DOJ Criminal Division Chief Lanny Breuer Resigns After PBS Frontline Documentary 'The Untouchables' Exposes 'Too Big to Jail' Policy Resulting in Zero Major Bank Executive Prosecutions Compared to 900+ Convictions in 1980s S&L Crisis

On January 29, 2013, Assistant Attorney General Lanny Breuer announced his resignation as head of the Department of Justice’s Criminal Division, just one week after PBS Frontline aired “The Untouchables,” a damning documentary exposing how the Obama Justice Department had deliberately chosen not to criminally prosecute any senior Wall Street executives for fraud related to the 2008 financial crisis. Breuer’s resignation came one day after the Washington Post reported he was stepping down, and the timing left little doubt that the documentary’s exposure of his “too big to jail” doctrine had made his position untenable. During his tenure from April 2009 to January 2013, Breuer oversaw the period when the Justice Department could have pursued criminal cases against bank executives for securities fraud, accounting fraud, and other crimes that caused the worst financial crisis since the Great Depression. Instead, his division brought criminal charges against just one senior banking executive—Kareem Serageldin of Credit Suisse—while hundreds of executives whose fraudulent practices had cost the economy trillions of dollars and destroyed millions of jobs faced no criminal prosecution.

The Frontline documentary revealed that Breuer had explicitly embraced a policy of considering “collateral consequences” when deciding whether to prosecute major financial institutions or their executives. In a March 2012 speech at the New York City Bar Association, Breuer stated: “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.” This reasoning created a framework where executives running systemically important financial institutions enjoyed functional immunity from criminal prosecution, because prosecuting them for fraud might harm the very institutions they had nearly destroyed through that fraud or might affect innocent third parties who depended on those institutions.

The catastrophic contrast between the Justice Department’s response to the 2008 financial crisis and its response to the 1980s Savings & Loan crisis demonstrated that the “too big to jail” policy was a deliberate choice rather than an inevitable result of case complexity or evidentiary limitations. In the S&L crisis, which cost taxpayers approximately $132 billion (inflation-adjusted), the Justice Department convicted more than 900 senior banking executives for fraud and related crimes, including high-profile prosecutions like Charles Keating. William Black, who served as a banking regulator during the S&L crisis, testified before Congress that his single agency made over 30,000 criminal referrals during that crisis, while all federal banking agencies combined made fewer than a dozen criminal referrals during the 2008 financial crisis. This stark difference occurred despite the 2008 crisis being orders of magnitude larger, involving more obvious fraud, and requiring $700 billion in TARP bailouts alone. The collapse in criminal referrals and prosecutions reflected deliberate policy decisions by Breuer, Attorney General Eric Holder, and other Obama administration officials to prioritize protecting financial institutions over criminal accountability.

Breuer’s professional background and revolving door conflicts thoroughly corrupted his approach to financial crisis prosecutions. Before joining the Justice Department in 2009, Breuer was a partner at Covington & Burling, a prominent white-collar defense firm that specialized in representing corporations and executives in criminal investigations. At Covington, Breuer had represented major financial institutions and corporate clients facing government investigations, building relationships with executives and developing expertise in helping them avoid criminal prosecution. Upon leaving the Justice Department in March 2013, immediately after his resignation announcement, Breuer rejoined Covington & Burling as vice chairman. The New York Times speculated that he could earn as much as $4 million annually in private practice, representing the same types of clients and institutions he had declined to prosecute while at Justice. This revolving door created obvious financial incentives for Breuer to maintain friendly relationships with bank executives and avoid aggressive prosecutions that would damage his future earning potential in private practice.

Attorney General Eric Holder, Breuer’s boss and the official ultimately responsible for Justice Department prosecution decisions, came from the same revolving door culture and returned to the same firm. Holder joined the Obama Justice Department in 2009 from Covington & Burling, where he had been a partner representing corporate clients. In March 2013 Congressional testimony, Holder explicitly endorsed the “too big to jail” reasoning, stating: “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 we do prosecute—if we do bring a criminal charge—it will have a negative impact on the national economy, perhaps even the world economy.” After leaving the Justice Department in 2015, Holder returned to Covington & Burling as a partner. The perfect symmetry of Holder and Breuer both coming from Covington, implementing policies that protected the firm’s potential clients, and returning to Covington revealed how the revolving door institutionalizes regulatory capture and prevents accountability.

The Justice Department’s explanation for not prosecuting financial executives—that cases were too complex and criminal intent could not be proven beyond reasonable doubt—crumbled under scrutiny. Breuer told Frontline: “These are very complicated cases and they were just simply, on the merits, not cases that could be brought criminally.” However, the Department brought no cases because it conducted no serious investigations that would develop evidence of criminal intent. Former federal prosecutors and banking regulators interviewed for the Frontline documentary explained that criminal cases required “following the money” through subpoenas, depositions, and document analysis to establish patterns of fraudulent behavior and knowledge of wrongdoing. The Justice Department never conducted such investigations, instead relying on cursory reviews that accepted banks’ explanations for fraudulent behavior and failed to pursue evidence of executive knowledge. The Department’s claim that “there was no case” was self-fulfilling: they ensured there would be no prosecutable cases by refusing to conduct the aggressive investigations that would uncover criminal evidence.

Senator Elizabeth Warren became a prominent critic of the Justice Department’s financial crisis non-prosecution policy, stating: “The message to every Wall Street banker is loud and clear: If you break the law, you are not going to jail, but you might end up with a bigger paycheck.” Her critique captured how the absence of criminal accountability created moral hazard that encouraged subsequent financial fraud and risk-taking. When executives learned they could engage in securities fraud, accounting manipulation, and predatory lending that caused systemic economic collapse, receive hundreds of millions in bonuses during boom years, secure government bailouts during the crisis, and face zero criminal prosecution, the incentive structure guaranteed that similar frauds would recur. The 2008 crisis demonstrated that financial executives had discovered a formula for risk-free fraud: privatize profits through enormous executive compensation during boom years, socialize losses through taxpayer bailouts during busts, and rely on regulatory capture and the “too big to jail” doctrine to avoid criminal accountability.

The institutional consequences of Breuer’s “too big to jail” policy extended far beyond the financial crisis and established precedents that corrupted federal law enforcement for the subsequent decade. By explicitly embracing “collateral consequences” reasoning, Breuer created a framework that applied beyond financial institutions to any large corporation whose prosecution might have economic effects. The doctrine meant that pharmaceutical companies could engage in fraud that killed patients, defense contractors could defraud the Pentagon, and tech companies could violate antitrust laws, all while enjoying de facto immunity from criminal prosecution because of their size and economic importance. The policy inverted the rule of law: rather than larger and more systemically important actors facing greater scrutiny and accountability because their misconduct caused more harm, they enjoyed greater impunity precisely because of their size and importance. This framework fundamentally corrupted American capitalism by eliminating the accountability mechanisms that were supposed to constrain corporate fraud and align private profit-seeking with social welfare.

The timing of Breuer’s resignation—announced the day after the Washington Post reported he was leaving and exactly one week after the Frontline documentary aired—suggested that public exposure of the “too big to jail” doctrine had become politically untenable for the Obama administration. However, Breuer’s departure changed nothing about Justice Department policy or financial crisis accountability. No additional prosecutions of bank executives followed his resignation. His replacement continued the policies of deferring to regulators, accepting corporate settlements without individual accountability, and declining to pursue criminal cases against major financial institutions. The episode demonstrated that regulatory capture operated at the institutional level rather than depending on individual officials: even when public pressure forced the resignation of the official most associated with non-prosecution policies, the underlying structural incentives, revolving door conflicts, and regulatory relationships ensured policy continuity.

Breuer’s lucrative return to Covington & Burling sent a clear message to current and future Justice Department officials about the financial rewards of maintaining friendly relationships with corporate executives and financial institutions. By earning an estimated $4 million annually representing corporations and executives in the same types of matters he had declined to prosecute as a government official, Breuer demonstrated the personal financial value of regulatory capture. Future prosecutors and policymakers learned that aggressive pursuit of criminal cases against major corporations would harm their post-government earning potential, while implementing policies that protected corporate executives from prosecution would be rewarded with multimillion-dollar partnerships at white-collar defense firms. The revolving door thus creates a systematic bias toward corporate impunity that operates independently of ideology, party affiliation, or individual ethics—the financial incentives ensure that officials who might otherwise pursue aggressive enforcement choose corporate-friendly approaches that preserve their future earnings potential in private practice representing those same corporations.