Is it easy to launder black money through private banks? --Videos India:IBNLive Videos

Is it easy to launder black money through private banks? --Videos India:IBNLive Videos:

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DOJ's Wall Street Crackdown Is Laughable:

DOJ's Wall Street Crackdown Is Laughable

By Matt Taibbi, Rolling Stone

21 February 13

 don't want to sound like a broken record, but . . . the latest ploy by the government to insist it is "getting tough" on Wall Street is beyond laughable.

The tough new-and-improved regime, as described by the curiously credulous Dealbook, is a policy of extracting criminal guilty pleas from foreign subsidiaries, as opposed to the "usual fines and reforms." This was the path chosen in the recent UBS deal (in which a Japanese subsidiary was charged while the parent company was given a complete walk, a non-prosecution settlement) and in the more recent deal with the Royal Bank of Scotland. Both of those banks were implicated in the LIBOR rate-fixing case, which is only maybe the most egregious and far-reaching financial scandal of our generation. Writes Dealbook:

Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks.

In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations.

Lawyers for several big banks, who spoke on the condition of anonymity, said they were already adjusting their defenses and urging banks to fire employees suspected of wrongdoing in the hope of appeasing authorities.

The story was accompanied by a preposterous photo of Lanny Breuer angrily wagging a finger, suggesting a new, "get-tough" criminal division of the Department of Justice.

The article worried desperately over the issue of whether or not the Japanese subsidiaries would keep their licenses after these guilty pleas. As is often the case - I've personally heard this excuse about a dozen times coming from DC types - regulators are terrified of repeating an Arthur Andersen situation, i.e. punishing a company and seeing massive job losses as a result:

Critics point to the UBS case. Before UBS signed the deal, Japanese authorities assured the bank that a guilty plea would not cost the subsidiary its license, a person involved in the case said. While the case has weighed on the stock price, the subsidiary is operating normally and clients have stayed put, according to people with direct knowledge of the case.

Prosecutors defend their effort, saying it was born from painful experiences over the last decade.

After Arthur Andersen was convicted in 2002, the accounting firm went out of business, taking 28,000 jobs with it. The Supreme Court later overturned the case, prompting the government to alter its approach.

The Arthur Andersen case has become like Wall Street's magic mantra - you hear the name whispered anytime any company gets in trouble. This is a tactic straight out of Blazing Saddles, with banks essentially taking themselves hostage, putting guns to their own heads as they creep sideways out the door: "Back off! Prosecute us and all these jobs will die!"

And prosecutors, just like the idiot town leaders of Mel Brooks's Rockridge, are screaming, "They're just crazy enough to do it!"

This isn't brain surgery. You know what an effective deterrent to crime is? Jail! And do you know what kind of criminal penalty actually makes people think twice about committing crimes the next time? The kind that actually comes out of some individual's pocket, not fines that come out of the corporate kitty.

I get that regulators are worried about job losses. They should be. But the long-term job losses are going to be much greater when investors around the world lose confidence in the U.S. financial system because they recognize that individuals do not face punishment for criminal activity. The individual incentive not to commit crime on Wall Street now is almost zero. Even the worst of the worst - like, say, a certain unindicted co-conspirator in an evolving insider trading case - is only threatened with individual prosecution after years of monstrous and obvious market manipulation, resulting in massive profits that he'll almost certainly get to keep most of, by the way, if previous settlements are any guide.

It continually amazes, the way all of these law-and-order types are so willing to pontificate about the importance of taking individual responsibility for one's actions, until the guy in their crosshairs is someone he/she went to college with, or a former client of his or her law firm. Then, suddenly, their idea of drastic justice becomes maybe yanking the license of a foreign subsidiary.

Let's make a new rule: The Department of Justice doesn't get to call itself "tough" until a) it puts someone from one of these companies in jail for at least 24 hours, or b) it extracts fines from either companies or individuals that represent at least slightly more than laughable fractions of their ill-gotten gains. That's setting the bar pretty low, but you have to start somewhere, right?

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Why We Bought Bush's Lies - Valerie Palme Wilson / Joe Wilson

Why We Bought Bush's Lies:

Valerie Plame and husband Joseph Wilson, July 2003. (photo: Getty Images)

Why We Bought Bush's Lies

By Valerie Plame Wilson and Joe Wilson, Guardian UK

02 March 13

We knew WMD intelligence was flawed, but there was a larger failure of officials, media and public to halt the neocon juggernaut.

t has been 10 long years since "Shock and Awe" - the opening bombardment of Baghdad - lit up the skies above the Tigris. A decade later, we know far more about the case the Bush administration made to the world to justify its war of choice to overthrow Saddam Hussein. Books like Hubris by David Corn and Michael Isikoff, and British commission and US Senate reports have catalogued the extent to which intelligence was misused to mislead the public.

Yet, even as the intervening period has brought profound change for the United States and its role in the world, have we learned the lessons of that disastrous period? And what were those lessons?

For nearly a year prior to the invasion, President Bush and his administration peppered the airwaves with serious accusations against Saddam Hussein, including claims of aluminum tubes that could be used in centrifuges to enrich uranium, and of Iraqi efforts to purchase uranium yellowcake from Africa. The intelligence supporting the claims was either not believed or was highly disputed by the experts. But that did not stop senior government officials from repeating them incessantly; nor did it prevent the powerful neoconservative ideologues who were the war's most fervent supporters from parroting them with menacingly jingoistic passion.

Who can forget the trademark line, delivered by Condoleezza Rice:

We don't want the smoking gun to be a mushroom cloud.

As a covert CIA operations officer working frantically in the months before the war to find and verify hard intelligence about Iraq's presumed WMD program, Valerie was keenly interested in watching Secretary of State Colin Powell address the United Nations on 6 February 2003. His reputation and service to the United States was stellar, and he was viewed as the lone moderate inside what many others considered to be a hawkish cabinet.

As Valerie watched the speech unfold on TV from CIA headquarters that morning, she experienced what can only be described as "cognitive dissonance". It became clear, as Powell laid out the case for war (with CIA Director George Tenet sitting conspicuously just behind the secretary's right shoulder), that his robust claims about the state of Iraqi WMD simply did not match the intelligence which she had worked on daily for months.

Powell's claim from a discredited defector code-named "Curveball" on Iraq's biological weapons capability was particularly alarming. Valerie knew that "Curveball" had been deemed a "fabricator" by the agency, meaning that none of his intelligence could be believed.

The implications suddenly become obvious: we were watching a kabuki play and the outcome was predetermined. The Bush administration was determined to go to war, however bad the intelligence, and not even Secretary of State Powell was going to stand in the way.

Joe, too, watched Powell's speech, wondering whether the secretary would repeat the statement, first made by President Bush in his state of the union address several days earlier , that "the British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa." At the request of the CIA, Joe had investigated that claim in February 2002, as it pertained to Niger and had reported back to the agency that there was no evidence to support the charge. Tellingly, Colin Powell made no mention at the UN of any Iraqi effort to seek uranium, either from Niger or anywhere else in Africa.

Rumors of a Niger-Iraq uranium deal had first surfaced in Rome in 2001, as documents purporting to be related to the sale of 500 metric tonnes of yellowcake (a lightly refined uranium ore) circulated in intelligence circles and among journalists. Those documents were later found to be forgeries, but by the time the charge made its way into the president's speech, it had already been largely discounted by both the State Department and the CIA. The agency's director told the White House three times not to use the claim because the CIA believed it to be false.

The now infamous 16 words made it into the state of the union speech only by agreement between the White House and the CIA to attribute the charge to the British government, which had published such a claim in its "White Paper" on Iraq, in September 2002. Unfortunately, as then Foreign Secretary Jack Straw testified to the House of Commons foreign affairs select committee in June 2003, the British claim had been based on separate intelligence from the forged documents, and that the British had not shared their intelligence with the US government.

In sum, we are left to believe that a significant part of President Bush's case for war was based on intelligence that neither he nor his intelligence officials had even seen. The declassification of several documents in recent years, and a US Senate investigation report published in 2008 conclude that there was far closer collusion between the Bush and Blair administrations than the Straw testimony suggests. Yet, the British government to this day continues to stand behind its "separate intelligence" - which it has yet to make public.

The Powell address to the UN and the Niger-Iraq saga are but two examples of the efforts of the Bush administration to manipulate intelligence to support its political objectives and the lengths to which it went to secure support for its war. As former White House press secretary Scott McClellan put it:

"Bush and his White House were engaging in a carefully orchestrated campaign to shape and manipulate sources of public approval to our advantage."

That it was so successful is an indictment of a corrupt administration. But it is also emblematic of the failure of the checks and balances that are the hallmark of our democracy. As Obama appointees John Kerry and Chuck Hagel can attest, the US Congress was ineffective, to say the least, in the exercise of its oversight responsibilities. (The same applies to the UK Parliament.) The Washington press corps was dilatory in its investigative reporting - valuing access and cozy relationships with senior officials above the search for truth; ultimately, the media served as lapdogs rather than watchdogs.

And the public, still reeling from 911 and whipped up by the fear-mongering since, instinctively trusted its leaders. Given the full force and power of the administration's efforts to sell the war, it is no wonder that nearly 60% of Americans were in favor of the invasion in the early part of 2003.

Not surprisingly, that figure has flipped, with nearly 60% of Americans now saying that the Iraq war was a mistake; more than 70% of the British public agree. We owe it to ourselves and to our partners in the "coalition of the willing" to confront the fact that, when it mattered a decade ago, our Congress, our press, and we as citizens were not vigilant enough in holding our government to account for its statements and actions.

We did not do nearly enough to prevent this tragedy perpetrated on Iraq, on the world, and on ourselves.

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Life Sentence for the Poor, Immunity for the Wealthy:

Lanny Breuer, Assistant Attorney General of the Justice Department's Criminal Division, addresses a news conference in Brooklyn. British bank HSBC has agreed to pay $1.9 billion to settle a New York based-probe in connection with the laundering of money from narcotics traffickers in Mexico. (photo: AP/Richard Drew)

Life Sentence for the Poor, Immunity for the Wealthy

By Glenn Greenwald, Alternet

19 December 12

he US is the world's largest prison state, imprisoning more of its citizens than any nation on earth, both inabsolute numbers andproportionally. It imprisons people for longer periods of time, more mercilessly, and for more trivial transgressions than any nation in the west. This sprawling penal state has been constructed over decades, by both political parties, and it punishes the poor and racial minorities at overwhelmingly disproportionate rates.

But not everyone is subjected to that system of penal harshness. It all changes radically when the nation's most powerful actors are caught breaking the law. With few exceptions, they are gifted not merely with leniency, but full-scale immunity from criminal punishment. Thus have the most egregious crimes of the last decade been fully shielded from prosecution when committed by those with the greatest political and economic power: the construction of a worldwide torture regime, spying on Americans' communications without the warrants required by criminal law by government agencies and the telecom industry, an aggressive war launched on false pretenses, and massive, systemic financial fraud in the banking and credit industry that triggered the 2008 financial crisis.

This two-tiered justice system was the subject of my last book, "With Liberty and Justice for Some", and what was most striking to me as I traced the recent history of this phenomenon is how explicit it has become. Obviously, those with money and power always enjoyed substantial advantages in the US justice system, but lip service was at least always paid to the core precept of the rule of law: that - regardless of power, position and prestige - all stand equal before the blindness of Lady Justice.

It really is the case that this principle is now not only routinely violated, as was always true, but explicitly repudiated, right out in the open. It is commonplace to hear US elites unblinkingly insisting that those who become sufficiently important and influential are - and should be - immunized from the system of criminal punishment to which everyone else is subjected.

Worse, we are constantly told that immunizing those with the greatest power is not for their good, but for our good, for our collective good: because it's better for all of us if society is free of the disruptions that come from trying to punish the most powerful, if we're free of the deprivations that we would collectively experience if we lose their extraordinary value and contributions by prosecuting them.

This rationale was popularized in 1974 when Gerald Ford explained why Richard Nixon - who built his career as a "law-and-order" politician demanding harsh punishments and unforgiving prosecutions for ordinary criminals - would never see the inside of a courtroom after being caught committing multiple felonies; his pardon was for the good not of Nixon, but of all of us. That was the same reasoning hauled out to justify immunity for officials of the National Security State who tortured and telecom giants who illegally spied on Americans (we need them to keep us safe and can't disrupt them with prosecutions), as well as the refusal to prosecute any Wall Street criminals for their fraud (prosecutions for these financial crimes would disrupt our collective economic recovery).

A new episode unveiled on Tuesday is one of the most vivid examples yet of this mentality. Over the last year, federal investigators found that one of the world's largest banks, HSBC, spent years committing serious crimes, involving money laundering for terrorists; "facilitat[ing] money laundering by Mexican drug cartels"; and "mov[ing] tainted money for Saudi banks tied to terrorist groups". Those investigations uncovered substantial evidence "that senior bank officials were complicit in the illegal activity." As but one example, "an HSBC executive at one point argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda."

Needless to say, these are the kinds of crimes for which ordinary and powerless people are prosecuted and imprisoned with the greatest aggression possible. If you're Muslim and your conduct gets anywhere near helping a terrorist group, even by accident, you're going to prison for a long, long time. In fact, powerless, obscure, low-level employees are routinely sentenced to long prison terms for engaging in relatively petty money laundering schemes, unrelated to terrorism, and on a scale that is a tiny fraction of what HSBC and its senior officials are alleged to have done.

But not HSBC. On Tuesday, not only did the US Justice Department announce that HSBC would not be criminally prosecuted, but outright claimed that the reason is that they are too important, too instrumental to subject them to such disruptions. In other words, shielding them from the system of criminal sanction to which the rest of us are subject is not for their good, but for our common good. We should not be angry, but grateful, for the extraordinary gift bestowed on the global banking giant:

"US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the 'collateral consequences' of taking the bank to court. . . .

"Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s 'blatant failure' to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire.

"Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.

"HSBC, Britain's biggest bank, said it was 'profoundly sorry' for what it called 'past mistakes' that allowed terrorists and narcotics traffickers to move billions around the financial system and circumvent US banking laws. . . .

"As part of the deal, HSBC has undertaken a five-year agreement with the US department of justice under which it will install an independent monitor to assess reformed internal controls. The bank's top executives will defer part of their bonuses for the whole of the five-year period, while bonuses have been clawed back from a number of former and current executives, including those in the US directly involved at the time.

"John Coffee, a professor of law at Columbia Law School in New York, said the fine was consistent with how US regulators have been treating bank infractions in recent years. 'These days they rarely sue individuals in any meaningful way when the entity will settle. This is largely a function of resource constraints, but also risk aversion, and a willingness to take the course of least resistance,' he said."

DOJ officials touted the $1.9 billion fine HSBC would pay, the largest ever for such a case. As the Guardian's Nils Pratley noted, "the sum represents about four weeks' earnings given the bank's pre-tax profits of $21.9bn last year." Unsurprisingly, "the steady upward progress of HSBC's share price since the scandal exploded in July was unaffected on Tuesday morning."

The New York Times Editors this morning announced: "It is a dark day for the rule of law." There is, said the NYT editors, "no doubt that the wrongdoing at HSBC was serious and pervasive." But the bank is simply too big, too powerful, too important to prosecute.

That's not merely a dark day for the rule of law. It's a wholesale repudiation of it. The US government is expressly saying that banking giants reside outside of - above - the rule of law, that they will not be punished when they get caught red-handed committing criminal offenses for which ordinary people are imprisoned for decades. Aside from the grotesque injustice, the signal it sends is as clear as it is destructive: you are free to commit whatever crimes you want without fear of prosecution. And obviously, if the US government would not prosecute these banks on the ground that they're too big and important, it would - yet again, or rather still - never let them fail.

But this case is the opposite of an anomaly. That the most powerful actors should be immunized from the rule of law - not merely treated better, but fully immunized - is a constant, widely affirmed precept in US justice. It's applied to powerful political and private sector actors alike. Over the past four years, the CIA and NSA have received the same gift, as have top Executive Branch officials, as has the telecom industry, as has most of the banking industry. This is how I described it in "With Liberty and Justice for Some":

"To hear our politicians and our press tell it, the conclusion is inescapable: we're far better off when political and financial elites - and they alone - are shielded from criminal accountability.

"It has become a virtual consensus among the elites that their members are so indispensable to the running of American society that vesting them with immunity from prosecution - even for the most egregious crimes - is not only in their interest but in our interest, too. Prosecutions, courtrooms, and prisons, it's hinted - and sometimes even explicitly stated - are for the rabble, like the street-side drug peddlers we occasionally glimpse from our car windows, not for the political and financial leaders who manage our nation and fuel our prosperity.

"It is simply too disruptive, distracting, and unjust, we are told, to subject them to the burden of legal consequences."

That is precisely the rationale explicitly invoked by DOJ officials to justify their decision to protect HSBC from criminal accountability. These are the same officials who previously immunized Bush-era torturers and warrantless eavesdroppers, telecom giants, and Wall Street executives, even as they continue to persecute whistleblowers at record rates and prosecute ordinary citizens - particularly poor and minorities - with extreme harshness even for trivial offenses. The administration that now offers the excuse that HSBC is too big to prosecute is the same one that quite consciously refused to attempt to break up these banks in the aftermath of the "too-big-to-fail" crisis of 2008, as former TARP overseer Neil Barofsky, among others, has spent years arguing.

And, of course, these HSBC-protectors in the Obama DOJ are the same officials responsible for maintaining and expanding what NYT Editorial Page editor Andrew Rosenthal has accurately described as "essentially a separate justice system for Muslims," one in which "the principle of due process is twisted and selectively applied, if it is applied at all." What has been created is not so much a "two-tiered justice system" as a multi-tiered one, entirely dependent on the identity of the alleged offender rather than the crimes of which they are accused.

Having different "justice systems" for citizens based on their status, wealth, power and prestige is exactly what the US founders argued most strenuously had to be avoided (even as they themselves maintained exactly such a system). But here we have in undeniable clarity not merely proof of exactly how this system functions, but also the rotted and fundamentally corrupt precept on which it's based: that some actors are simply too important and too powerful to punish criminally. As the Nobel Prize-winning economist Joseph Stiglitz warned in 2010, exempting the largest banks from criminal prosecution has meant that lawlessness and "venality" is now "at a higher level" in the US even than that which prevailed in the pervasively corrupt and lawless privatizing era in Russia.

Having the US government act specially to protect the most powerful factions, particularly banks, was a major impetus that sent people into the streets protesting both as part of the early Tea Party movement as well as the Occupy movement. As well as it should: it is truly difficult to imagine corruption and lawlessness more extreme than having the government explicitly place the most powerful factions above the rule of law even as it continues to subject everyone else to disgracefully harsh "justice". If this HSBC gift makes more manifest this radical corruption, then it will at least have achieved some good.

UPDATE

By coincidence, on the very same day that the DOJ announced that HSBC would not be indicted for its multiple money-laundering felonies,the New York Times published a story featuring the harrowing story of an African-American single mother of three who was sentenced to life imprisonment at the age of 27 for a minor drug offense:

"Stephanie George and Judge Roger Vinson had quite different opinions about the lockbox seized by the police from her home in Pensacola. She insisted she had no idea that a former boyfriend had hidden it in her attic. Judge Vinson considered the lockbox, containing a half-kilogram of cocaine, to be evidence of her guilt.

"But the defendant and the judge fully agreed about the fairness of the sentence he imposed in federal court.

"'Even though you have been involved in drugs and drug dealing,' Judge Vinson told Ms. George, 'your role has basically been as a girlfriend and bag holder and money holder but not actively involved in the drug dealing, so certainly in my judgment it does not warrant a life sentence.'

"Yet the judge had no other option on that morning 15 years ago. As her stunned family watched, Ms. George, then 27, who had never been accused of violence, was led from the courtroom to serve a sentence of life without parole.

"'I remember my mom crying out and asking the Lord why,' said Ms. George, now 42, in an interview at the Federal Correctional Institution in Tallahassee. 'Sometimes I still can't believe myself it could happen in America.'"

As the NYT notes - and read her whole story to get the full flavor of it - this is commonplace for the poor and for minorities in the US justice system. Contrast that deeply oppressive, merciless punishment system with the full-scale immunity bestowed on HSBC - along with virtually every powerful and rich lawbreaking faction in America over the last decade - and that is the living, breathing two-tiered US justice system. How this glaringly disparate, and explicitly status-based, treatment under the criminal law does not produce serious social unrest is mystifying.

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FOCUS | Eric Holder: 'Some Banks Are Too Big to Prosecute'

FOCUS | Eric Holder: 'Some Banks Are Too Big to Prosecute':

Eric Holder: 'Some Banks Are Too Big to Prosecute'

By Robert Borosage, AlterNet

07 March 13

or years, the Obama Administration has been pummeled for failing to bring criminal charges against a single major Wall Street bank or a single leading Wall Street banker for what the FBI termed an "epidemic of fraud" that blew up the entire economy.  Investigations revealed the banks committed routine fraud in peddling mortgage securities they knew were garbage, trampled basic property laws, laundered money from Iran, Libya and Mexican drug lords, conspired to game the basic measure of interest rates and more.  Yet, time after time, the Justice Department and regulatory agencies settled for sweetheart deals, with no admission of guilt, no banker held accountable, and fines that were the equivalent in earnings of a speeding ticket to the average family.

Yesterday Attorney General Holder stated openly what was already apparent.  The Justice Department believes that Too Big to Fail Banks are Too Big to Jail.  Criminal indictments against banks or leading bankers might endanger the economy and thus were too big a risk.

Here's what Holder said

"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," he said. "And I think that is a function of the fact that some of these institutions have become too large."

Holder was responding to questions by Republican Senator Charles Grassley about why the Justice Department brought no criminal charges against the large British bank HSBC after it admitted laundering money for parties in Iran, Libya and Mexican drug lords.  The Attorney General acknowledged that the sheer size of the big banks "has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate.  That is something you (members of Congress) all need to consider."

Foam the Runway

Allowing the big banks to operate above the law is at one with the philosophy that guided both the Bush and the Obama administrations during the financial collapse.  Tim Geithner, former head of the New York Federal Reserve bank under Bush and Treasury Secretary under Obama, would preach that it was necessary to "foam the runway" to protect the banks from total crackup.  That "foam" included literally trillions in the backdoor bailout of banks organized by the Federal Reserve, abandoning the underwater homeowners who were victimized by Wall Street's wilding, while neutering any regulatory or criminal accountability.

Above the Law

Holder's outrageous admission means that bankers operate - and know they operate - above the law.  That renders all the argument about regulations and legal limits risible.  Bankers spend tens of millions lobbying to weaken regulations and starve regulators of authority and resources.  But when the action gets hot, the bubble starts to build, the music keeps playing, they can trample the laws, mislead the regulators and defraud their customers, bolstered by the confidence that the laws will not apply to them.

Holder's argument, however, is indefensible.  There is no reason a bank with billions of assets could not survive the indictment of its CEO or CFO.  If the Fed and Treasury can "foam the runway" to protect otherwise insolvent banks from collapse, they surely could insure that a bank survives while its executives are held personally responsible for their crimes.  Putting a few bankers in jail and holding them personally accountable for their frauds would do much to bring sobriety back to Wall Street.

The Campaign for a Fair Settlement, of which the Campaign for America's Future is a partner, has called on the president to repudiate Holder's statement, and to direct the Justice Department to prosecute those who violated the law.  But Holder's position forces a bigger issue.

Too Big to Be

So big banks operate above the law.  And as the conservative head of the Dallas Federal Reserve Bank Richard Fischer and many others have argued, they are not disciplined by the market.  They know their losses are covered, while they pocket their winnings.  They have multi-million dollar personal incentives to leverage up, use other people's money to make big bets on high risk operations that offer big rewards.  Their excesses blew up the economy, but they got bailed out and emerged bigger and more concentrated than ever.

And, of course, since investors know the big banks can't fail, the big banks can attract money at much lower rates than smaller banks, a subsidy worth about $83 billion a year according to recent calculations by Bloomberg News.

Clearly, institutions that are above the law and beyond the discipline of the market cannot exist in their current form.  The Congress has only two choices.  The big banks can be nationalized and treated as public utilities.  The public would pocket their profits and cover their losses.  Or the big banks can be broken up, and be accountable to both the law and the market.

Senators Sherrod Brown and Jeff Merkley have spearheaded the drive to break up the big banks.  This takes remarkable courage.  Brown had to overcome torrents of big money poured into the effort to defeat him when he ran for re-election last year.

Now they are gaining unlikely allies.  George Will has called on conservatives to follow Brown to the barricades.  Republican Senator David Vitter has joined in calling for study of the subsidy big banks enjoy.  Retired bankers like John Reed, former president of Citibank have joined with Dallas Fed President Fischer and others to call for breaking up the banks.

Can the big banks be held accountable?  Wall Street is a leading source of funds for both parties.  The revolving door between Wall Street and Washington spins no matter what administration is in power.  The Obama administration has opposed every effort to break up the big banks.  Republicans in Congress have shamelessly offered themselves as Wall Street's protectors in exchange for campaign money.

But Holder's admission makes action - however improbable - imperative.  A nation of laws and markets cannot abide huge private financial institutions that are accountable to neither.

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