[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]




 
                      WHO IS TOO BIG TO FAIL: ARE
                      LARGE FINANCIAL INSTITUTIONS
                    IMMUNE FROM FEDERAL PROSECUTION?

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON OVERSIGHT
                           AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 22, 2013

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-25


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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California, Ranking 
    Chairman                             Member
SPENCER BACHUS, Alabama, Chairman    CAROLYN B. MALONEY, New York
    Emeritus                         NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          BRAD SHERMAN, California
FRANK D. LUCAS, Oklahoma             GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
JOHN CAMPBELL, California            STEPHEN F. LYNCH, Massachusetts
MICHELE BACHMANN, Minnesota          DAVID SCOTT, Georgia
KEVIN McCARTHY, California           AL GREEN, Texas
STEVAN PEARCE, New Mexico            EMANUEL CLEAVER, Missouri
BILL POSEY, Florida                  GWEN MOORE, Wisconsin
MICHAEL G. FITZPATRICK,              KEITH ELLISON, Minnesota
    Pennsylvania                     ED PERLMUTTER, Colorado
LYNN A. WESTMORELAND, Georgia        JAMES A. HIMES, Connecticut
BLAINE LUETKEMEYER, Missouri         GARY C. PETERS, Michigan
BILL HUIZENGA, Michigan              JOHN C. CARNEY, Jr., Delaware
SEAN P. DUFFY, Wisconsin             TERRI A. SEWELL, Alabama
ROBERT HURT, Virginia                BILL FOSTER, Illinois
MICHAEL G. GRIMM, New York           DANIEL T. KILDEE, Michigan
STEVE STIVERS, Ohio                  PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee       JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana          KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina        JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois             DENNY HECK, Washington
DENNIS A. ROSS, Florida
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
              Subcommittee on Oversight and Investigations

              PATRICK T. McHENRY, North Carolina, Chairman

MICHAEL G. FITZPATRICK,              AL GREEN, Texas, Ranking Member
    Pennsylvania, Vice Chairman      EMANUEL CLEAVER, Missouri
PETER T. KING, New York              KEITH ELLISON, Minnesota
MICHELE BACHMANN, Minnesota          ED PERLMUTTER, Colorado
SEAN P. DUFFY, Wisconsin             CAROLYN B. MALONEY, New York
MICHAEL G. GRIMM, New York           JOHN K. DELANEY, Maryland
STEPHEN LEE FINCHER, Tennessee       KYRSTEN SINEMA, Arizona
RANDY HULTGREN, Illinois             JOYCE BEATTY, Ohio
DENNIS A. ROSS, Florida              DENNY HECK, Washington
ANN WAGNER, Missouri
ANDY BARR, Kentucky
KEITH J. ROTHFUS, Pennsylvania


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 22, 2013.................................................     1
Appendix:
    May 22, 2013.................................................    45

                               WITNESSES
                        Wednesday, May 22, 2013

Raman, Mythili, Acting Assistant Attorney General, Criminal 
  Division, U.S. Department of Justice...........................     5

                                APPENDIX

Prepared statements:
    Raman, Mythili...............................................    46

              Additional Material Submitted for the Record

McHenry, Hon. Patrick:
    Letter to Attorney General Eric Holder from Senator Jeffrey 
      A. Merkley, dated December 13, 2012........................    50
    Letter to Attorney General Eric Holder from Senators Sherrod 
      Brown and Charles E. Grassley, dated January 29, 2013......    53
    Letter to Senator Sherrod Brown from Judith C. Appelbaum, 
      Principal Deputy Assistant Attorney General, received 
      February 27, 2013..........................................    55
    Letter to Attorney General Eric Holder from Financial 
      Services Committee Ranking Member Maxine Waters, dated 
      February 6, 2013...........................................    58
    Letter to Treasury Secretary Jacob Lew and Attorney General 
      Eric Holder from Financial Services Committee Chairman Jeb 
      Hensarling and Oversight and Investigations Subcommittee 
      Chairman Patrick McHenry, dated March 8, 2013..............    60
    Letter to Financial Services Committee Chairman Jeb 
      Hensarling from Alastair M. Fitzpayne, Assistant Secretary 
      for Legislative Affairs, U.S. Department of the Treasury, 
      dated March 28, 2013.......................................    63
    Letter to Treasury Secretary Jacob Lew from Oversight and 
      Investigations Subcommittee Chairman Patrick McHenry, dated 
      March 20, 2013.............................................    65
    Letter to Oversight and Investigations Subcommittee Chairman 
      Patrick McHenry from Alastair M. Fitzpayne, Assistant 
      Secretary for Legislative Affairs, U.S. Department of the 
      Treasury, dated May 10, 2013...............................    68
    Letter to Federal Reserve Chairman Ben Bernanke from 
      Oversight and Investigations Subcommittee Chairman Patrick 
      McHenry, dated March 20, 2013..............................    70
    Letter to Oversight and Investigations Subcommittee Chairman 
      Patrick McHenry from Federal Reserve Chairman Ben Bernanke, 
      dated April 22, 2013.......................................    72
    Letter to Comptroller of the Currency Thomas J. Curry from 
      Oversight and Investigations Subcommittee Chairman Patrick 
      McHenry, dated March 20, 2013..............................    74
    Letter to Oversight and Investigations Subcommittee Chairman 
      Patrick McHenry from Comptroller of the Currency Thomas J. 
      Curry, dated April 8, 2013.................................    76
    Letter to Attorney General Eric Holder from Oversight and 
      Investigations Subcommittee Chairman Patrick McHenry, dated 
      April 3, 2013..............................................    77
    Letter to Attorney General Eric Holder from Oversight and 
      Investigations Subcommittee Chairman Patrick McHenry, dated 
      April 26, 2013.............................................    78
    Letter to Oversight and Investigations Subcommittee Chairman 
      Patrick McHenry from Peter J. Kadzik, Principal Deputy 
      Assistant Attorney General, dated May 16, 2013.............    81
Green, Hon. Al:
    List of persons who have been prosecuted by the Justice 
      Department.................................................    83


                      WHO IS TOO BIG TO FAIL: ARE
                      LARGE FINANCIAL INSTITUTIONS
                    IMMUNE FROM FEDERAL PROSECUTION?

                              ----------                              


                        Wednesday, May 22, 2013

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:19 p.m., in 
room 2128, Rayburn House Office Building, Hon. Patrick McHenry 
[chairman of the subcommittee] presiding.
    Members present: Representatives McHenry, Fitzpatrick, 
Grimm, Fincher, Hultgren, Wagner, Barr, Rothfus; Green, 
Cleaver, Maloney, Delaney, Sinema, Beatty, and Heck.
    Ex officio present: Representatives Bachus and Waters.
    Also present: Representative Sherman.
    Chairman McHenry. The subcommittee will come to order. 
Today's hearing of the Oversight and Investigations 
Subcommittee of the Financial Services Committee is entitled, 
``Who is Too Big To Fail: Are Large Financial Institutions 
Immune from Federal Prosecution?'' There is a question mark at 
the end of that, which is not as common for most of our 
hearings, but we are trying to learn something here.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Before we begin, I would like to recognize our newest 
member of the subcommittee for his first hearing, Mr. Keith 
Rothfus from Pennsylvania. Thank you, Mr. Rothfus, for being 
here.
    And with prior agreement with the ranking member, we will 
limit opening statements to 6 minutes per side. Without 
objection, it is so ordered.
    I will now recognize myself for the purpose of an opening 
statement. Almost 3 years ago, the Dodd-Frank Act was signed by 
President Obama. Upon enactment, the President declared an end 
to too-big-to-fail; this phenomenon would be ended. Among other 
things, Dodd-Frank authorized regulators to take certain 
actions to reduce both the likelihood that a large financial 
company would fail, and the impact of any such failure were it 
to occur. Thus, an elaborate new bureaucracy was formed.
    Within it, the new Financial Stability Oversight Council 
(FSOC) is authorized to designate certain financial 
institutions for enhanced prudential supervision by the Federal 
Reserve, and to monitor risks to the financial stability of the 
United States in conjunction with the newly created Office of 
Financial Research (OFR). In addition, Title II establishes the 
Orderly Liquidation Authority (OLA), which putatively provides 
the means to safely resolve firms that are so complex or 
important that their failure and subsequent bankruptcy would 
significantly disrupt the system, or so says those who proposed 
it and supported it.
    Separate from this new regime, the Justice Department has 
the authority to prosecute a business organization, including 
financial institutions, for violations of Federal law and 
individuals within those institutions. Any resulting criminal 
liability may give rise to non-penal sanctions that, 
individually or collectively, impose significant cost to the 
organization, and potentially impact its ability to continue as 
a going concern. Standards adopted by the Justice Department 
call on prosecutors to consider the collective consequences of 
prosecuting a business organization.
    However, in recent testimony before the Senate Judiciary 
Committee, Attorney General Eric Holder stated that some 
financial institutions are so large or complex and consequences 
to innocent third parties from holding them criminally liable 
so great, that the Justice Department is hindered from bringing 
prosecutions.
    Rather than me say it, let's let Eric Holder say it for 
himself.
    [no sound]
     While I certainly appreciate the Attorney General in 
``mute,'' it doesn't help with the presentation we are trying 
to make.
    All right, we will try it this way. I will actually read 
what he said. So much for technology, right? ``I am concerned 
that the size of some of these institutions has become 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. And I think 
that is a function of the fact that some of these institutions 
have become too large. I think it has an inhibiting influence 
and impact on our ability to bring resolutions that I think 
would be more appropriate.'' That is the quote from Attorney 
General Eric Holder. We were at least able to see a visual 
representation of that.
    In addition, the Attorney General has previously stated 
that the Justice Department relies on ``outside experts'' when 
assessing the economic harm associated with prosecuting larger 
financial institutions. To better understand the Justice 
Department's decisions not to seek convictions in cases 
involving large final institutions, including the Department's 
assessment of collateral consequences as called for under its 
policies, this subcommittee has sought to determine the 
identities of the outside experts referred to by the Attorney 
General in his December 2012 statement.
    The subcommittee has contacted the Justice Department and 
the Treasury Department, as well as the Federal Reserve and the 
OCC, in addition to questioning representatives of the FSOC and 
the OFR at our March 14th hearing in this subcommittee. And so 
without objection, I would submit those letters and 
corresponding responses for the record.
    To date, the subcommittee's investigation has indicated 
that the Justice Department has not received any material 
information from outside experts when making prosecutorial 
decisions in cases involving large financial institutions. It 
should be noted that in January, Senators Grassley and Brown 
made a similar inquiry to the Attorney General requesting he 
disclose the identity of these outside experts with whom 
prosecutors consulted about the appropriate level of penalties 
for large financial institutions. After receiving the DOJ's 
response, the Senators described DOJ's response as 
``aggressively evasive.'' On a bipartisan basis, they said 
this.
    And I have to agree with their summation. The DOJ is 
providing nothing material to explain the comments made by the 
Attorney General. This is disconcerting. They have been 
resisting this hearing since we sent the invitation request to 
the Deputy Attorney General to testify. That request was made 4 
weeks ago. Only this past Friday afternoon did the Department 
of Justice inform us that the Deputy Attorney General would not 
be available to testify. I find this obfuscation very 
troubling.
    Last week, in testimony before the House Judiciary 
Committee, the Attorney General appeared to contradict his 
earlier remarks to the Senate, stating, ``There is no bank, 
there is no institution, there is no individual that cannot be 
prosecuted by the U.S. Department of Justice.'' However, the 
Attorney General's contradicting comments do not explain 
whether the Department's view of the collateral harm of 
convicting a financial institution has changed, or if the 
Department's view has not changed. The circumstances in which a 
party's criminal conduct is so egregious that prosecution is 
appropriate even in the face of significant harm to innocent 
parties has not been made clearer by the Attorney General's 
comments.
    Accordingly, this hearing will examine the following: the 
identities of the outside experts consulted and relied upon by 
the Justice Department in such cases; any additional analysis 
used by the Department when making prosecutorial decisions in 
such cases; and whether the Attorney General's statement 
suggested that too-big-to-fail institutions persist despite the 
fact of enactment of the Dodd-Frank Act.
    Finally, this hearing will enable the subcommittee to begin 
examining whether more aggressive enforcement of existing 
criminal laws will cause persons and entities to avoid engaging 
in unreasonably risky economic behavior, thus lessening the 
need for proscriptive policy from Congress on these agencies 
and whether such behavior will be remedied through basic 
enforcement of existing laws. And so, I thank our witness for 
being here today.
    And with that, I will now recognize the ranking member for 
6 minutes.
    Mr. Green. Thank you, Mr. Chairman. I thank the witness for 
appearing today. And if I may, I would like to take just a 
moment to again express my concern for the persons in Oklahoma, 
our sister State. I am from Texas, of course, and I do want to 
make it very clear to them that at an appropriate time, if I am 
permitted to cast a vote, I assure you I will be voting to 
render aid and do all that I can to help them restore their 
lives. My sympathies and my prayers are with them.
    I would like to repeat something that the chairman said. He 
said it correctly, but some things bear repeating. The Attorney 
General has sought to clarify the statement made earlier. In 
fact, it was on May 15th of this year that he gave clarity. And 
he did indicate that there is no institution, and there is no 
individual that cannot be prosecuted by the U.S. Justice 
Department. I believe that the U.S. Justice Department and the 
many men and women who work there seek to make sure no person 
is above the law and no person is beneath the law, which is the 
way it ought to be in our country.
    And I do want to share this thought with reference to the 
entirety of the Justice Department. While I think it is 
appropriate for us to critique and to criticize and to ask 
difficult questions, there are a good many persons who work in 
the Justice Department, hard-working public servants who have 
little, if anything, to do with much of what will be discussed 
today. And my hope is that what we say will not have an adverse 
impact upon what they do at the Justice Department. They are 
hard-working public servants, and I want to acknowledge their 
hard work.
    I would also like to let the record reflect that there are 
persons in the Justice Department who have been prosecuting 
individuals as well as corporations. And I will submit a 
document for the record that we have compiled in my office. But 
I would like to just make sure that the record is very clear on 
these prosecutions.
    Hence, I will read some of the list that I have of persons 
who have been prosecuted. I will be careful not to call their 
names, but I will mention their business entities: Goldman, 
Sachs, a member of the board was sentenced to 2 years in prison 
on October 14, 2012; Credit Suisse, the global head of 
structured credit pleaded guilty April 12, 2013; Credit Suisse, 
the managing director pleaded guilty February 1, 2012; Credit 
Suisse, the vice president pleaded guilty February 1, 2012; UBS 
senior trader charged December 19, 2012; UBS senior trader 
charged--these are separate persons--December 19, 2012; Morgan 
Stanley managing director sentenced to prison August 16, 2012; 
Galleon Management LLC managing director sentenced to prison 
for 11 years, October 13, 2011; Stanford International Bank 
chairman of the board of directors sentenced to prison for 110 
years, June 14, 2012; Stanford International Bank chief 
financial officer sentenced to prison for 5 years, January 22, 
2013; Stanford International Bank chief investment officer 
sentenced to prison for 3 years, September 13, 2012; Colonial 
Bank senior vice president sentenced to prison for 8 years, 
June 17, 2011. And there is more to be added and said.
    The point is, while we will have our discussion today and 
ask our questions, I think we should not omit the fact that the 
Justice Department is still in the business of prosecuting 
those who commit crimes, offenses with malice aforethought. If 
it is a penal action, they are in the business of prosecuting. 
This does not include the list of entities that have been 
prosecuted. And many of them have sought to settle. Just a few: 
the Deutsche Bank, $202 million settlement, May 2012; National 
Mortgage Settlement, $25 billion, February 2012; Countrywide--
this was a discrimination case--$355 million, December 2011. 
And this list goes on and on.
    I welcome the witness. I trust that the witness is prepared 
to answer the very difficult questions. But I do trust that the 
witness will also have an opportunity to answer the difficult 
questions as we go through this process. And with that, Mr. 
Chairman, I will yield back the balance of my time.
    Chairman McHenry. I thank the ranking member.
    And we will now recognize our witness today. We have before 
us today Ms. Mythili Raman, who is the Acting Assistant 
Attorney General for the Criminal Division of the U.S. 
Department of Justice. Before that, she held a number of 
positions in the Department of Justice, including serving as 
Chief of Staff for the Criminal Division for many years. She 
has a distinguished career of service in our government. And 
she is a graduate of Yale University and the University of 
Chicago law school, both fine institutions.
    So thank you so much for being here. This is your first 
time testifying before the House. We have a very simple 
lighting system which is slightly different than the Senate, in 
that we try to abide by it. I have to make a little Senator 
jab. May I? It is bipartisan.
    But green means go, yellow means hurry up, and red means 
stop. And you will have 5 minutes to summarize your opening 
statement. Our microphones are a bit directionally sensitive, 
so if you will pull it close and direct it towards you, that 
would help significantly. And without objection, the witness' 
written statement will be made a part of the record.
    Ms. Raman?

STATEMENT OF MYTHILI RAMAN, ACTING ASSISTANT ATTORNEY GENERAL, 
         CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE

    Ms. Raman. Chairman McHenry, Ranking Member Green, and 
distinguished members of the subcommittee, thank you for 
inviting the Department of Justice to appear today to discuss 
our efforts to combat financial crime. I am pleased to be here 
and I am privileged to oversee the important work of the 
Criminal Division.
    The Justice Department is committed to vigorously 
investigating allegations of wrongdoing at financial 
institutions and, along with our many law enforcement partners, 
holding individuals and corporations accountable for their 
misconduct. Our track record in recent years shows our 
commitment to pursuing the most challenging and complex 
financial crime investigations in the country. Over the last 3 
fiscal years alone, the Department has filed nearly 10,000 
financial fraud cases against nearly 14,500 defendants.
    These prosecutions have led to stiff prison sentences for 
many defendants. Last year, for example, the Criminal Division 
and the U.S. Attorney's Office in Houston secured a 110-year 
sentence for Robert Allen Stanford for orchestrating a 20-year, 
$7 billion investment fraud scheme; just one of numerous 
investment fraud schemes the Department has prosecuted in 
recent years. We have been just as aggressive in bringing 
prosecutions involving the manipulation of the markets, as seen 
by the extraordinary success of the U.S. Attorney's Office in 
Manhattan in an unprecedented string of insider trading cases 
over the last several years.
    Our prosecutors and agents also continue to doggedly pursue 
health care fraudsters. Our Medicare fraud strike force has 
convicted over 1,000 defendants of felony health care fraud 
offenses since the strike force's inception. And the average 
sentence for the strike force cases is approximately 45 months 
in prison. Our fight against foreign bribery, too, is as robust 
as it has ever been. In just the past 2 months, we have 
announced charges against 11 individuals, including corporate 
executives and employees and one foreign official, in active 
Foreign Corrupt Practices Act investigations.
    Similarly, our investigation of the manipulation at various 
banks of interbank lending rates, including LIBOR, has had 
reverberations across the globe. As detailed in my written 
statement, the consequences thus far for several multinational 
banks have been far-reaching, ranging from the replacement of 
senior leaders at Barclays, to criminal charges against traders 
at UBS, to detailed admissions of criminal wrongdoing and the 
payment of substantial penalties by three global banks, to 
felony guilty plea agreements by Japanese subsidiaries of UBS 
and RBS.
    As is evident from this track record, we are deeply 
committed to holding wrongdoers, whether individuals or 
business entities, accountable for their crimes. In our 
investigations of business entities in particular, we are 
guided by firmly rooted Department of Justice policy, set out 
in the U.S. Attorneys' Manual, which requires our prosecutors 
to consider a number of factors in determining how, and 
whether, to bring charges, including: the seriousness of the 
entity's conduct; the pervasiveness of the criminal misconduct; 
the extent of the entity's cooperation with our investigations; 
and the remedial actions taken by the company.
    There has been some discussion in recent months about one 
of those factors: the potential collateral consequences of 
charging a corporate entity. And we appreciate your interest in 
better understanding the extent to which the Department may 
consider possible collateral consequences of criminal 
prosecutions against large, complex financial institutions. The 
consideration of collateral consequences on innocent third 
parties, like the other factors we must consider when 
determining how and whether to proceed against a corporation, 
has been required by the U.S. Attorneys' Manual since 2008.
    But the basic principles underlying that policy have a much 
longer history at the Department. The first Department-wide 
guidance on this subject was issued in 1999, and those basic 
principles have been reaffirmed multiple times since then--
including in 2003, 2006, and 2008. As more fully explained in 
my written statement, although the factors set forth in the 
U.S. Attorneys' Manual, for good reason, inform our 
prosecutorial decisions, none of those factors, including 
potential collateral consequences, acts as a bar to prosecution 
or has prevented the Justice Department from pursuing 
investigations and seeking criminal penalties in cases 
involving large, complex financial institutions.
    No individual and no institution is immune from 
prosecution. And we intend to continue our aggressive pursuit 
of financial fraud with the same strong commitment with which 
we pursue other criminal matters of national and international 
significance.
    Thank you for the opportunity to provide the subcommittee 
with this overview of our financial fraud efforts, and I look 
forward to answering your questions.
    [The prepared statement of Acting Assistant Attorney 
General Raman can be found on page 46 of the appendix.]
    Chairman McHenry. Thank you for your testimony. I now 
recognize myself for 5 minutes for questions.
    On March 6th, the Attorney General testified, as I said in 
my opening statement, ``It does become difficult for us to 
prosecute 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's economy.'' Are these decisions that affect prosecution 
decisions?
    Ms. Raman. I should start by saying, Mr. Chairman, the 
Attorney General, as he said, was clear that no institution and 
no individual is immune from prosecution because of its size. 
Of course, there are complexities that come along with the size 
of an institution. But the complexities do not equal immunity, 
as seen by our--
    Chairman McHenry. Does size mean immunity?
    Ms. Raman. Size does not equal immunity. Because although 
complexities certainly accompany investigations of large 
financial institutions, as you might expect they would, those 
complexities do not result in immunity for the corporation. In 
fact, our track record is clear on that. We have--
    Chairman McHenry. Right. The track record is not as clear 
as on this side for viewing this. But in testifying that the 
DOJ is having difficulty prosecuting large financial 
institutions because ``it will have a negative impact on the 
national economy, perhaps even the world economy,'' isn't the 
Attorney General implying that some of these institutions are 
so large that it is very difficult to make a decision to 
prosecute them?
    Ms. Raman. I don't think that is what the Attorney General 
was saying, Mr. Chairman. I think that what the Attorney 
General was saying--I believe it to be so--is that complexity 
does accompany our investigations of large financial 
institutions. And that, of course, does not--that is not 
specific as to large institutions. We see complexities in lots 
of our large investigations.
    Chairman McHenry. Okay, sure. Has the size of an 
institution ever been a meaningful element in whether or not 
you prosecute?
    Ms. Raman. As I alluded to in my written testimony and in 
my oral testimony, when we look at prosecution of business 
entities--putting individuals aside for a moment, where 
collateral consequences never enter into the equation--when we 
look at the prosecution of business entities, we are guided by 
long-established Department policy, which sets out a number of 
factors.
    Chairman McHenry. Certainly.
    Ms. Raman. And those factors include the seriousness of the 
misconduct, the pervasiveness of the misconduct, cooperation, 
and collateral consequences on innocent third parties.
    Chairman McHenry. In a separate statement the Attorney 
General made in March, he referenced that some of these large 
institutions have ``an impact on our ability to bring 
resolutions that I think would be more appropriate.'' He refers 
to perhaps a different way, rather than prosecution, criminal 
prosecution. What are those other avenues, those other ways 
that he says are more appropriate?
    Ms. Raman. The U.S. Attorneys' Manual sets out a number of 
different types of resolutions that a prosecutor can reach with 
a business entity following an investigation. Just to step back 
for a moment and to give you an overview of what we do, when 
we--
    Chairman McHenry. Right, I understand. But the Attorney 
General sets policy, the U.S. Attorneys' Manual determines 
procedure, right? So when he lays this out, and says these 
large financial institutions are very difficult to prosecute, 
is that not true?
    Ms. Raman. I--
    Chairman McHenry. So they are--is that not true?
    Ms. Raman. There are complexities and difficulties with any 
large investigation. But our prosecutors are well-prepared for 
that.
    Chairman McHenry. Okay, so a larger institution would be 
more difficult, is what he is implying, than a smaller 
institution?
    Ms. Raman. The larger investigations are always more 
challenging.
    Chairman McHenry. Right.
    Ms. Raman. And they are challenging for the--
    Chairman McHenry. My time is short here. Last week, the 
Attorney General testified that banks are not ``too-big-to-
jail.'' That was his quote. Does this mean that the DOJ is 
preparing to prosecute a case, even if it determines that a 
conviction would cause harm to domestic or international 
economy?
    Ms. Raman. We have, in recent months, prosecuted a number 
of multinational banks, as I am sure the chairman is aware, 
including RBS and UBS subsidiaries in Japan, and achieved 
resolutions against large multinational banks involving 
significant criminal misconduct. The factor that you are 
referring to is one of nine factors that we consider, but it is 
never the dispositive factor. It can be, in certain 
circumstances, an important factor. But none of those nine 
factors set out in Department policy ultimately drives the 
decision on its own.
    Like with any case, our prosecutors need to look at all of 
the facts, apply it to the policy of the Department of Justice, 
and apply the law that is applicable in that particular 
circumstance. And in each of those circumstances, after 
assessing those considerations, we do assess what the 
appropriate resolution is. Of course if there is no evidence of 
crime in the first place, that is an easy call; we don't 
prosecute at all.
    Where there is evidence of criminal misconduct, we have a 
number of different tools that we have available to us to 
extract the kind of punishment and deterrence and cooperation 
and--
    Chairman McHenry. Like a fine, for instance.
    Ms. Raman. --that we need. Sometimes there is a guilty 
plea, sometimes there are charges resulting in trials, 
sometimes there are deferred prosecution agreements, sometimes 
there are non-prosecution agreements.
    Chairman McHenry. And sometimes, there are huge fines. So 
with that, my time has expired.
    Mr. Cleaver will be recognized for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman. Ms. Raman, not long 
ago, one of the larger banks was charged with mortgage fraud. 
Are you familiar with the case? Bank of America?
    Ms. Raman. I may not be thinking of the specific case you 
are, Congressman, but you may be referring to the Lee Farkas 
Colonial Bank case?
    Mr. Cleaver. Well, either one. That is not the one, but it 
is the same arena. How was that case resolved, adjudicated?
    Ms. Raman. In the case that I am thinking about, this was a 
massive prosecution of executives of Colonial Bank and Taylor, 
Bean & Whitaker for an almost $3 billion fraud that eventually 
led--ended up resulting in the failure of Colonial Bank. In 
that case, we prosecuted a number of top executives there, all 
of whom are serving time. The chairman of Taylor, Bean & 
Whitaker, Lee Farkas, is serving 30 years in prison.
    The senior vice president of Colonial Bank, Cathie Kissick, 
is serving 8 years in prison. TBW's CEO is serving more than 3 
years in prison. TBW's CFO is serving 5 years in prison. TBW's 
president is serving 2\1/2\ years in prison. And its treasurer 
is serving 6 years in prison. So those are the types of 
resolutions we have been able to get to after aggressive and 
tenacious investigation.
    Mr. Cleaver. Thank you. Before the hearing is over, I will 
get the name of the bank that I am talking about. Would you 
agree that for some of the larger banks, they simply build into 
their budget fines for violating the law as a regular course of 
doing business?
    Ms. Raman. I can't speculate about how each bank may set 
aside money to pay fines. But what I can tell you, Congressman, 
is our penalties are driven by an assessment under the 
sentencing guidelines or pursuant to forfeiture law about what 
the appropriate monetary penalty should be in any particular 
case. When the penalty is driven by the sentencing guidelines, 
we look at issues such as loss to investors and intended loss. 
When our penalty is driven by forfeiture laws, we look at how 
much criminal proceeds may have flowed through a bank and seek 
to forfeit that money and take it away from that bank.
    And so, we have a number of different statutory and 
regulatory regimes under which we can assess monetary 
penalties, and we always approach that analysis aggressively 
and responsibly to ensure that the maximum deterrent effect is 
achieved.
    Mr. Cleaver. I think there is a general view out in the 
world from which I come that the banks are now larger than they 
were when the economic crisis began. And that they are simply 
fined when they are caught in violation of the law. Then, when 
we hear that none of the Wall Street culprits have gone to 
trial, it contributes to this feeling out here that if you have 
money, you can get off.
    If you rob a convenience store, you are going to go to 
jail. If you rob the Nation, you just get richer, and you pay a 
fine. It is difficult to justify that to my constituents at 
town hall meetings. So what would you suggest I say at a town 
hall meeting, as this issue surfaces?
    Ms. Raman. I can assure you, Congressman, that our career 
prosecutors and our investigative agents are absolutely 
tenacious about getting to the bottom of criminal wrongdoing at 
any entity, including large financial institutions. And I think 
our experience over the last several years shows that we use 
all of the tools that are at our disposal. First and foremost, 
individual prosecutions against culpable executives and 
employees of business entities, which can have the biggest 
deterrent effect one can hope to have on criminal wrongdoing in 
the future.
    We also, on separate tracks but sometimes as part of a 
comprehensive approach to our law enforcement efforts, look at 
wrongdoing as a general matter within a business entity and 
decide whether the entity itself, separate and apart from the 
employees or executives, should also have to pay a significant 
monetary penalty and, among other things, agree to cooperate 
with the government in ongoing investigations and engage in 
remedial efforts. So you can assure your constituents that our 
career prosecutors and agents are absolutely dedicated to 
ensuring that we root out criminal wrongdoing at these 
institutes.
    Chairman McHenry. The gentleman's time has expired.
    Mr. Fitzpatrick, the vice chairman of the subcommittee, is 
recognized for 5 minutes.
    Mr. Fitzpatrick. I thank the chairman. And Ms. Raman, I 
appreciate your service to the Department of Justice and, 
certainly, your statement here today. I listened to the few 
prosecutions that you outlined in your opening statement, 
including the Allen Stafford Ponzi scheme prosecution. And 
there were a couple of others, but with all due respect, they 
are not really what brings us here today.
    With all the misconduct that has been alleged and all of 
the significant losses that our constituents have suffered as a 
result of the 2008 mortgage and real estate meltdown, it is 
true, is it not, that nobody has gone to jail since then?
    Ms. Raman. I don't think that is true. We have prosecuted a 
number of executives at large financial institutions since 
2008. And the numbers actually speak for themselves. In terms 
of executives, we have had, as I said, UBS traders, a 
boardmember of Goldman Sachs, a--
    Mr. Fitzpatrick. Ms. Raman, are they laid out in your 
testimony?
    Ms. Raman. I am sorry?
    Mr. Fitzpatrick. Are they laid out in your testimony? Are 
any of those related to the mortgage foreclosure crisis of 
2008?
    Ms. Raman. I think it is hard to describe what is or is not 
related specifically to the mortgage foreclosure crisis. And I 
can't--
    Mr. Fitzpatrick. Why is it hard?
    Ms. Raman. What I can tell you is that as with all 
Americans, the employees at the Justice Department understood 
the gravity of the 2008 mortgage foreclosure crisis. We have 
investigated, and continue to investigate, any conduct that may 
have led to that mortgage foreclosure crisis. And--
    Mr. Fitzpatrick. Can you, as the acting AG in charge, 
identify any prosecution and subsequent incarceration related 
directly to the mortgage foreclosure crisis? Is there one?
    Ms. Raman. Without speaking to any ongoing investigations, 
into the ongoing work of our mortgage--
    Mr. Fitzpatrick. In the past.
    Ms. Raman. --we have had several prosecutions, including 
most recently in Manhattan of executives of Credit Suisse and 
the global head of structured credit at Credit Suisse, who have 
all pleaded guilty, which related to hiding of profits from 
residential mortgage-backed securities.
    Mr. Fitzpatrick. Yes. I want to get to a separate issue, 
Ms. Raman. In a May 16, 2013, letter the Justice Department 
wrote that it has from time to time contacted relevant 
government agencies, including domestic and foreign regulators, 
to discuss the potential collateral consequences of 
prosecutorial actions that the Justice Department might take 
with respect to large, complex financial institutions. What are 
the identities of those domestic and foreign regulators 
consulted by the Justice Department, as identified in your May 
16th letter?
    Ms. Raman. As an initial matter, and to be clear, contacts 
with regulatory partners can occur at different times during an 
investigation and at certain periods of an investigation. And, 
frankly, in only certain types of investigations. Many of our 
bank prosecutions are ones that we do hand-in-glove with a 
regulatory partner. And so there are many times that they will 
take civil enforcement actions at the same time we take 
criminal enforcement actions. And many of our partners, such as 
the Treasury Department, the OCC, the Federal Reserve, and 
foreign regulators are ones that we work with closely in 
connection with many of those investigations.
    There are other times where--in the few--without going into 
open cases or matters that are currently in litigation, it is 
correct that as a matter of policy, whenever we do need to 
assess broader collateral consequences--and, again, I have to 
emphasize this is in a very small series of cases, we have been 
able to reach out to our regulatory partners, partners such as 
those, to get feedback on what regulatory actions may or may 
not be taken as a result of a conviction. And so, those are the 
types of interactions that we are--
    Mr. Fitzpatrick. Ms. Raman, when it is measuring how much 
damage a prosecution could cause to an institution, does the 
Department assume that regulators will impose sanctions if the 
company is convicted?
    Ms. Raman. We never assume that a particular action will 
necessarily be taken. But it is absolutely correct that 
convictions trigger a number of regulatory actions. And that, 
in fact, regulatory actions and criminal actions, when brought 
together, can sometimes have the best impact that we need to 
have--
    Mr. Fitzpatrick. But it is not assumed, as part of a 
prosecutorial decision?
    Ms. Raman. It is not assumed, meaning none of these things 
are ever--
    Mr. Fitzpatrick. Is it ever factored into the decision as 
to whether to prosecute that a regulator may issue or impose 
sanctions?
    Ms. Raman. Yes. As in any type of fraud case, such as 
defense procurement fraud cases where we consult with debarment 
officials from time to time to understand what a conviction may 
trigger, we do understand fully that convictions of banks--
    Mr. Fitzpatrick. So it is weighed into the prosecutorial 
decision whether to prosecute or not, whether sanctions would 
be imposed by a regulator.
    Ms. Raman. The collateral consequences of a conviction is a 
factor that we can and do consider from time to time, in 
certain cases when we decide to pursue an investigation. But it 
is never the reason we don't bring a case. Indeed, we recognize 
that sometimes civil and criminal enforcement actions, when 
taken together, can be the most powerful response that the 
government can have.
    Chairman McHenry. The gentleman's time has expired.
    We will now go to Mr. Ellison for 5 minutes.
    Mr. Ellison. Thank you, Mr. Chairman. And let me thank the 
ranking member, as well, for this hearing.
    Ms. Raman, thank you for your testimony and your 
willingness to be here and answer questions. My question is, I 
don't know anecdotally, I don't have it here in my notes, but I 
do know that during the S&L crisis, DOJ had a significantly 
larger number of lawyers in a position to bring accountability. 
I don't know if they were civil or criminal, but in general a 
larger number of lawyers compared to today. Do you know what 
the difference is? Because I don't, and I know that is kind of 
an unfair question.
    But given that they are--and do you agree that there is a 
difference? And if so, do you think that there is any--do you 
think that you could prosecute more cases if you had more 
lawyers?
    Ms. Raman. I don't have the exact numbers, although I am 
happy to go back to the Justice Department and provide those 
numbers to you if we are able to get those. As a general 
matter, of course we can always do more with more. And, in 
fact, the recent sequestration has had significant effects on 
how we deploy our resources and where we deploy our resources. 
It has caused us to have to make hard choices about our 
enforcement priorities. But putting that aside, I don't think 
there is a prosecutor or agent in the Department of Justice who 
isn't as committed as they were before to--
    Mr. Ellison. Of course not. Yes, of course not. And I don't 
mean to imply--the position that you are in is, you are going 
to say we are going to do the best we can every time no matter 
what. And I know that because I know that is true. But there 
are budgetary realities you are dealing with. And another 
reality is that in the aftermath of 9/11, it was incredibly 
appropriate for the United States to turn its attention to 
protecting the American people from terrorism.
    But did that decision that needed to be made have an effect 
on the ability to, say, prosecute white collar crime or 
mortgage fraud?
    Ms. Raman. I can't speculate about whether the diversion of 
resources to national security impacted actual numbers of fraud 
prosecutions. But as I think I tried to make clear during my 
oral testimony and written testimony, the numbers of fraud 
prosecutions are still very, very high. And that is because 
financial fraud will always be a top priority of the Justice 
Department. It is the kind of case that if Federal prosecutors 
don't bring them, sometimes they will never be brought at all.
    And so I do not expect that the Department's commitment to 
prosecuting financial crime will ever diminish. It is a core 
mission of ours.
    Mr. Ellison. Yes. Since 2010, according to our numbers, 
there have been about 24 significant fraud cases that were 
settled through agreements. And I think that is a significant 
number. In 2012, there were 7 major cases resulting in over $30 
billion in fines. And so, you all have been active. But, of 
course, given all the pain and suffering that so many American 
homeowners have faced, I think many of them have just been 
shocked that they haven't seen more folks on television being 
``perp-walked,'' as they say.
    That is just a comment. You don't need to respond to that. 
I also have a question that is not exactly on the issue of too-
big-to-fail, but is important in my district. And that is--
under the Bank Secrecy Act, there are significant penalties for 
noncompliance. I have had bankers in my district tell me that 
they have to hire highly paid professionals in order to make 
sure that they comply. And then, they have told me, as a 
result, it has made it difficult for them, from an expense 
standpoint, to be able to facilitate transactions, particularly 
ones that involve wiring money overseas, particularly to East 
Africa.
    Have you all thought about this issue? And have you ever 
reflected on how the Bank Secrecy Act may be adjusted, since it 
has been in force for so many years, to be more tailored? Of 
course, we want to go after the terrorist financers, but I can 
tell you from my experience in representing the largest Somali-
American community in the country that there are a lot of 
people who have seen the number of banks that will even 
facilitate these transactions go down.
    And a lot of folks seem to think that it is because the 
Bank Secrecy Act and other things that you all are--and other 
sort of laws in place. Can you respond to that at all?
    Ms. Raman. I think, Congressman, that it is important for 
me to note that there are both civil and criminal enforcement 
authorities under the Bank Secrecy Act. And, of course, I am 
here in the capacity of the criminal prosecutor. I can tell you 
that we always deploy our resources and bring charges only when 
the evidence supports it and when the law supports it. The Bank 
Secrecy Act is a powerful tool. And it is one that has caused 
the compliance culture at financial institutions to improve in 
a way that is helpful to this country and protects our 
financial system.
    And in our prosecutions, we ensure that our use of the Bank 
Secrecy Act is targeted and effective.
    Chairman McHenry. The gentleman's time has expired.
    Mr. Ellison. Thank you.
    Chairman McHenry. We will now recognize Mr. Fincher for 5 
minutes.
    Mr. Fincher. Thank you, Mr. Chairman, and thank you, Ms. 
Raman, for coming today. Just going back to Mr. Fitzpatrick's 
line of questioning, you mentioned the regulators and the role 
that they play, working with the Department of Justice. What 
are the identities of the regulators that DOJ is contacting to 
provide an economic analysis when you do prosecute or look at 
prosecuting? Who are the regulators that you are talking about, 
specifically?
    Ms. Raman. Just to step back for a second to make sure that 
I am clear in my response, our interactions with regulators 
often are just organic interactions with regulators in--
    Mr. Fincher. Like who?
    Ms. Raman. In the course of criminal investigations, we 
often announce criminal resolutions in conjunction with FinCEN 
or OFAC, the OCC, the Treasury Department, the Federal Reserve, 
or foreign regulators. And so, we are often partners with our 
regulatory counterparts when we look at banks for either 
criminal or other misconduct. I should step back by saying that 
is the bread and butter of our interaction with regulators. It 
is as partners addressing a common problem.
    There is a small sliver of cases--and, again, I can't speak 
about open matters or about open investigations or matters in 
litigation--where it has been necessary for us to test any 
arguments that a subject bank may make about the collateral 
consequences that may befall them if we prosecute. And in those 
limited cases, it has been our practice to ensure that we reach 
out to those types of partners to make sure that we--
    Mr. Fincher. So my time, I am--I apologize. But before you 
look at prosecuting someone, so you talk to the regulators to 
make sure that--no, you just go on and prosecute if that is the 
need, and then talk to the regulators. So you are working with 
OCC and all these agencies before you make a decision on 
whether the systemic risks are too great to prosecute?
    Ms. Raman. I just want to emphasize that systemic risk as a 
collateral consequence only appears in the smallest sliver of 
financial institution cases that we have prosecuted. The bread 
and butter collateral consequences that we always look at as 
prosecutors include things like harm to innocent employees who 
may lose their jobs if a business goes out of business, 
shareholders, or customers. That is the kind of collateral 
consequence that our fraud prosecutors look at, as one of many 
factors, when we prosecute a business entity.
    When we are talking about systemic risk, which I think is 
the focus of your question, that comes up very, very rarely. 
And, again, without speaking to open cases which I can't speak 
about, we have, on occasion and from time to time, reached out 
to those same regulatory partners to understand whether or not 
a criminal proceeding will trigger a regulatory--
    Mr. Fincher. So to end this line, and I will start in on 
another line, you are working with the regulators to make sure 
you are not harming employees, to a certain extent, before you 
make the decision to prosecute or not to prosecute if there is 
something criminal that has been done. Correct?
    Ms. Raman. We consider collateral consequences as one of 
several factors. And in some of those cases, we consult 
regulators.
    Mr. Fincher. Okay. In the first--the chairman was asking 
you earlier, and you kept going back to the complexity. And a 
lot of these cases are very complex. Can you give me some 
examples of what makes them so complex? Because it seemed like 
you were using that word a lot, and just--
    Ms. Raman. When we talk about multinational banks--and we 
have looked at them for a number of different types of 
misconduct--what we need to deal with is what we need to deal 
with sometimes in other international investigations: evidence 
located abroad that might be difficult to get; subjects who are 
located abroad that may be hard to extradite; data privacy laws 
existing in some of these other countries which may preclude an 
entity from providing us with the information that we need in 
order to get to the bottom of what we are looking at, the 
number of employees of an entity who may or may not be affected 
by our criminal proceeding. And so, that is the kind of--
    Mr. Fincher. That is what you were talking about with--
    Ms. Raman. Those are the kinds of concerns that we need to 
look at in any--
    Mr. Fincher. My time is almost up. Let me just finish up 
with this. And since the DOJ hasn't criminally prosecuted any 
large financial institutions, is it fair to say there are still 
some financial institutions that are too-big-to-fail, and Dodd-
Frank didn't end too-big-to-fail?
    Ms. Raman. I don't know about too-big-to-fail. I do know 
there is no institution that is too large to prosecute.
    Mr. Fincher. Without talking to the regulators.
    Ms. Raman. Only when we talk to--only in the small minority 
of cases, when that issue even arises. And I have to emphasize 
as much as I can, that issue rarely comes up.
    Mr. Fincher. My time has expired. Thank you, Mr. Chairman.
    Chairman McHenry. Mrs. Maloney for 5 minutes.
    Mrs. Maloney. Thank you very much for yielding. And I thank 
the ranking member and the chairman.
    I want to try to understand how DOJ initiates 
investigations. And when you face a multimillion-dollar, 
billion-dollar scheme or another type of large-scale 
circumstances, how does the Department decide to settle versus 
going to trial? It seems like you settle all the time. What 
goes into those decisions? And does the complexity of the case 
or the institution involved play a factor in your decision that 
you are making whether to prosecute or just settle?
    Ms. Raman. First and foremost, we look at the evidence that 
we have been able to gather during the course of an 
investigation to satisfy ourselves that we could prove beyond a 
reasonable doubt that the entity or individual in fact violated 
the law. And in white collar crimes, one of the most important 
elements of our proof includes whether or not the entity or 
person acted willfully, that is, with an intent to violate the 
law. So, that is our baseline assessment.
    We need to look first at the evidence and the law to see 
whether we have a prosecutable case. When we are talking about 
business entities as opposed to individuals, we then look at 
the nine factors that are set out in long-established 
Department policy. And we consider them one by one to 
determine, at the end of the day, does the balance sway in 
favor of charging, resolution, guilty pleas, or some other 
resolution altogether. And some of the factors that obviously 
drive our decision the most strongly are seriousness of the 
misconduct and pervasiveness of the misconduct, including 
whether we are talking about one rogue employee or whether we 
are talking about a criminal practice that was sanctioned by 
the managers of that particular institution.
    And so, the pervasiveness of the wrongdoing is obviously 
something that we need to look at closely. We look at, in these 
cases, whether the corporation cooperated. Did they come in and 
disclose that they had a problem? And if they did, did they 
come in and cooperate with us, give us the documents that we 
needed, point us to the witnesses, suggest to us who we might 
need to interview? Did they give meaningful cooperation? Have 
they, on their own, taken remedial action? Is this now a new 
company that we are talking about?
    Meaning, have they replaced their managers? Have they set 
into place a compliance structure that now will ensure, or do 
better to ensure, that the same misconduct doesn't reoccur? 
Have they made restitution to victims? Would there be 
collateral consequences if there was one type of resolution 
versus another? There are all of these factors that we look at. 
And at the end of the day, it is a balanced decision about 
whether or not we sit across from the table from a bank counsel 
and say, we are ready to charge you.
    And often, when we have that conversation, the response is 
that the bank elects to plead guilty, which is, obviously, a 
successful resolution for any prosecution. Oftentimes, our 
assessment, based on all of those factors, is that one of the 
middle-ground resolutions is most appropriate, a deferred 
prosecution or a non-prosecution agreement. And even for those, 
we require complete admission of wrongdoing. So there is a 
stipulated statement of facts in which the entity fully 
acknowledges publicly what the misconduct was.
    Mrs. Maloney. But may I further ask, I don't know if it is 
DOJ or other settlements, I often see settlements in the paper 
that ``X, Y, Z firm'' settled for $700 million, a billion 
dollars, whatever. And a statement was issued that they did 
nothing wrong. And I am asking, why did they pay $700 million 
if they did nothing wrong? But that has happened several times. 
I am just reading the paper and seeing this.
    What is going on there, where they give a huge settlement 
and then a statement that they did nothing wrong? It is 
confusing to me. I would think, why are you paying a fine if 
you didn't do anything wrong?
    Ms. Raman. I am glad you asked that question. It is not the 
policy of the Department of Justice to allow a company to 
neither admit nor deny. In fact, to the contrary, the Criminal 
Division's policy has been that regardless of the resolution--
that is a DPA, an NPA, or a guilty plea--the company must fully 
acknowledge its criminal wrongdoing and may not retract that 
later.
    Mrs. Maloney. My time is running out. I really want to know 
how you decide between prosecuting an institution versus an 
individual? Oftentimes, it is an individual who has committed a 
criminal act. And in some cases, the institution doesn't even 
know that they did it. So how do you decide whether to 
prosecute the individual or prosecute the firm?
    Ms. Raman. And there are times that it is not an either/or, 
but it is both or neither. And we look at, first, whether or 
not--who the culpable individual is. And again, I would say 
that it is important to us whether it is a rogue employee or 
whether an employee who should be prosecuted and that should be 
the end of it. Or whether it is someone who is of a higher 
position in the entity who committed the misconduct and that 
kind of misconduct ended up profiting the entity.
    And in those cases, it may be appropriate to prosecute the 
entity, and sometimes--
    Chairman McHenry. The gentlelady's time has expired.
    With that, we will now go to Mr. Rothfus for 5 minutes.
    Mr. Rothfus. Thank you, Mr. Chairman.
    A recent Law Review article surveyed 54 public companies 
that were convicted of Federal crimes from 2001 to 2010, 
finding that no company was charged with a fraud or financial 
crimes offense, except in one instance of securities fraud. 
Further, the study found that no public company from the 
financial sector was convicted of any offense during this 
period. DOJ's prosecutorial standards remind prosecutors that 
the nature of some crimes may be such that national law 
enforcement policies mandate prosecutions.
    My question to you is this: Does any national law 
enforcement policy mandate prosecution of financial crimes, 
despite a company's cooperation or the presence of other 
mitigating factors?
    Ms. Raman. I don't believe it is fair to say it is 
mandated. But I think it is absolutely fair to say that those 
factors are never going to be the only factors that drive a 
decision. So there, in fact, may be instances in which, no 
matter how cooperative an entity has been, they should, and 
will be, charged or enter into a resolution. And so, again, it 
is one of several factors that we consider.
    Mr. Rothfus. Looking again at the financial crisis in 2008, 
has DOJ prosecuted any company, any entity, for conduct related 
to the financial crisis?
    Ms. Raman. I don't think that we can say that there is one 
company we have prosecuted which was directly related to the 
financial crisis. But I can say that we have looked diligently 
and tenaciously since 2008, and we continue to do so through 
our residential mortgage-backed securities working group. And 
we are committed to ensuring that we look at every fact and 
make appropriate decisions. When the evidence--
    Mr. Rothfus. But to date, no entity has been prosecuted?
    Ms. Raman. When the evidence suggests that a crime has been 
committed, and the law allows for it, a prosecution will be 
brought. When the evidence is not there, we will not bring a 
case.
    Mr. Rothfus. In matters related to the 2008 financial 
crisis, has the Department of Justice found potential 
violations worthy of prosecution?
    Ms. Raman. I think, again, I can say this in the most sort 
of general terms. When the evidence and the law suggest that a 
prosecution is appropriate we have, and will, bring those 
prosecutions. When the evidence and the law does not support 
such a prosecution we cannot, and will not, bring a 
prosecution.
    Mr. Rothfus. If I could shift gears a little bit, with 
respect to the sliver of cases where you are taking into 
account the economic consequences of prosecuting large 
institutions, can you please identify the regulators by name 
whom you are contacting in this small sliver of cases to which 
you are referring?
    Ms. Raman. I understand the committee's interest in this. 
And I hope that the committee understands that I am extremely 
limited in what I can say about open investigations and cases 
that are currently in litigation. We have several cases that 
are currently in litigation, and so--
    Mr. Rothfus. Are there any cases where you have actually 
closed the investigation?
    Ms. Raman. I know that our staff at the Department, at the 
committee's request, has done some good faith searches in 
connection with the request of this committee for that kind of 
information. And my understanding is that in closed cases, we 
have not identified the kinds of documents--in certain--keeping 
in mind that the searches were limited, in which systemic risk 
was a factor in those decisions.
    Mr. Rothfus. Looking at the case, the rate-rigging case 
against UBS, wasn't that case structured so that a foreign 
subsidiary with no real exposure to the United States was used 
to limit the potential consequences to the broader 
organization?
    Ms. Raman. I don't think it is correct to say that was the 
reason that UBS Japan pleaded guilty. Again, we look at a 
number of factors, including where the bulk of the misconduct 
occurred. And oftentimes, it is absolutely appropriate for a 
subsidiary of a company to be the entity that pleads guilty, 
with the parent company perhaps entering into another 
resolution. And--
    Mr. Rothfus. And if the parent company also profited, 
wouldn't it be appropriate to also prosecute the parent 
company?
    Ms. Raman. In certain circumstances. And again, only after 
considering all of those factors. It may well be that the 
parent company was absolutely cooperative and has engaged in 
remedial action, but we nevertheless believe that it is 
important to bring a prosecution against a subsidiary. And, 
again, it is not a science, it is an art how we come to these 
decisions. But we look at each of those factors in good faith 
and through the lens of--
    Mr. Rothfus. Isn't it true that if UBS Japan was the entity 
that you prosecuted, there would be no effect on UBS in the 
United States?
    Ms. Raman. I can't say that.
    Mr. Rothfus. Thank you. I yield back.
    Chairman McHenry. Mrs. Beatty is recognized for 5 minutes.
    Mrs. Beatty. Thank you, Mr. Chairman, and Mr. Ranking 
Member.
    Ms. Raman, getting ready for today's hearing I reviewed a 
report that is a couple of years old, but I think still very 
relevant today. And in that report, the GAO reported regarding 
the Department of Justice's monitoring of deferred pension 
agreements and non-pension agreements as a tool to respond to 
corporate crime. The report was based on the understanding that 
because the Department of Justice has recognized that it could 
be potentially harmful to criminally prosecute a company if you 
didn't look at what the investors or the employees or the 
pensioners or the customers who were not involved in that, and 
the effect it would have on them.
    So they relied a lot on what we are going to call the DPAs 
and the NPAs to avoid harm to the innocent parties. And this 
made sense to me. But the GAO report concluded with a 
recommendation that the Department of Justice develop 
performance measures to evaluate the contribution of the DPAs 
and the NPAs towards its strategic objective of combating 
public and corporate corruption.
    Specifically, the report suggests that the Department of 
Justice use two different metrics for such evaluation: one, 
whether the company had successfully met all the terms of the 
agreement; or two, if the company had re-offended. Given the 
significant increase in the use of DPAs over the last few 
years, can you tell us what efforts the Department has made 
with respect to measuring and tracking the effectiveness of 
these deferred prosecution agreements?
    Ms. Raman. Congresswoman, I am somewhat familiar with that 
GAO report. And I am aware that the Department took a number of 
steps in response to the recommendations of the GAO in that 
investigation, and that the GAO has since closed out those 
recommendations, understanding that the Department, in fact, 
followed through. The response to your question, I think, comes 
in several parts. One is that we have instituted a tracking 
procedure to ensure that we know how many DPAs the Department 
enters into, and whether or not those DPAs are favorably 
resolved.
    We often, as you know, install monitors to oversee the 
conduct of a business during the course of a DPA. And during 
that period of time, if there is any derogatory information 
that comes forth as a result of the monitor's work, we are able 
to take a number of steps, including sometimes extending the 
period of the DPA, requiring correction, or in some 
circumstances, breaching the deferred prosecution agreement and 
requiring that the company pleads guilty.
    So I think through both the tracking--ensuring that we have 
watchful eyes on the company during the course of the DPA, 
including through, at some points, monitors--I think we have 
done a good job of ensuring that we understand, during the 
period of a deferred prosecution agreement, whether or not a 
company is living up to the promises that it made when we 
entered into a DPA. And, of course, they understand--the 
company understands--that the Department can always withdraw 
that DPA if the DPA is breached, and require a guilty plea.
    Mrs. Beatty. Just to further elaborate, since you have 
these tracking mechanisms, can you tell us if there are any 
statistics to show us what percentage of those agreements are 
meeting the Department objectives?
    Ms. Raman. I can get you those statistics. I know that we 
track the number of DPAs that we enter into every year, and we 
can certainly get that information for you. In terms of being 
satisfied that the DPAs are achieving our law enforcement 
objectives, I can tell you from simply supervising these cases 
and speaking to our prosecutors who are prosecuting these 
matters that the matters in which we enter into DPAs have real 
beneficial impacts for law enforcement. First and foremost, 
because companies are required to cooperate with the government 
during the period of the DPA, it is often the case that the 
information they provide us during the course of a deferred 
prosecution agreement can lead to individual prosecutions.
    And we had a recent example of that in the foreign bribery 
arena where we entered into a DPA with BizJet, and they were 
cooperative. And just about a month ago, we announced the 
unsealing of charges against four of its executives. And so, 
that is a real benefit that the government and law enforcement 
get out of these deferred prosecution agreements when we enter 
into them, and where appropriate. Of course, our insistence 
during the period of the DPA that the company engage in 
remedial action is also a real benefit to law enforcement and, 
frankly, sometimes can have cascading benefits to other 
companies in the same industry who are able to see that if 
company A has instituted a certain remedial program that if 
they institute the same compliance program that it can help 
them, and--
    Chairman McHenry. The gentlelady's time has expired.
    With that, Mr. Hultgren is recognized. And I would just 
counsel the witness that she does not have to take up the full 
5 minutes. You don't have the obligation to do such. With that, 
we will recognize Mr. Hultgren for 5 minutes.
    Mr. Hultgren. Thank you, Mr. Chairman. Thank you for being 
here today.
    Standards adopted by the Justice Department call on 
prosecutors, I know, to consider collateral consequences of 
prosecuting a business organization ``including whether there 
is a disproportionate harm to shareholders, pension holders, 
employees and others not proven personally culpable, as well as 
the impact on the public arising from the prosecution.'' The 
Justice Department, I know, consults with outside experts when 
seeking to determine the economic impact of prosecuting 
financial institutions.
    We know this because in announcing the statement with UBS, 
the settlement with UBS for manipulation of the LIBOR in 
December of 2012, the Attorney General said, ``The impact on 
the stability of the financial markets around the world is 
something we take into consideration. We reach out to experts 
outside the Justice Department to talk about what are the 
consequences of actions that we might take. What would be the 
impact of those actions if we would want to make particular 
prosecutive decisions or determinations with regard to a 
particular institution.''
    In those small slivers of cases where there is economic 
impact or potential economic impact--and I recognize that is 
probably a relatively small number of cases--I wondered if you 
could just let us know the identities of the domestic and 
foreign regulators contacted by the Justice Department to 
provide information about that economic impact in determining 
whether prosecution will move forward.
    Ms. Raman. And, again, recognizing that I am extremely 
limited in what I can say about open matters and--
    Mr. Hultgren. More the closed ones, I guess.
    Ms. Raman. And we have not been able to identify, thus far 
at least, any closed cases in which that kind of impact has 
been a factor.
    Mr. Hultgren. So you think the Attorney General was 
referring to open cases, or closed cases? It seems like the 
settlement case in the LIBOR case would be closed, so who do 
you think he would have been referring to as far as the experts 
who were reached out to, either foreign or domestic regulators?
    Ms. Raman. The LIBOR investigation is incredibly active and 
ongoing. That having been said, I know that the Attorney 
General was referring to domestic and foreign regulators and 
not third parties outside of the government. He was talking 
about--
    Mr. Hultgren. Which specific regulators would he have been 
referring to? What nations, which specific entities?
    Ms. Raman. And, again, because I am limited in what I can 
say based on my ethical duties on open investigations, I will 
have to rely on what is in the public record. I am aware that 
some of those regulators have informed this committee about 
contacts made by the Department of Justice.
    Mr. Hultgren. So as far as you know, there is none that you 
could list today that have been contacted that are not part of 
an open, ongoing investigation. Let me move on because my time 
is limited. Quick question: The Treasury Department hasn't 
provided any information that DOJ has used to determine the 
economic impact of prosecuting a large financial institution. 
Is that correct?
    Ms. Raman. I am sorry, the--
    Mr. Hultgren. The Treasury Department hasn't provided any 
information that DOJ has used to determine the impact of 
prosecuting a large financial firm. Is that correct?
    Ms. Raman. And I apologize that I need to continue to say 
this, but I can't comment on any--
    Mr. Hultgren. Okay. Let me move on to the next one, then. 
Has the Treasury Department ever requested that DOJ consider 
the economic consequences of prosecuting a large financial 
institution?
    Ms. Raman. I am not aware of that.
    Mr. Hultgren. Has the Justice Department contacted FSOC or 
OFR about an economic analysis of prosecuting a large financial 
institution? And if so, have FSOC and OFR provided such an 
analysis?
    Ms. Raman. I am personally not aware of that, but I have 
not done a comprehensive--
    Mr. Hultgren. Okay. Has DOJ contacted the OCC about the 
economic impact of potential prosecution of a large financial 
institute? And if so, has the OCC provided such an analysis?
    Ms. Raman. And I--again, because the OCC has publicly 
stated that contact has been made, I understand that the 
committee does have that information that the OCC has been 
contacted by the Department of Justice. But again, I am relying 
on the public record because I do not want to go outside the 
public record in open matters.
    Mr. Hultgren. As far as DOJ, has the DOJ contacted the 
Federal Reserve about the economic impact of prosecuting a 
large financial institution? And has the Federal Reserve 
provided such an analysis?
    Ms. Raman. Again, based on the public record, I believe 
that the Federal Reserve has informed this committee that it 
was not contacted.
    Mr. Hultgren. It was not contacted? Has DOJ contacted the 
Council of Economic Advisors about the economic impact of 
prosecuting a large financial institution? And if so, have they 
provided such an analysis?
    Ms. Raman. Without getting into any open matters, I am 
afraid I can't identify particular entities that have not 
already provided public information to this committee.
    Mr. Hultgren. Last, has the Justice Department ever 
determined the economic impact of prosecuting a large financial 
institution without using analyses provided by regulators?
    Ms. Raman. I am not aware of any circumstance in which a 
prosecutor, on their own, made any such determination. But, 
again, keeping in mind that we are talking a very small sliver 
of cases.
    Mr. Hultgren. I see my time has expired. Thank you, Mr. 
Chairman.
    Chairman McHenry. Mr. Heck is recognized for 5 minutes.
    Mr. Heck. Thank you, Mr. Chairman.
    Ms. Raman, most of the questions today have been associated 
with inquiries regarding prosecuting the big guys. I actually 
want to turn this on its head, and ask you about prosecuting 
the little guys. As you probably know, the citizens of both 
Washington State and Colorado voted last November to legalize 
marijuana. But it remains, of course, a Federal crime. One of 
the ways that this Federal-State conflict manifests, of course, 
is under the Bank Secrecy Act.
    Companies that provide banking services that aid in, or 
result from, Federal crimes must file suspicious activity 
reports. And they face peril, of course, because if they 
accumulate too many before the regulators or DOJ, they get in 
trouble. Of course, the practical effect of this is that 
businesses related to what is, in Washington State and 
Colorado, the legal sale of marijuana cannot access the banking 
system or won't access the banking system as a matter of 
prudent judgment.
    And I am not just talking about dispensaries or growers. I 
am even talking about informational Web sites which do nothing 
more than provide reviews. They can't take credit cards, they 
can't write checks, they can't direct deposit payroll. They 
can't do any of that. They are basically shot out of the 
banking system. And the net effect of that, of course, is that 
they will operate entirely in cash. And we are talking about an 
industry in Washington State that is projected to grow to 
hundreds of millions of dollars.
    I am very hard pressed, Ms. Raman, to figure out or divine 
how it is society would be better served by that much cash 
rattling around in that sector of our economy and all of the 
potential damage and ill-doing that could result from that. 
Therefore, ma'am, what can or will the Department of Justice do 
to help with this problem?
    Ms. Raman. I am not familiar, Congressman, with the 
specific issue you raised in Colorado or Washington. But I can 
tell you that the Bank Secrecy Act has been helpful to us in 
ensuring that our financial markets are able to operate without 
criminal proceeds flowing through them. And recent prosecutions 
that we brought in Los Angeles and Brooklyn under the BSA of 
check cashing businesses are a good example of why the use of 
the BSA in these circumstances can be very helpful for law 
enforcement. Those were matters in which those check cashing 
businesses and the individuals who ran them were alleged to 
have essentially been accepting, knowingly, the proceeds of 
massive health care fraud.
    And so we use the BSA where it is appropriate and where we 
believe that we will get a real law enforcement impact out of 
those. And--
    Mr. Heck. Is it your position that it is appropriate to use 
the Bank Secrecy Act in pursuing banks that receive deposits 
from businesses that are legally engaged in the business of 
dispensing or growing or providing information about marijuana 
in Washington State?
    Ms. Raman. Again, I am not specifically aware of the 
circumstances presented in those two States with those 
particular businesses. So I am hesitant to opine on whether or 
not enforcement is appropriate in those circumstances, but I 
understand the concern that you have raised.
    Mr. Heck. I am surprised that you are not familiar with the 
issue insofar as our governor has spoken directly and in person 
with your boss on more than one occasion about this. But I 
would make every effort here to impress upon you that we are 
all now well-served if the net result of DOJ or the regulators 
using the Bank Secrecy Act, in this instance--and I am a fan of 
the Bank Secrecy Act--to prosecute people in this regard for an 
activity that has been legalized, frankly, by a substantial 
majority in Washington State; thus rendering it an entirely a 
cash business.
    Nobody is going to be better off for that. In fact, you 
will incite or induce or prompt or incentivize increased 
criminal behavior with that much cash flowing around in the 
economy for this. So please go back and take a look at it.
    Ms. Raman. I will.
    Mr. Heck. Thank you.
    I yield back the balance of my time, Mr. Chairman.
    Chairman McHenry. I thank the gentleman.
    And I will now recognize Mrs. Wagner for 5 minutes.
    Mrs. Wagner. Thank you, Mr. Chairman. Ms. Raman, back on 
March 8th of this year, the committee sent a letter to Attorney 
General Holder requesting that he produce records regarding 
DOJ's assessment of the economic impact when prosecuting large 
financial institutions. Over the past 10 years, the Department 
of Justice has investigated one or more large financial 
institutions for violations of Federal law, correct?
    Ms. Raman. Yes.
    Mrs. Wagner. And am I correct that the Department of 
Justice keeps written records of its prosecutorial decisions in 
these matters?
    Ms. Raman. Every prosecutor in every U.S. Attorney's Office 
has very different ways of--
    Mrs. Wagner. Do you have written records on these 
particular prosecutorial decisions?
    Ms. Raman. I am not certain which prosecutorial decisions 
in particular, but every--
    Mrs. Wagner. You keep no written records?
    Ms. Raman. That is not what I said. The 94 U.S. Attorneys' 
Offices and each of the litigating components in the Department 
of Justice have very different ways of documenting decisions 
about whether, and when, they have brought cases.
    Mrs. Wagner. Generally speaking, do they keep written 
records on their prosecutorial decisions?
    Ms. Raman. Many prosecutors do, but I can't speak for the 
entire--
    Mrs. Wagner. And when making these prosecutorial decisions 
involving large financial institutions, am I correct in stating 
that the Department of Justice applies the standards of the 
U.S. Attorneys' Manual for principles of Federal prosecution of 
business organizations?
    Ms. Raman. Yes.
    Mrs. Wagner. I think you have spoken to that directly 
already in your testimony.
    Ms. Raman. Yes.
    Mrs. Wagner. And the standards in this Manual instruct 
prosecutors to consider the collateral consequences, as we have 
talked about, of the prosecution, including harm to the public. 
Is that correct?
    Ms. Raman. That is right.
    Mrs. Wagner. And considering the harm to the public, is 
this a form of economic analysis? Is that correct?
    Ms. Raman. Again, I want to emphasize that the issues I 
think that this committee is focused on, which is systemic risk 
to the global markets, rarely, if ever, comes up. And so the 
collateral consequences that we are ordinarily looking at are 
things such as how many employees, innocent employees, may go 
out of--may have to leave their jobs if a company goes out of 
business; how will pensioners be affected; how will--
    Mrs. Wagner. So, harm to the public. This is a form of 
economic analysis, correct?
    Ms. Raman. Not always. It is not--
    Mrs. Wagner. But sometimes?
    Ms. Raman. I think we are probably talking about two 
different things. When I am talking about collateral 
consequences to, for example, innocent employees, that is not 
an economic analysis. That is a decision about how many 
employees may lose their jobs if a company goes out of 
business.
    Mrs. Wagner. Ms. Raman, can you commit today, in this 
hearing, to providing these records containing this analysis to 
the committee, without delay?
    Ms. Raman. I know that our staff has been speaking with 
your staff and has described in detail the parameters of 
searches that have been done in good faith to try to answer the 
committee's questions. So I know--
    Mrs. Wagner. Thanks. I am glad to hear that. When can we 
expect those records to be produced, ma'am?
    Ms. Raman. Our staffs have been talking, and I think we 
have described to your staff the searches that we have done and 
the results of those searches, which have thus far not turned 
up any documents that--
    Mrs. Wagner. You have no documents on any of these cases, 
or records--are--is that your testimony--to provide?
    Ms. Raman. I have been informed that the searches that we 
did on closed cases did not--certain closed cases in certain 
U.S. Attorneys' Offices and litigating components did not yield 
information about systemic risk to the global markets. And I am 
not talking about other collateral effects, such as loss of 
jobs or loss of pensions. I am talking about systemic risks to 
the global markets.
    Mrs. Wagner. I think what we asked for March 8th was that 
you produce records regarding the Department of Justice's 
assessment of the economic impact when prosecuting these large 
financial institutions. And this would pertain to any and all 
records. Now, are you having conversations with the committee 
about bringing forth those records?
    Ms. Raman. We have been clear that, of course, we cannot 
provide records on any ongoing investigations or--
    Mrs. Wagner. Absolutely. We are not looking for that. We 
are looking for closed cases. And certainly, I guess I would 
ask that since 2008, have there been closed cases for which you 
are able to provide some kind of record?
    Ms. Raman. And as our staffs have been discussing, in the 
closed cases that our staff has looked through there is not the 
specific information about economic analyses relating to global 
systemic risk that this committee had asked about. Of course, 
because collateral consequences to employees and others is a 
factor that has long been considered, there are many, many 
cases in which those issues are likely to have--
    Mrs. Wagner. I think my time has expired, I think. Thank 
you, Mr. Chairman.
    Chairman McHenry. Ms. Waters, the ranking member of the 
full committee, is recognized for 5 minutes.
    Ms. Waters. Thank you very much. I would like to continue 
some discussion about drugs. This testimony was started by my 
colleague here, Mr. Heck, but I would like to take a little 
different spin on it. This year marks the 40th anniversary of 
the war on drugs, a critical time to shine a spotlight on 40 
years of failed policy. Since the declaration of a war on drugs 
40 years ago, America has spent at least $1 trillion on the 
drug war. It cost U.S. taxpayers at least $51 billion in 2009 
at the State and Federal levels. That is $169 for every man, 
woman, and child in America, and that is not counting 
opportunity costs or costs at the local level.
    Millions of people have been incarcerated for low-level 
drug law violations, resulting in drastic racial disparities in 
the prison system. Yet drug overdose, addiction, and misuse are 
more prevalent than ever. The number of people behind bars for 
drug law violations rose from 50,000 in 1980 to more than a 
half-million today, a 1,100 percent increase. Drug arrests have 
more than tripled in the last 25 years, totaling more than 1.63 
million arrests in 2010. More than 4 out of 5 of these arrests 
were for mere possession, and 46 percent of these arrests were 
for marijuana possession alone.
    Arrest and incarceration for drugs--even for the first-
time, low-level violations--can result in debilitating 
collateral consequences for an individual and their family. I 
have worked on something called mandatory minimum sentencing 
for the last 20 years. I hold workshops every year at the CBC 
Legislative Weekend Conference. And we worked on trying to 
bring about some justice in the area of mandatory minimum 
sentencing, where we had all these young people who were being 
incarcerated. Five grams of crack cocaine triggered a 5-year 
mandatory minimum sentence; 50 grams of crack cocaine triggered 
a 10-year sentence.
    And I could go on and on about this. But you can understand 
why, when I see that we have some of the biggest banks in the 
world who get a slap on the wrist for laundering drug money 
from the drug cartels and they are not going to jail. And this 
keeps happening year after year after year. I don't believe--it 
is hard to believe that we don't understand how they launder 
this money. But we know this: If there was no profit, if they 
were not able to launder this money, perhaps we wouldn't have 
drugs on the street with all of these young people getting 
arrested.
    And basically some of them not criminals, just stupid, 
getting involved with small amounts of cocaine or crack 
cocaine. And yet, we have some of the richest, most powerful 
banks in the world who are laundering drug money from the drug 
cartels. Why don't they go to jail?
    Ms. Raman. I think I can respond to your--
    Ms. Waters. I can't hear you.
    Ms. Raman. I can respond to your question in a couple of 
ways. First and foremost, the bank entity, of course, cannot go 
to jail. The bank entity, when we are talking about an entity, 
a corporate entity, the punishment that we are able to secure 
comes in the form of monetary penalties, a period under which 
they must engage in remedial action or cooperate with the 
United States in its investigation. So in our cases, we are 
focused on ensuring that we understand how much of these crime 
proceeds that you are referring to have flowed through a bank.
    And when we determine that, we seek to forfeit that money 
or we seek to find--
    Ms. Waters. Excuse me. I don't want to interrupt you or 
take too much time. But we know what you do. It is what you do 
that we don't like. What you do is, they get fined. It is the 
cost of doing business, these fines. And I know maybe you can't 
incarcerate a corporate entity. But are you telling me that the 
CEOs and those who are responsible for the operations of the 
banks, the boards, the presidents, nobody can be--have criminal 
violations because of the laundering of drug money in the bank?
    Ms. Raman. We, in the Criminal Division, in fact 
established a money laundering and bank integrity unit that is 
focused on prosecuting precisely these kinds of cases, 
including professional money launderers and the entities in 
which they work.
    Ms. Waters. But you have not sent anybody to jail.
    Ms. Raman. We have prosecuted innumerable money laundering 
cases involving persons who assist drug and other criminal 
organizations in laundering their money. And so--and we are 
committed to doing that. And when we have resolved any such 
cases with bank entities, those resolutions have not, in the 
least, precluded the possibility of individual--
    Ms. Waters. Let me just say this, because I guess we could 
go on with this conversation--and I appreciate the time here. 
But you have not prosecuted anybody, you have not sent anybody 
to jail. As a matter of fact, the most shameful case, that I 
won't mention, where hundreds of millions of dollars were 
laundered through one of the biggest banks in the world and 
they got away with a hefty fine. And this goes on and on and 
on. It is unacceptable. It is not your fault. It is not a 
personal attack on you.
    But it is about the system, it is about the Justice 
Department. Something needs to be done. These kids, they go to 
jail and do 5 years for 5 grams of crack cocaine. You tell me 
that they are more guilty than the presidents of banks who have 
the responsibility for running that bank don't know that drug 
money is going through those banks? I don't think so.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Chairman McHenry. I thank the ranking member.
    We will now recognize Mr. Barr for 5 minutes.
    Mr. Barr. Thank you, Mr. Chairman. Ms. Raman, thank you for 
your testimony today. Thank you for your service. As an 
attorney, but not a prosecutor and not a U.S. Attorney, I would 
like to kind of ask you a little bit about the background of 
the U.S. Attorneys' Manual, how that is put together, how the 
collateral consequences analysis entered into that Manual in 
1999, and the evolution of that analysis and direction to U.S. 
Attorneys.
    Who sets the standards? Who writes and drafts the Manual at 
the Department?
    Ms. Raman. Generally--there are many, many provisions of 
the U.S. Attorneys' Manual, covering all manner of procedures 
and policies in place at the Department of Justice. And each of 
those provisions is likely drafted by a very different group of 
people. But at the end of the day, any provision of the U.S. 
Attorneys' Manual is drafted with the input of litigating 
components, U.S. Attorneys and the leadership of the Department 
of Justice.
    Mr. Barr. I want to talk about that small sliver of cases 
that you talked about involving systemic risk. Since enactment 
of the Dodd-Frank law, has there been any discussion within the 
Department that you are aware of to modify the Manual in any 
way, to eliminate consideration of collateral consequences with 
respect to that small sliver of cases that could potentially 
involve systemic risk?
    Ms. Raman. I am not aware of any such discussions. Because, 
in fact, I think that policy exists for a good reason. Any law 
enforcement action we take needs to be targeted and effective 
and proportional. And that particular provision of the U.S. 
Attorneys' Manual ensures that any action we take does not have 
disproportionate harm on non-culpable people, like the public 
or employees.
    Mr. Barr. I am thinking in terms of Title II of the Dodd-
Frank law and OLA. After the codification of this Orderly 
Liquidation Authority, has the Justice Department considered 
the fact that--or the possibility that--collateral consequences 
are no longer needed as a consideration in terms of the 
prosecutorial discretion that the Department has?
    Ms. Raman. In our bread and butter prosecution of business 
entities, collateral consequences will always be--
    Mr. Barr. I understand that. I am not talking about bread 
and butter. I am talking about that small sliver of cases 
involving potential systemic risk. In light of codification of 
OLA, Title II of Dodd-Frank, has there been any discussion 
about eliminating the collateral consequences analysis from the 
Manual?
    Ms. Raman. I am not aware of any such discussion, and I 
would be surprised if there was such a discussion. Because we 
do want to make sure that our prosecutions don't have a 
disproportionate effect on the public.
    Mr. Barr. If OLAs resolves the too-big-to-fail problem, why 
would collateral consequences analysis even be required in that 
small sliver of cases?
    Ms. Raman. We are still going to want to assess any time we 
prosecute a business entity whether, for example, we will have 
a disproportionate effect on the employees or the pensioners. 
And so, those types of collateral consequences will always be 
at play. And the U.S. Attorneys' Manual is drafted relatively 
broadly to encompass any such collateral consequences that may 
be appropriate to consider, and--
    Mr. Barr. Are you aware of any cases in which the Justice 
Department has declined prosecution as a result of consultation 
with financial regulators?
    Ms. Raman. It is never the sole factor in any of our 
decisions. All of the nine factors set out in the U.S. 
Attorneys' Manual are always considered in combination.
    Mr. Barr. Are you aware of any particular cases where where 
a decision to prosecute has been withheld as a result of 
consultation with regulators, domestic or foreign?
    Ms. Raman. Again, it will never--and to my knowledge will 
never be the sole factor in determining how we resolve a case.
    Mr. Barr. Does the Administration, or does the Department 
have the resources necessary to evaluate the economic 
consequences that could result from a prosecution of a large 
financial institution?
    Ms. Raman. Given that these issues arise rarely, I think 
that we are equipped to address any arguments that are made by 
banks when they face potential indictment. But that having been 
said, we can always do more. And, in fact, we have continued to 
redouble our efforts to ensure that we engage as robustly as we 
can with regulators to best understand these sorts of 
circumstances. And we are committed to continuing to do so.
    Mr. Barr. Thank you. I yield back.
    Chairman McHenry. We will now recognize the ranking member 
of the subcommittee, Mr. Green, for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Attorney Raman, is that 
correct?
    Ms. Raman. Yes.
    Mr. Green. You heard me earlier go over a list of 
prosecutions and convictions. Do you agree with what was on the 
list, generally speaking? I know that you didn't have a chance 
to actually have me hand it to you. And, first, do you agree, 
generally speaking?
    Ms. Raman. I do.
    Mr. Green. And do you also agree that I did ask you, prior 
to this hearing, to provide me information on prosecutions so 
that I might have this available at the hearing? Is this true?
    Ms. Raman. Yes, you did.
    Mr. Green. And I appreciate your providing the information 
that I requested. Mr. Chairman, if there are no objections, I 
would like to have this placed in the record.
    Chairman McHenry. Without objection, it is so ordered.
    Mr. Green. Thank you, Mr. Chairman.
    Now, I would like for you to give a little bit more 
information about you. Tell us about the number of years you 
have been in the Justice Department, please.
    Ms. Raman. I have been a prosecutor with the Justice 
Department for almost 17 years. I started in the Criminal 
Division in 1996 as a trial attorney in the narcotic and 
dangerous drug section in the Criminal Division, and went to 
the U.S. Attorney's Office in Maryland for much of my career, 
and then returned to the Criminal Division more recently, in 
the last 5 years, in various leadership positions.
    Mr. Green. Is it fair to say that you have prosecuted many 
cases as opposed to a few?
    Ms. Raman. Yes.
    Mr. Green. Is it fair to say that you have prosecuted a 
good number? And would you give just an estimate as to the 
number you have been associated with, please?
    Ms. Raman. I couldn't even give an estimate. I have 
supervised, and myself handled, hundreds of cases over the last 
17 years.
    Mr. Green. And you have an understanding of both civil and 
criminal prosecution. Is this a fair statement?
    Ms. Raman. A better understanding of criminal than civil, 
but yes.
    Mr. Green. But is it true that in civil prosecutions, from 
time to time persons who admit or find themselves paying a fine 
or penalty they don't always acknowledge liability in civil 
cases, not criminal cases?
    Ms. Raman. I think that is fair to say.
    Mr. Green. And is it true that--let me just ask you. Will 
you prosecute any size, any complexity, any difficulty of case?
    Ms. Raman. Where the evidence and the law supports it, we 
absolutely will.
    Mr. Green. And is it true that you have--you failed to 
prosecute any case because of systemic risk?
    Ms. Raman. It has never been a sole factor in our decision. 
It has--as I mentioned during the course of this hearing, 
collateral consequences can be a factor, and have been a 
factor, in our decision-making in the past.
    Mr. Green. I am going to go back to the list that I talked 
to you about earlier and that I called to the attention of the 
public earlier. Is it true that the chairperson of the board of 
directors of Stanford International Bank received 110 years?
    Ms. Raman. He did.
    Mr. Green. Is he currently serving time, or is he currently 
on appeal?
    Ms. Raman. My understanding is that he is currently serving 
his sentence.
    Mr. Green. And I have another list, and I thank the staff 
for providing this information. Much of what I have came from 
staff. But I have a list of what appears to be monies that have 
been made available to the Justice Department for various 
reasons in terms of settlements. And I am just looking at the 
numbers: One case, $8.5 billion; another case, $25 billion; 
another case, $285 billion; another case, $10.4 billion. And I 
just have a long list of cases where you have settled for large 
sums of money.
    It might be helpful to just mention the types of cases, 
rather quickly. You have dealt with mortgage fraud settlements, 
mortgage-backed securities settlements, fraudulent practices. 
These are the types of cases that you have settled? Is this a 
fair statement?
    Ms. Raman. It is. And we have secured record penalties and 
forfeitures in the last several years.
    Mr. Green. Now, I think that there is always more that the 
Justice Department can do, and I think that it is fair to 
criticize some of the things that have occurred. But I also 
want people to know that there are people at the Justice 
Department who are busily prosecuting cases, and that the 
Justice Department, I don't think, is perfect but I do think 
that I will acknowledge that there are some prosecutions taking 
place that are very meaningful.
    And with this, Mr. Chairman, I think I am going to yield 
back the balance of my time.
    Chairman McHenry. Thank you.
    Mr. Grimm is recognized for 5 minutes.
    Mr. Grimm. Thank you, Mr. Chairman, and thank you, Ms. 
Raman, for being here today. Thank you for all your many years 
of service. It is greatly appreciated and very well-respected 
and well-received.
    I am concerned. In your earlier testimony, I think we all 
pretty much know that the wrongdoers that led to the crisis of 
2008 really have not been brought to justice. And I just want 
to ask, for the committee's purposes, it is a 5-year statute of 
limitations on that, correct, on those crimes?
    Ms. Raman. With some statutes. Some statutes trigger a 5-
year statute of limitations. We do have some other statutes 
available to us that have longer statutes of limitation.
    Mr. Grimm. But most of them would probably fall in the 
general 5-year? So--
    Ms. Raman. Most criminal laws do have a 5-year statute of 
limitations.
    Mr. Grimm. So if my math is right, in 2013, we are about at 
the end. So a lot of those that led to this big crisis in 2008, 
if they haven't been caught by now, they are not going to be. 
And a lot of them are going to be protected by the statute of 
limitations very soon.
    Ms. Raman. I don't think it is fair to say that if they 
haven't been caught by now, they won't be caught. As I said, we 
still do have some statutes that trigger longer statutes of 
limitations. And there are ongoing and active efforts still to 
ensure that the Department of Justice and all of our partners 
are looking at the conduct.
    Mr. Grimm. Okay. I think those statutes with longer than 5 
years are far and few between. They are very technical. And the 
nature of these criminals, with the lawyers they will be 
hiring, based on my experience with the Department of Justice 
who--I think my analysis is actually spot on. But you just 
mentioned--my friend and colleague, Mr. Green, asked you a 
question about prosecuting. And you said absolutely prosecute--
will prosecute any size.
    I believe you, and I know that, based on your experience, 
is in your heart. But when you look at the actual quote from 
the boss, the Attorney General, Eric Holder, it says, ``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.''
    I just have to tell you, it does seem like you may be on a 
different page than the Attorney General, based on that quote--
taking it not out of context, but as I read it.
    Ms. Raman. He described difficulties with certain 
prosecutions. But the Attorney General and all of its 
prosecutors are not deterred by difficulty. We have brought 
very difficult cases, after long investigations, because we 
frankly have a talented corps of prosecutors and agents.
    Mr. Grimm. That I agree with 100 percent, as far as you 
having a very talented corps and dedicated people. Is it 
possible, though, that sometimes it is more than just the size? 
Is it possible that there are sometimes political affiliations? 
The reason I ask is it brings you to the very curious case of 
Jon Corzine. A lot of people on the street, a lot of people in 
my very district, in New York City, the financial capital of 
the country, believe that because he had a lot of political 
clout and had a lot of political ties he walked, he skated.
    You think about it. This man was overseeing a company, and 
right from under his nose, $1.6 billion vanished. It was 
missing, it was gone. And he came before this very committee, 
as well as other committees here in Congress, and he said--this 
is a quote from Mr. Jon Corzine--``I simply do not know where 
the money is. I simply don't know where it is. It was 
segregated funds.''
    In all the cases I worked on in over 5 years of working 
financial fraud, when segregated funds went missing and the 
captain of the ship who was in charge said, ``I don't know 
where it went,'' they were getting handcuffed 99 percent of the 
time. He said, ``I was stunned, when I was told on Sunday, 
October 30, 2011, that MF Global could not account for many 
hundreds of millions of dollars of client money.'' Then he goes 
on to say that, ``I did not, however, generally involve myself 
in the mechanics of the clearing and settlement of trades or in 
the movement of cash and/or collateral.''
    So he has been cleared during the investigation. But I 
would ask the Department of Justice, how do they jibe that the 
trustees' report is replete that he perjured himself. That he 
did--in fact, was notified that the money went to JPMorgan 
Chase beforehand, and that he did, in fact, know--because he 
got daily reports on cash and where cash was being moved--he 
perjured himself. Is the Department of Justice going to look 
into this matter of Jon Corzine any further, considering $1.6 
billion went missing and he claimed he just didn't know what 
happened to it?
    Ms. Raman. Without speaking to any particular 
investigation, I can tell you that politics never enters into 
the calculus. I know that your question started with a concern 
that somehow political clout leads to decision-making in the 
Department of Justice, and that is simply not the case. I can't 
speak to any open investigations but, again, prosecutors and 
agents do not take that into consideration.
    Mr. Grimm. Thank you for your testimony.
    I yield back.
    Chairman McHenry. Mr. Sherman is recognized for 5 minutes.
    Mr. Sherman. I thank the chairman for allowing me to 
participate, even though I am not a member of the--
    Chairman McHenry. Oh, I am sorry, sir. I ask unanimous 
consent that members of the full committee be allowed to 
participate in--if anybody, in the interest of time, wants to 
object, well, I am sorry.
    Mr. Sherman, you are recognized for 5 minutes.
    Mr. Sherman. Thank you.
    Thanks for being with us here today. It is an interesting 
division of responsibilities. You in the Justice Department, 
and the Judiciary Committee around the corner, deal with 
enforcing our laws. And if I have understood your testimony as 
I have watched it on television, you are going to enforce the 
law no matter how big the--or interconnected of systemically 
important the company involved might be. Does that summarize it 
pretty well?
    Ms. Raman. I think I want to be clear that the size of a 
corporation will never be a factor in and of itself. And that 
no institution is too big to prosecute.
    Mr. Sherman. And you don't have economic analysis people in 
your division telling you what the effect is going to be on the 
stock market if you announce a particular indictment, or 
suggesting that the unemployment rate will go up a tenth of a 
percent if this or that bank is put in the hot seat? You don't 
even have that information?
    Ms. Raman. In very rare cases, a bank will make that 
argument, of course. And it is our obligation to ensure that we 
test those assertions.
    Mr. Sherman. Even if the assertions were right and they 
said, ``Hey, if you bring this indictment, if you fail to 
accept this plea offer, economic growth is going to decline by 
a tenth of a point''--and they have 99 economists who all swear 
that that is the case--would that cause you not to indict?
    Ms. Raman. Again, a single collateral consequence cannot be 
the reason we don't charge a case or resolve it in a particular 
way. But collateral consequences are issues that we must, and 
do, consider.
    Mr. Sherman. Okay. The thing is, in this division of 
responsibilities, it is really this committee that has the 
responsibility of minimizing those consequences. And there are 
indeed companies that are so big that if you were to enforce 
the law, it would have an effect on the entire economy. That is 
why we have to break them up. And this is a problem that arises 
because we have punted to the regulators and said they can 
break them up, but we haven't said, okay, if you have reached a 
certain size, too-big-to-fail is ``too-big-to-exist.''
    You, then, have to deal with these very large institutions. 
My hope is that you are not looking at collateral consequences 
at all. But it is this committee that has to--that realizes 
that any one of these giant institutions could be prosecuted, 
could run into economic problems and fail. And as long as we 
allow those that are too-big-to-fail or ``too-big-to-jail'' to 
exist, they may fail, you may jail them, and the economy will 
suffer because we haven't done our job.
    Do you have any further comments?
    Ms. Raman. I want to emphasize that in our prosecutions we 
act aggressively and responsibly. And that is one of the 
reasons why collateral consequences are even in the equation. 
We want our enforcement efforts to be effective and targeted, 
but also proportional. And so, of course, we want to be 
cognizant if any actions we take might have a disproportionate 
impact on non-culpable third parties, including the public at 
large. So we are committed, regardless of those difficulties, 
to ensure that we come to the resolution that is right and will 
lead us to the right--
    Mr. Sherman. You have somewhat confused me. Because in real 
life, there may be a circumstance where if you do bring a case, 
1,000 people or 10,000 people who would otherwise be employed 
are not going to have jobs. You can read the sociology reports 
as to what 10,000 unemployments means in terms of number of 
divorces, adverse impact in school performance, et cetera. And 
you seem to be implying that if all that came together, you 
might not prosecute somebody who was otherwise culpable. Is 
that the case?
    Ms. Raman. I have to be clear that we are talking about 
business entities and not individuals.
    Mr. Sherman. Right.
    Ms. Raman. Individuals are--when we prosecute individuals 
and make decisions about that, collateral consequences don't 
ever get into the equation. When we are talking about business 
entities, and specifically those business entities where we 
actually have evidence beyond a reasonable doubt that a law was 
violated, that is when we need to look at all of the factors, 
including collateral consequences. So there may be 
circumstances in which that argument is more weighty than in 
other circumstances, depending on how it balances with the 
seriousness of the misconduct.
    Mr. Sherman. I would hope that you would enforce the law, 
period. I would hate to think that those who create collateral 
consequences are somewhat immune.
    Chairman McHenry. The gentleman's time--
    Mr. Sherman. And I yield back.
    Chairman McHenry. We will now begin a second round of 
questions.
    We will begin with Mr. Hultgren, from Illinois, for 5 
minutes.
    Mr. Hultgren. Thank you, Mr. Chairman. Again, thank you for 
being here, Ms. Raman. I had a lot of questions first time 
around, but I do appreciate your service very much and 
appreciate you taking the time and helping us through this.
    A couple more questions. I wondered, has the Justice 
Department ever contacted the FDIC to understand how the 
Orderly Liquidation Authority in the Dodd-Frank Act works?
    Ms. Raman. I can't speak about our open litigation matters, 
and I am not aware that there has been anything on the public 
record about that. So, I am unable to answer that question.
    Mr. Hultgren. I think this wouldn't be, really, an open 
investigation. But it would really just be more of the 
processes of how Dodd-Frank works and, specifically, the 
Orderly Liquidation Authority. So the Justice Department 
certainly wouldn't be an expert on Dodd-Frank. So there would 
be--I think it would be understandable if there would be a 
reaching out to ask for an understanding of how it is expected 
from the FDIC to understand the Orderly Liquidation Authority. 
So apart from any type of open cases, would you know of any 
time where there has been a reaching out by Justice to FDIC to 
understand this Orderly Liquidation Authority?
    Ms. Raman. We always try to educate ourselves on what 
collateral consequences might occur from a conviction. And 
certainly, the FDIC's authority to revoke deposit insurance is 
a collateral consequence that some may raise from time to time. 
I am not aware of specific conversations in matters that I can 
speak about.
    Mr. Hultgren. Okay.
    Ms. Raman. But I think it is fair to say that it is a 
relevant regulator in these instances.
    Mr. Hultgren. Okay, but you are not aware of any 
communication that has gone on to understand that further. Let 
me ask a different question here. The Department of Justice's 
prosecutorial standards remind prosecutors that the government 
may charge even the most cooperative corporation: ``Government 
may charge even the most cooperative corporation. Put 
differently, even the most sincere and thorough effort to 
cooperate cannot necessarily absolve a corporation that has, 
for example, engaged in egregious, orchestrated and widespread 
fraud.''
    Within the last 10 years, has any financial institution 
ever engaged in such egregious, orchestrated, and widespread 
criminal conduct as to merit prosecution, regardless of this 
cooperation?
    Ms. Raman. The most recent examples of large financial 
institutions that we have insisted accept guilty pleas are RBS 
Japan and UBS Japan at the end of 2012. And I think it is fair 
to say that even though we received cooperation, we determined 
that the appropriate prosecutorial response was guilty pleas 
from those to entities and various other resolutions as to the 
parent companies.
    Mr. Hultgren. So, those two. Any others in the last 10 
years that you would be aware of that are closed cases?
    Ms. Raman. I can certainly get you that information.
    Mr. Hultgren. That would be great. If you could get to me, 
it would be great. The Attorney General implied in his 
testimony before the Senate Judiciary Committee, again on March 
6th that absent the size of some financial institutions, some 
resolutions ``are more appropriate to particular criminal 
matters.'' Does that mean that the Department of Justice was 
prepared to prosecute some past matters if the institution was 
not so big?
    Ms. Raman. I don't think that is what the Attorney General 
meant. I do think that what he was trying to convey and what 
the Department has said unequivocally is that there are 
difficulties, complexities with these kinds--that sometimes a 
company--investigations of large, multinational corporations. 
But I should also emphasize that the specific collateral 
consequence issue is one that is specifically contemplated by 
the U.S. Attorneys' Manual as an appropriate factor to ensure 
that our resolutions and our law enforcement actions are 
aggressive but responsible at the same time.
    And I think that is what he was trying to convey is that 
there are a number of different enforcement tools that we have 
available, and it just may be the case that in certain 
circumstances, one tool is more appropriate than the other. And 
I think our record has shown that we have used all of those 
tools over the last several years.
    Mr. Hultgren. I see my time ticking away. One last 
question, kind of follow up of--you had mentioned that if there 
is other information, you can get that to the committee. I 
wonder if I can ask, as well, if you could provide to the 
committee--if you could check with your staff, other members of 
DOJ--a log of each consultation with domestic and foreign 
regulators regarding possible prosecutions of large financial 
institutions. Again, these would be closed cases. We have 
already talked about how we don't want to go into open cases.
    But if there are closed cases where there has been a 
consultation, getting back, again, that this is technical. The 
Department of Justice has many areas that it has to prosecute 
and, certainly, it would be understandable if there was 
outreach to regulators, foreign or domestic. If those contacts 
have been made with--in that small sliver of cases where it 
would potentially have a significant financial impact on our 
financial systems. If the DOJ could provide that log to us of 
those entities, domestic or foreign, that were contacted, it 
would be great.
    Ms. Raman. I think we have been talking with the committee 
staff about the searches that we have been able to do and what 
we haven't been able to do. And we will be happy to continue to 
engage with staff.
    Mr. Hultgren. And then if you can get that to us in 
writing, if there is anything that is found. Thank you.
    With that, I yield back.
    Mrs. Wagner [presiding]. Thank you. The Chair recognizes 
the gentleman from Missouri, Mr. Cleaver, for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. And thank you, 
too, Ms. Raman. You have been, I think, as candid as you could 
be, considering the fact that you can't speak about ongoing 
cases, which I understand. And there have been prosecutions. I 
have a list of them here, and I think most of the Members have 
that same list. What I hope to convey is that there is a lot of 
concern.
    The case I couldn't bring out of my computer when I spoke 
first is getting older. It is a case from 2012. It was 
categorized by the U.S. Attorney who filed it in Manhattan as 
``spectacularly brazen.'' And yet, there were no criminal 
charges. It was mortgage fraud, I guess primarily Countrywide-
connected. As you know, they were purchased by Bank of America.
    And so, when those huge cases are brought to the public, 
and you find that there are no charges, it just doesn't feel 
good as a citizen, who realizes that if you do something, you 
are going to go to prison. And somebody--even the attorney says 
violates the law in a spectacularly brazen way, and nothing was 
done, it creates a problem.
    Ms. Raman. It sounds like the case that you are referring 
to was a civil suit that was brought. And that may explain some 
of what you are asking. I am not, myself, familiar with that 
particular case. But I do think that it is important for me to 
convey that we have different burdens of proof in civil cases 
and criminal cases. And that we can only bring criminal cases 
when we can prove beyond a reasonable doubt willful intent to 
violate the law and an actual violation of the law. And, when 
we are able to make that proof, we do bring it.
    You mentioned that this particular announcement was by the 
U.S. Attorney's Office in Manhattan, which has been, frankly, 
one of the most aggressive--
    Mr. Cleaver. They have, yes.
    Ms. Raman. --offices on bringing financial fraud cases.
    Mr. Cleaver. And that is why it is so concerning. He goes 
on to call it ``the hustle,'' and no criminal charges were 
filed. I am just a Methodist preacher. I don't know a lot about 
the law. That is why I am sitting next to the judge. I try to 
sit next to him all through the hearings every time we have one 
just so osmosis might help me learn something about the law.
    But it just creates a problem--no criminal charges. That is 
what people see. And then hundreds of million dollars are 
involved, and somebody takes a carton of milk out of one of the 
convenience stores and they are going to go to jail.
    Ms. Raman. On behalf of the entire--
    Mr. Cleaver. I understand.
    Ms. Raman. --Justice Department, we have many fraudsters in 
jail for decades now, as we speak, because we have been able to 
make that proof, because we have been able to root out the 
evidence of the crime and file those charges. There are 
countless such people who have defrauded the public, and we are 
committed to continuing to bring those kinds of cases. I think 
Allen Stanford, who is serving a 100-year sentence, feels like 
he is been appropriately punished.
    Mrs. Wagner. I thank the gentleman from Missouri for 
yielding back. And a marvelous preacher he is, might I just 
say.
    [laughter]
    I would like to yield myself 5 minutes for our second round 
of questioning. Thank you for hanging in there with us, Ms. 
Raman. I am interested in what foreign regulators the 
Department of Justice has contacted about an economic analysis 
of prosecuting large financial institutions, and what 
information have any such regulators provided to DOJ.
    Ms. Raman. When we are talking about multinational banks, 
sometimes the multinational bank's primary prudential regulator 
is a foreign regulator. And, again, I can't talk about open 
cases or cases that are currently in litigation, but many of 
the banks that we have looked at and this committee is aware of 
has tentacles in countries all over the globe. And--
    Mrs. Wagner. Can you talk about any closed cases, and some 
of the foreign regulators that you have been dealing with over 
the period of time here the last 5 years?
    Ms. Raman. Again, I am not aware that our search has 
yielded any evidence that in closed cases there has been that 
sort of contact with foreign regulators on economic impact 
issues in particular.
    Mrs. Wagner. Would you agree, then--let me try and come at 
this from a different angle. Would you agree that foreign 
regulators have a vested interest in shielding companies 
headquartered in, say, their jurisdictions from prosecution in 
other countries?
    Ms. Raman. Our experience has not shown us that. In fact, 
sometimes the biggest impact we can have is when we literally 
bring a global resolution; when regulators across the globe or 
American regulators and the Justice Department act in concert 
or investigate in concert. So I don't think, at least in my 
experience, I can say that the regulators have tried to shield 
the banks. In fact, they can be of great assistance if they 
bring civil enforcement actions. And that can assist us in our 
prosecution.
    Mrs. Wagner. Then perhaps, Ms. Raman, you can explain how 
it is exactly the Department of Justice weighs statements made 
by foreign regulators about prosecutions in the United States 
of firms headquartered abroad.
    Ms. Raman. Because they do have an interest in assisting in 
any investigation, and that has been our experience. To the 
extent that we consult them, we consult them as we would with 
any other partner. That is, engage in a discussion with them, 
and make sure we understand what they are saying and that they 
understand what we are saying.
    Mrs. Wagner. As a matter of course, does the Department of 
Justice regularly solicit input from foreign regulators about 
whether to pursue prosecutions of foreign firms?
    Ms. Raman. I don't think it is fair to say we regularly do 
that. In fact, I think it has been rare that we have had to 
address specific types of issues that are of concern to this 
committee. That is, impacts--systemic impacts on global 
markets.
    Mrs. Wagner. And you are not able to share with the 
committee any of the foreign regulators that you all have 
contacted vis-a-vis economic analysis on these prosecutions?
    Ms. Raman. Because I can't get into matters that are 
currently in litigation or--
    Mrs. Wagner. But how about those that are closed?
    Ms. Raman. And I have been--I think I have been trying to 
explain, but I should be as clear as I can be, that in the 
closed cases that we have searched in the parameters that--
under the parameters that we have discussed with committee 
staff we have not identified any cases in which those kinds of 
conversation--in which economic impact was a factor in those 
closed cases. And I haven't--I can't tell you for certain what 
other document searches may be possible or may not be possible, 
but I am not aware, I am not personally aware, that we have 
searched and that search has resulted in any documents that--
    Mrs. Wagner. I guess the confusion here, and the 
persistence is, one, that the Department of Justice has 
indicated that they have received analysis from those foreign 
and domestic regulators. Yet you are--there seems to be no 
record, no knowledge of records by any of the U.S. Attorneys' 
Offices by your own. Nothing that you can share with this 
committee to shed some light on these prosecutions.
    Ms. Raman. It is not--setting aside the open cases, because 
in some ways I think that is what this committee may be 
interested in and, unfortunately, I just can't speak about 
those, setting those aside, it is not surprising to me that in 
our closed cases in past years there has not--our current 
searches thus far have not yielded the kinds of economic 
analyses that the committee is interested in. And it doesn't 
surprise me because these types of arguments come up only 
rarely.
    And, again, I know that our staffs have been talking about 
the parameters--
    Mrs. Wagner. And I just have a few more minutes left. And, 
the economic analysis was referred to by the Attorney General. 
So this is--we would really implore you to continue to work 
with the staff to come up with records, with information, with 
regulators, with entities that you all have been working with 
as, frankly, indicated already by the Department of Justice and 
the Attorney General. I think I am out of time.
    And I am pleased to recognize the gentleman from 
California, Mr. Sherman.
    Mr. Sherman. I thank the ranking member for letting me ask 
questions at this point. With regard to the closed files, can 
you identify and describe any case involving a financial 
institution where, due to collateral damage, you didn't assert 
the strongest possible charges or impose the maximum possible 
penalty?
    Ms. Raman. I am not aware, in any closed case, that we 
didn't pursue the appropriate response because of any such 
argument.
    Mr. Sherman. Okay. So we have all this conversation from 
the Department of Justice saying that they may look at 
collateral consequences. Could you, for the record, ask your 
staff to review the closed files and identify any time that 
they can find in which a collateral consequence has affected 
the prosecutorial actions?
    Ms. Raman. We will absolutely continue to work with the 
committee to ensure that the committee has the information that 
it needs.
    Mr. Sherman. This is a question I would like you to respond 
to for the record, independent of what the committee staff has 
to say to you. Please respond appropriately for the record 
whether you have been able to conduct a review and whether 
there has ever been a case where economic consequences have 
affected prosecutorial action. Since we don't have any 
practical cases, I am going to get a little theoretical here.
    You may have a small bank, where ordinarily you would 
impose a million-dollar penalty. And you are convinced that 
will cost dozens of jobs. It could be in a small town, or it 
could be dozens of jobs in a big town. Big town people count, 
too. Or there could be a big entity you are thinking of 
imposing a billion-dollar penalty on, and you know that is 
going to cost tens of thousands of jobs with international 
implications.
    Is the small entity or the large entity more likely to get 
reduced prosecution due to collateral consequences? Are you 
focused on the national and international collateral 
consequences, or is it all kind of proportional?
    Ms. Raman. I think it is fair to say that there are 
different collateral consequences that are apparent in 
different types of prosecutions. And so the--
    Mr. Sherman. But I am just posing--in one case you get a 
great economic analysis. If we don't cut the penalty by a 
million bucks, we are going to lose dozens of jobs. In another 
case, you get in an economic analysis if we don't cut the 
penalty by a billion dollars, we are going to lose tens of 
thousands of jobs. As a matter of fact, assume that the penalty 
reduction-job loss ratio is identical. It is $8,000 of penalty 
per job, or $18,000 or whatever it is.
    Are you more likely to make an adjustment to save 12 jobs 
for--by reducing the penalty by a million bucks, or to save 
tens of thousands of jobs by reducing the penalty by a billion?
    Ms. Raman. Congressman, I am--
    Mr. Sherman. Does size matter?
    Ms. Raman. Congressman, I am actually not aware that the 
size of a penalty has ever been changed because of such 
arguments. What we do consider is whether or not a collateral 
consequence might suggest that one type of resolution is 
superior to another, a deferred prosecution--
    Mr. Sherman. These resolutions tend to take the form of a 
company writing a check. So you can say it is not--you can't 
put a corporation in jail.
    Ms. Raman. Whether guilty plea, deferred prosecution, or 
nonprosecution agreement, our punitive tool for any corporate 
entity is a fine. And, of course, any additional--
    Mr. Sherman. Yes. And the lower the--both how much you 
charge and what fine you settle for is a matter of money. And I 
have given you an example of a dozen jobs for a million-dollar 
reduction here, tens of thousands of jobs. And I will ask 
again, does size matter? Does being systemically important lead 
to a reduction in the penalty?
    Ms. Raman. Being systemically important can cause us to 
evaluate certain collateral consequences. But again, I am not 
aware that the amount of the fine has changed because of that. 
We do consider, whenever we consider collateral consequences, 
whether a deferred prosecution agreement may be more 
appropriate than a guilty plea.
    Mr. Sherman. Not only do the big banks save 80 basis 
points, as we have heard testified in this room, on their cost 
of funds, but they are more likely--apparently, by your 
testimony--to get deferred prosecution and other understandings 
of the collateral consequences. In any case, you can't assure 
me that small bank is--I am trying to understand what the 
implications of your answer are, and I think I would rather be 
a big bank than a small bank.
    Ms. Raman. I can tell you that in our big bank 
prosecutions, including our LIBOR investigation involving UBS, 
RBS, and Barclays, more than $2.5 billion has been the monetary 
assessment. In our prosecution of BP, it was a $4 billion--
    Mr. Sherman. And yet, there could be a small community bank 
where $100,000 would be just as big.
    Chairman McHenry. The gentleman's time has expired. I have 
been very generous with allowing Members to get full answers. 
We will end with that. Mr. Green has 5 more minutes and I have 
5 minutes. And so, I will recognize myself for 5 minutes, and 
then give the ranking member the opportunity to close.
    You have referenced that you have certain ongoing matters 
that prevent you from testifying about the Department of 
Justice going after financial firms and those people in it who 
were breaking the law. When those matters close, would you be 
willing to come back before this committee to give us the 
rundown, and share?
    Ms. Raman. Absolutely. Within the parameters of what I will 
be able, by court rules and other ethical obligations, to share 
with you we--
    Chairman McHenry. On a closed case.
    Ms. Raman. We will be ready to share with you whatever we 
can.
    Chairman McHenry. There is a deferred prosecution that has 
been before a judge for a number of months, and we wanted to 
ask some questions about that, and I understand your 
unwillingness to talk about that. I did want to talk about, 
though, this economic analysis. You went through the nine 
rules--and again, we are getting close to the end here--the 
nine sets of weighing through these things.
    So you have U.S. Attorneys who look at this, and you weigh 
those things out. And they are not all equally weighted, are 
they?
    Ms. Raman. Depending on the facts of the cases, each can 
have different--
    Chairman McHenry. Okay.
    Ms. Raman. --proportionate weights, yes.
    Chairman McHenry. Okay, okay. But you talk about the impact 
on the economy. Senator Merkley sent a letter to the Attorney 
General in December of 2012, and he said that the Dodd-Frank 
Act, ``explicitly created new authority to permit a failed 
institution to be wound down safely without impacting financial 
stability.'' Do you agree with that analysis?
    Ms. Raman. I am not an expert on Dodd-Frank. I will have to 
defer to--
    Chairman McHenry. Okay. So when the Justice Department 
estimates economic costs of prosecuting a firm, we are not 
talking about a specific example, we are talking about your 
policy, your procedure. That is why we have you here. But when 
you are estimating the economic cost of prosecuting a large 
financial institution, that analysis takes into account the 
cost associated to the economy, right?
    Ms. Raman. Again, only when it is raised and only in a very 
small sliver of cases in which that argument may be raised by a 
bank or a subject entity.
    Chairman McHenry. So yes, it is, on occasion, raised.
    Ms. Raman. Banks have raised, and I expect will continue to 
raise these sorts of arguments.
    Chairman McHenry. Okay. So internally, within your 
Department, when you are estimating the costs associated with 
perhaps a failure of a large financial firm, do you take into 
account the Dodd-Frank process of the Orderly Liquidation 
Authority?
    Ms. Raman. As prosecutors, we do not take into account 
Dodd-Frank, per se. As prosecutors, we want--
    Chairman McHenry. But you are taking the fact that a firm 
could fail as a result of your prosecution.
    Ms. Raman. Yes, because of the potential collateral 
consequences to--
    Chairman McHenry. Yes. So now we have a procedure that is 
within the government to wind down an institution, and it is 
called the Orderly Liquidation Authority. Senator Merkley, some 
of my colleagues contend that it ended--it actually ends too-
big-to-fail, right? Going back to the Attorney General's quote 
that I referenced at the beginning of this hearing--where he 
says that some of these firms are too large, too complex--that 
goes counter to the arguments that proponents of the Orderly 
Liquidation Authority make, that this authority means that 
firms that are too big actually can fail, and there is a 
process for that. What I am asking is, that is very important 
when you are talking about a firm failing if you have a 
government procedure that some contend means that the firm is 
wound down. So you don't take that into account whatsoever?
    Ms. Raman. We take into account whether or not a particular 
type of law enforcement action will trigger disproportionate 
collateral consequences on the public or innocent third 
parties. And so in whatever form or format that might present 
itself in any particular case, we have to, and do, consider 
those. And so, the Orderly Liquidation Authority issue--
    Chairman McHenry. But how can you not take in the Dodd-
Frank Orderly Liquidation Authority when you are going through 
what you just said?
    Ms. Raman. Our concern is to ensure that when we bring a 
charge, when we don't bring a charge, when we resolve a case 
that we have a full understanding that it is an--
    Chairman McHenry. But if you have a full understanding, you 
would know that Orderly Liquidation Authority exists in that 
procedure.
    Ms. Raman. And I understand that the purpose of Dodd-Frank 
legislation is to ensure such orderly liquidation.
    Chairman McHenry. It has been on the books for 3 years.
    Ms. Raman. We consider collateral consequences of all 
types, and they don't always--
    Chairman McHenry. But do you consider that consequence of 
the Orderly Liquidation Authority?
    Ms. Raman. We consider all of the--and I am trying to 
answer the question, but I want to answer it--
    Chairman McHenry. But you are not. Do you consider the 
Dodd-Frank Orderly Liquidation Authority, yes or no?
    Ms. Raman. The bottom line is that the liquidation of a 
company or not is only one factor that is of relevance when we 
are talking about collateral consequences.
    Chairman McHenry. I understand you don't want to answer the 
question. It is kind of clear because I am trying to restate it 
in a way that you could answer it. And I am not trying to 
badger you about this, but it is important to note. It is 
either yes, you take it into account, or no, you do not. And it 
is an existing law that deals with a whole class of companies 
that have been designated as systemically important or 
systemically significant.
    Ms. Raman. We take into consideration every single 
regulatory action and option available that may be triggered by 
a criminal conviction. Sometimes--
    Chairman McHenry. So on this matter of the Orderly 
Liquidation Authority, has your Department had conversations 
with the FDIC, which is charged with that procedure? Not about 
an individual case, about that procedure?
    Ms. Raman. We have had many conversations with regulators 
across-the-board about--
    Chairman McHenry. I understand. You have said that 
repeatedly. I am talking about the Orderly Liquidation 
Authority.
    Ms. Raman. I have not had that conversation, but I know 
that we--
    Chairman McHenry. But you are in charge of the division.
    Ms. Raman. --have had conversations with regulators about 
all of the regulatory actions that can be triggered by a 
criminal conviction, including the FDIC's authority to revoke a 
bank's deposit insurance if a charter is revoked, for example. 
And so we have had robust, and will continue to have robust, 
conversations with these types of regulators. And--but we--
    Chairman McHenry. It sounds like you have not yet had those 
robust conversations on a law that has existed for 3 years.
    The ranking member has been very generous, and I would now 
recognize the ranking member for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. If you need more time, 
I will gladly yield some of my time to you.
    I want to ask a couple of questions about persons who have 
asked you to submit additional evidence for the record. You 
have had more than one request today. I assume that you will 
comply and you will submit the additional evidence for the 
record?
    Ms. Raman. We will.
    Mr. Green. I asked you for evidence, and you complied and 
you provided this evidence to me. Was my request any different 
than any of the other requests that you have had today for 
evidence to go into the record?
    Ms. Raman. No. I haven't kept track of every single 
request, although I am certain some behind me have.
    Mr. Green. No, I am talking about--
    Ms. Raman. But we are happy to be as helpful as we possibly 
can.
    Mr. Green. Yes. I am talking about, now, more specifically 
in terms of my having just made a request to you to give me 
something to go into the record. Was that request made any 
differently? Other than it was made before we got here today 
because I wanted to make sure I had something that I could look 
at and peruse beforehand.
    Ms. Raman. That is right.
    Mr. Green. Let's go on to something else now. The Code of 
Judicial Conduct, the canons of ethics, all of these codes that 
deal with professional responsibility, most of them focus on 
protecting not the Justice Department itself, but they have to 
do with rights of individuals who may be prosecuted, rights of 
entities that may be prosecuted. But you don't promulgate some 
of these codes. I know the canons of ethics don't allow lawyers 
to do certain things and the Code of Judicial Conduct will 
prohibit a judge from discussing a case pending before the 
court.
    These are not professional codes of responsibility that you 
are trying to hide behind. But you do have to adhere to them. 
Is that a fair statement?
    Ms. Raman. I do.
    Mr. Green. And in so doing, it is not to preclude our 
knowing about evidence. It is just that if you do this and you 
violate one of the codes, then there may be consequences for 
you if you should do this. Is that a fair statement?
    Ms. Raman. Yes. And there are obviously good reasons why 
those ethics rules and local rules in courts exist. It is to 
avoid interfering with ongoing matters.
    Mr. Green. Yes. I know that, as a judge, if the judge 
happens to make a comment about a pending matter, it could 
prejudice the case one way or the other, depending on how the 
comment is made. And I just wanted to get that in the record 
because it is important for people to know that you don't 
produce the codes but you do have to adhere to them.
    Now, let's talk for just a moment about FSOC and the 
Orderly Liquidation Authority. You personally have not had any 
conversations with persons concerning cases that are associated 
with the Orderly Liquidation Authority. Is this correct?
    Ms. Raman. Setting aside ongoing matters.
    Mr. Green. Yes.
    Ms. Raman. The Department of Justice is constantly engaged, 
as a general matter, with our regulatory partners and with 
experts within the government about these sorts of matters to 
ensure that we are best educated. And, in fact, we have 
redoubled efforts to do so just to ensure that we are doing 
everything we possibly can. I have not personally had a 
discussion with FSOC.
    Mr. Green. And I will close with this. Do you believe Mr. 
Holder when he says there is no institution, there is no 
individual that cannot be prosecuted by the U.S. Justice 
Department? Do you believe that?
    Ms. Raman. I believe him, and I believe that the career 
prosecutors in the Department understand that principle.
    Mr. Green. Thank you.
    I yield back the balance of my time, Mr. Chairman.
    Chairman McHenry. I thank the ranking member. And again, 
the hearing title today is, ``Who is Too Big to Fail: Are Large 
Financial Institutions Immune from Federal Prosecution?'' And 
the questions we raised today were about whether or not Dodd-
Frank did, in fact, end too-big-to-fail, the Justice 
Department's refusal to prosecute some large firms with 
contradicting statements from the Attorney General, and whether 
or not too-big-to-fail, in fact, results in ``too-big-to-
jail.''
    And then finally, in deciding not to prosecute large 
financial institutions, the Justice Department either did not 
consider the Dodd-Frank's Orderly Liquidation Authority, or 
found that the Orderly Liquidation Authority did not solve the 
problems of too-big-to-fail. Those are among the questions.
    I thank the ranking member for his indulgence in this long 
hearing. Ms. Raman, thank you so much for being here today and 
making it through what was a large and long hearing.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place her responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
    And with that, this hearing is now adjourned.
    [Whereupon, at 4:42 p.m., the hearing was adjourned.]


                            A P P E N D I X



                              May 22, 2013


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