Has Too Big to Jail Finally Been Overcome?

We finally have a felony conviction, aiding and abetting tax evasion, for the major bank Credit Suisse, but what are the penalties?  For starters the bank will be fined $2.6 billion, a fair hunk of change to be sure, but the CEO Brady Dougan said this in a press statement, so where's the beef?

Dougan said the settlement had had little impact on business. “We have found no instances where clients cannot do business with us,” he said. “Our discussions with clients have been very reassuring and we haven’t seen very many issues at all.”

So much for feeling too much pain, now does he go to jail?  Not a chance in my opinion, even if Switzerland extradited him which they won't. Then there's the matter of the tax evaders, Credit Suisse hasn't been required to reveal who they are so the IRS can collect taxes from them, as well as prosecute them.  That has Senators Carl Levin and John McCain puzzled too after they did all the investigative work that led to the conviction.

Senators Carl Levin and John McCain welcomed the $2.6bn fine of the bank announced Monday but said more needed to be done. Levin and McCain led the permanent subcommittee on investigations team that uncovered much of the wrongdoing at the bank.

In a statement, Levin said it was “appropriate” that Credit Suisse had been held criminally liable for aiding and abetting tax evasion – the first bank of this scale to held criminally liable for 20 years.

He said the fine struck “an important blow against tax evasion through bank secrecy”.

“But it is a mystery to me why the US government didn’t require as part of the agreement that the bank cough up some of the names of the US clients with secret Swiss bank accounts. More than 20,000 Americans were Credit Suisse account holders in Switzerland, the vast majority of whom never disclosed their accounts as required by US law. This leaves their identities undisclosed, with no accountability for taxes owed. The changes Credit Suisse has agreed to make to its practices are long overdue and welcome, but must be carefully monitored,” he said.

McCain said he was “gratified” by the Justice Department’s decision to require Credit Suisse to plead guilty to criminal wrongdoing. “In such cases, it is vitally important for all Americans to know that no financial institution is ‘too big to prosecute,’” he said. But he added that questions remained.

“Over the next few days, I look forward to reviewing this guilty plea closely to see whether it appropriately holds officers, directors and key executives individually accountable and whether the plea will be sufficient to help deter similar misconduct in the future,” he said.

In The Guardian story, they interviewed  John Coffee, Adolf A Berle professor of law at Columbia Law School, and he said.

“It is less than a severe sanction when no officers are indicted, when the settlement does not require the dismissal of any employees and where they do not get the names of these US customers,” he said. He said other regulators could take further action, the SEC could bar it from being a money manager, but that was not going to happen.

“Mary Jo White [chair of the SEC] does not want to inconvenience a major bank over a little thing like a federal felony conviction,” he said.

Credit Suisse and Tax Evasion

Ahh, how wonderful to have the Swiss banks, and the Swiss government looking out for you if you're a maligned US millionaire sheltering a few mil from taxes, but the winds of change may be blowing in an different direction, maybe jail.  The Swiss bankers claim they can't under Swiss law disclose the names of rich tax dodgers in hearings conducted by the Senate Permanent Subcommittee on Investigations chaired by Senator Carl Levin.  The General Counsel Romeo Cerutti said they could go to jail under Swiss law if they divulged their clients.

An angry Sen. Carl Levin (D-Mich.), who has led a six-year crusade against offshore tax evasion, told four Credit Suisse executives that their regrets and promises of changed ways were hollow if they did not help U.S. authorities track down the tax cheats.
"You hide behind the Swiss law even though you're operating here, and that's just simply not going to cut it," he said
On Tuesday, the Senate's Permanent Subcommittee on Investigations released a report accusing Credit Suisse, Switzerland's second-largest bank, of actively helping U.S. citizens hide up to $12 billion in assets in 22,000 accounts at the bank from 2001 to 2008.

Republicans piled on too, with a couple of zingers of their own.

"Where would you like to spend time?" Sen. Tom Coburn (R-Okla.) asked Cerutti. And Sen. John McCain (R-Ariz.) said the bank "must answer for decades of ill-gotten profits."

 So why are these criminals still at large?  They're really rich.