In a move that's long overdue, the Justice Department is offering new guidelines about how it will target individual employees of large corporations that come under fire for crimes in the financial industry. The U.S. DoJ will reconsider how it rarely holds individuals liable for "white collar" crimes, choosing to focus on the large entities themselves rather than bankers and corporate executives.
Many see this as a sensible and just move—but does the new focus for federal prosecutors have any teeth?
The DoJ has come under fire lately for its lack of aggressiveness in seeking prosecutions against the chief executives, bankers, and individual board members who were culprits in the financial crisis. Instead, under former U.S. Attorney General Eric Holder, the Justice Department went after the corporations themselves. Although this has resulted in large fines for the DoJ to collect, it hasn't sat well with a public who sees many wealthy executives guilty of breaching financial regulations skating by without punishment. Under new Attorney General Loretta Lynch, the DoJ's strategy appears to have pivoted.
Leaked excerpts of a speech by the department's #2 in power, Sally Quillian Yates, seems to reiterate this point: “Our mission here is not to recover the largest amount of money from the greatest number of corporations. Our job is to seek accountability from those who break our laws and victimize our citizens. It’s the only way to truly deter corporate wrongdoing.”
Here, the DoJ is both right and wrong. It's right (though long overdue in acknowledging) that penalizing the corporations themselves does not do enough to exact justice from badly behaving institutions on Wall Street. At the same time, the department is wrong for being so late to the party on this front. During the Obama Administration, which began directly in the wake of the financial crisis that first hit the fan in late 2007, a remarkably small amount of corporate executives—and individual employees, in general—have been taken to task for their roles in the financial meltdown.
The new stance by the department entails a less lenient view of individual employees who break the law, affording them no protection in the event that their corporate parent reaches a settlement with the government. Even if a big firm has settled, if their employees or executives are guilty of wrongdoing, they will still be pursued.
There's Always a Catch
There is, of course, one giant caveat. Naturally, the Department of Justice has publicly laid out these new guidelines while admitting that they are "non-binding," meaning that they may not necessarily be enforced by federal prosecutors. Even with the proper tools and approach in place, prosecutors cannot be coerced into proceeding with charges against individuals they don't want to prosecute. In many circles, the lack of convictions for the financial crisis (other than large-sum settlements with the companies themselves) is less the result of the Justice Department's strategy or guidelines and has more to do with the prerogative of prosecutors who may be too cozy with the people they're supposed to be holding accountable.