When federal prosecutors go after a bank or a hedge fund, they often have to face an all-star team of high-priced lawyers. But there may come a day when the government simply cannot work its way around being outgunned, Preet Bharara, the United States attorney in Manhattan, said at a conference in New York on Tuesday.
Mr. Bharara, said that budget constraints have severely limited his ability to hire lawyers.
“I literally do not have hiring authority, as we sit here now. If I lose a prosecutor tomorrow, I don’t get to replace that person,” Mr. Bharara said at the Bloomberg Markets 50 Summit in New York.
His comments came as lawmakers in Washington are wrangling over deals to finance the federal government and to avoid a public default. If no agreement is reached on the former issue, the government might enter a shutdown after a continuing resolution expires on Sept. 30.
Like other federal agencies, the Justice Department — whose units include United States attorneys for various regions — are required to have contingency plans in case of a shutdown, as Annie Lowrey wrote this week in The New York Times.
Though Mr. Bharara would not comment on Tuesday specifically on current cases like the one against SAC Capital, he spoke in general terms about the challenges his office faced in bringing cases against deep-pocketed Wall Street firms.
“At some point, you will have a situation where, no matter how many resources we are able to bring to bear on something, it’s difficult to go up against an institution that brings armies and armies of lawyers to court,” Mr. Bharara said in the interview at the conference with Bloomberg TV’s Stephanie Ruhle.
In addition, Mr. Bharara hit on some familiar themes, like the importance of holding institutions – and not just individuals – responsible for wrongdoing. His comments on that topic echoed his rhetoric in July when announced the charges against SAC.
But he offered some historical context on Tuesday, arguing that prosecutors had been hesitant to go after institutions in the wake of the collapse of the accounting firm Arthur Andersen, which was brought low after being criminally charged in connection to the Enron scandal.
“The pendulum has swung too far back the other way,” Mr. Bharara said. “I think we should be entering a serious era of institutional accountability, not just personal responsibility.”
Earlier this year, Mr. Bharara’s boss, Attorney General Eric H. Holder Jr., suggested that some financial institutions had become so large that prosecuting them could have a negative impact on the broader economy. (He later clarified his comments, saying that he didn’t mean banks were “too big to jail.”)
Mr. Bharara on Tuesday rejected such arguments, which he characterized as “because we’re so big, to take action against us, the sky is going to fall.”
“It should not be the case,” he said, “that you have immunity from tough actions against you because you’re so large.”
When authorities do go after bad actors, it’s important to require them to admit wrongdoing, Mr. Bharara added. Not doing so, he said, is similar to allowing juvenile offenders to have their records expunged when they get older.
“Individuals have rap sheets. Institutions should also be held accountable based on their past behavior,” he said. “It’s important to have a record.”