"The Jobs of Tens of Thousands of Employees Could Literally Be At Stake"(1:58) FRONTLINE examines why no Wall Street execs have been prosecuted for the financial crisis

Is Wall Street Still “Untouchable”?

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This fall will mark the five-year anniversary of Lehman Brothers filing for bankruptcy, sparking the biggest financial crisis since the Great Depression. When the anniversary hits, many legal experts agree, any chance federal prosecutors will have had to hold Wall Street accountable will have come and gone with the passing of the statute of limitations.

So is Wall Street breathing a sigh of relief?

In The Untouchables, which re-airs tonight on FRONTLINE (check local listings), correspondent Martin Smith examines why not one major Wall Street executive has been prosecuted for fraud tied to the sale of bad mortgages.

Many of the same issues examined in the film will take center stage tomorrow during a hearing of a House Financial Services Subcommittee. Among the questions expected to come up is which outside experts the Justice Department consults with when considering whether to prosecute large financial institutions.

That question first drew the attention of lawmakers shortly after the The Untouchables premiered. A week after the film, Senators Sherrod Brown (D-Ohio) and Chuck Grassley (R-Iowa) sent a letter to Attorney General Eric Holder asking whether the “too big to fail” status of some banks undermines the government’s ability to prosecute wrongdoing.

The letter cited remarks made in the above excerpt from the film by Lanny Breuer, the former head of the Justice Department’s criminal division. Breuer told FRONTLINE:

In any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.

Breuer has since left the government to return to private practice with Covington & Burlington — a firm that counts major Wall Street firms such as JPMorgan Chase among its clients. Nonetheless, the criminal division’s track record during his tenure has spurred a war of words between lawmakers and the Department of Justice.

In February, the department wrote back to Brown and Grassley to say that, “No corporate entity, no matter how large, is immune from prosecution.” The senators responded by calling the letter “aggressively evasive.”

Regulators came under renewed criticism in March, when the attorney general told the Senate Judiciary Committee that the size of some banks has become a factor.

“I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them,” Holder said. “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 world economy, that is a function of the fact that some of these institutions have become too large. It has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate. That is something that you all need to consider.”

Last week, Holder sought to walk back his comments, telling lawmakers his words had been “misconstrued.”

“Let me be very, very, very clear,” Holder said. “Banks are not too big to jail. If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought.”

The Justice Department, said Holder, has brought thousands of financially based cases over the last four-and-a-half years.

One of the most recent cases to be filed is a civil fraud suit brought against Standard & Poor’s in February alleging that the credit-rating giant knowingly understated the risk behind many of the financial products that caused the subprime mortgage meltdown.

With S&P now facing as much as $5 billion in potential liabilities, the case is one of the largest to come out of the crisis. It may also be one of the last. In February, the Supreme Court ruled that the SEC cannot extend the time limit for seeking penalties in civil fraud cases, a ruling that largely ensures few if any new charges will emerge from the crisis.

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