Tony West, the third-ranking official at the U.S. Department of Justice, has a ready response for critics who question why few individuals have been charged for conduct tied to the financial crisis: just wait.
“We are not done, we are not finished,” said West, who was responsible for crafting a series of multi-billion dollar civil settlements with top banks JPMorgan Chase, Citigroup, and Bank of America over shoddy mortgage bonds they sold in the run up to the 2008 crisis.
Those three settlements, each of which beat a record amount set by the prior one, did not include charges against any individuals at the banks.
“Simply because we have been successful in using particular tools doesn’t mean that we have made any determinations about not using other tools,” West, who is leaving the agency next week, said in an interview in his 5th floor conference room at DOJ headquarters.
He did not provide details about any additional actions the Justice Department may take against the banks or individuals.
After spending more than five years at the Justice Department, including three years as head of the civil division, West leaves behind a legacy of nearly $37 billion in settlements that won him praise as a master negotiator who forced substantial penalties on banks that contributed to the crisis.
But his work on the settlements also raised questions across the political spectrum about why individuals did not face related charges and how the penalties were calculated. Bank lawyers privately complained there was little explanation of why the government sought the numbers it did.
Senator Elizabeth Warren, a Democrat from Massachusetts, this week again hammered financial regulators for not referring more potentially criminal cases, and slammed the Justice Department’s settlements.
“No corporation can break the law unless an individual within that corporation broke the law,” she said at a Senate Banking Committee hearing on Tuesday. “Yet, despite the misconduct at these banks that generated tens of billions of dollars in settlement payments by the companies, not a single senior executive at these banks has been criminally prosecuted.”
West, in the interview, defended the settlements, pointing out that the government could not have obtained the consumer relief included in the settlements if it had gone to court and litigated the cases. He also said that no bank asked for a detailed explanation of the calculation of the penalties to be included in settlement documents.
Further, West said the Justice Department’s approach to penalties has been generally affirmed by U.S. District Judge Jed Rakoff, an outspoken critic of light enforcement actions involving Wall Street.
In July, as Bank of America was in negotiations with West’s team, Rakoff separately ordered the bank to pay a $1.27 billion penalty for fraud over shoddy mortgages sold by the former Countrywide Financial Corp, which Bank of America bought during the crisis. It gave credence to the government’s theories of penalties the banks were being forced to pay under the law at issue, FIRREA.
“Judge Rakoff is, as everybody knows, an incredibly brilliant judge, and the fact that he saw it in very similar ways as we saw it, certainly makes you feel like you are on the right track,” West said.
West, who previously mounted unsuccessful bids for local office in his home state of California, said he would not rule out a return to government. “I hope I’ll have the opportunity at some point in the future to have the chance to serve the public again in some way,” he said.
He declined to comment on his next plans, but Bloomberg reported late Tuesday that West is expected to join PepsiCo Inc. as its new general counsel. Spokesmen for the Justice Department and for Pepsi declined comment.
(Reporting by Aruna Viswanatha, with additional reporting by Anjali Athavaley; Editing by Kare Van Hall and Chizu Nomiyama)