Oct. 24, 2012 – Rep. Barney Frank, D-Mass., ranking member of the House Financial Services Committee, wants federal and state officials to reconsider their decisions to prosecute financial institutions for misdeeds of smaller institutions they acquired during the financial crisis at the behest of federal regulators.
He noted particularly the federal-state task force going after J.P. Morgan Chase for potentially criminal acts by Bear Stearns before it was acquired by the larger bank in March 2008.
Frank chaired the House Financial Services committee at the time of that acquisition. In a statement Monday, he noted that J.P. Morgan Chase took on Bear Stearns at the strong urging of the Federal Reserve and the Secretary of the Treasury during the Bush administration.
“The Federal officials involved believed that the failure of Bear Stearns would have terribly negative consequences for the economy, and they urged J.P. Morgan Chase to do a good deed by taking over an institution which, I believe, the bank would never have sought to acquire absent that urging,” Frank wrote. “The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished.”
He said a similar rationale applies to Bank of America, “which undertook a takeover of Merrill Lynch in part because federal official[s] urged it to do so.”