You may be of the camp that big banks cannot be aggressively prosecuted because they are too-big-to-fail and will take the rest of America down with them.
On the other hand, you may be someone who sympathizes with protesters on both sides of the aisle who have ranted against the special untouchable legal status that larger institutions seem to benefit from when the risk of drawn out trials and legal measures could disrupt the financial markets.
But the real legal question is how will we as a nation define a corporation in the modern age? Are they merely evil vestiges in their own right deserving condemnation, or are their sins the spawns of individuals who should be forced to stand apart from the firm -- unmasked from the corporate veil -- when punishment comes down.
Peter Wallison of the American Enterprise Institute addressed this issue in a new article called "Faux Outrage over Too-Big-to-Jail".
He notes that even Attorney General Eric Holder is citing a much discussed post-crisis philosophy that banks have grown so large they cannot be prosecuted. They are in fact too-big-to jail, critics claim.
But Wallison calls the debate itself a bluff. He writes:
"Too big to jail!" has almost overnight become this group's battle cry. Unfortunately, like most of the chatter in this area, it is ill-informed and reeks of ideological motivations instead of common sense."
"Corporations or banks do not violate the law. Their officers, employees—sometimes even their boards of directors—violate the law. This includes money laundering, fraud, theft and every other crime known to the justice system. That means the proper defendants when an institution of any kind has violated the law are those who conspired to direct it in that path, not the firm itself."
Wallison asserts that individuals, not companies, are the movers of all good and evil in society and should rise and fall as individuals, not as part of some larger collective that can be shielded by a corporation.
He cites the rise and fall of Arthur Andersen as an example of an entire group of people taking a hit for the malfeasance of one group.
"It was not long ago that the Justice Department, foolishly, indicted the auditing firm Arthur Andersen for its employees' behavior in the Enron matter. The result was the destruction of the firm's practice and a reduction in the number of global U.S. auditing firms from five to four, severely limiting competition where it was already weak," Wallison writes.
This issue of how corporations are treated legally is significant, considering two potential regulatory leaders – SEC Chair Nominee Mary Jo White and CFPB Director and nominee Richard Cordray – are fighting to lead those financial regulatory agencies in the coming future.
On Tuesday, members of the Senate will try to nail down their exact philosophies when it comes to holding malicious corporate parties responsible. But the real question is what happens when an entire financial institution becomes buried in issues like mortgage-backed securities and accusations of fraudulent representations in securities contracts.
When a Senator asked potential SEC Chair White if she would aggressively file charges against wrongdoers even if they are too-big-to-fail, White said she would "proceed quite vigorously," and added "no institution is too-big-to-charge."
However, she added, "Federal prosecturs are instructed (at times) by the DOJ to consider other factors." Those factors may include the impact of an indictment on innocent shareholders or employees in a criminal case (which occurs outside the SEC's jurisdiction).
But White added, a too-big-to-fail defendant "doesn’t necessarily indicate a no decision" in a civil or criminal case.
However, White's nomination to lead the SEC has MBS investors still uncertain about the future. Manal Mehta with Sunesis Capital wants to see an SEC that moves away from a too-big-to-fail philosophy.
White was a tough prosecutor, but he notes, given her private sector experience — also that of her husband — she is going to be conflicted from some of the most necessary enforcement cases.
"She has done work for JPMorgan," Mehta said. "There is a real fundamental question of objectiveness if she has to exclude herself from some of these enforcement cases."