August 26, 2013
DOJ Still Thinking About Some Financial Crisis Cases
Posted by David Zaring

If you didn't see it, the Wall Street Journal brings word, straight from Eric Holder's mouth, that yes, there will be some financial crisis cases brought.  The AG said:

....anybody who's inflicted damage on our financial markets should not be of the belief that they are out of the woods because of the passage of time. If any individual or if any institution is banking on waiting things out, they have to think again.

The only thing is, the passage of time is beginning to hem in DOJ.  The world went crazy in September, 2008 - five years ago next month.  And the ordinary statute of limitations for federal cases is five years.  What can we surmise from this?

  • Some people really can start to breathe easier.  Although the crisis became spellbinding with the collapses of Fannie, Freddie, AIG, and Lehman Brothers, the securitization markets had already pretty much ground to a halt by 2007.  Bear Stearns had fallen.  There are some statutes - criminal mail and wire fraud, for example - that, unless I'm missing something, cannot be invoked for matters that happened then.
  • Those people do not include those who committed bank fraud, or fraud "affecting a federally insured financial institution."  Under FIRREA, these defendants are covered by a ten year statute of limitations, lashings of time.  FIRREA can get the government civil monetary penalties, but not criminal ones.
  • So if Holder is planning some press conferences, he's likely doing so for criminal cases that would be associated with the events of the fall of 2008, or civil cases that have a much broader scope, but probably do not involve a hedge fund lying to a money market fund, or something that does not involve FDIC insurance. 

Administrative Law, Finance, Financial Crisis, Financial Institutions | Bookmark

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