Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.

Last week’s big revelation on banking is that it is now official Department of Justice policy under Obama that big banks and their executives are above the law. HSBC was caught laundering money for both terrorists and drug dealers, and DOJ officials told the New York Times that they would not prosecute the bank under money laundering statutes, lest the financial system be destabilized. This was shocking, but consistent with policy made explicit by DOJ’s Head of Criminal Division Lanny Breuer back in September.

One key question is why it is that Judiciary Chairman Patrick Leahy, a former prosecutor, is utterly unwilling to do any investigation or oversight into this critical policy question? Leahy runs the Judiciary Committee in the Senate, and it would be impossible to find a more obvious topic for that committee to address. It’s not that there isn’t interest in the Senate. Senator Chuck Grassley, a Republican, and Senator Jeff Merkley, a Democrat, both blasted Eric Holder for this decision. Republican Senator Chuck Grassley is the ranking member on the committee, which means he’s the de fact Republican Chairman. He went after Holder aggressively:

What I have seen from the Department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists. I cannot help but agree with an editorial in the New York Times that ‘the government has bought into the notion that too big to fail is too big to jail.’

Senator Ted Kaufman, the reformer Senator who threw his body into the struggle from 2009-2010, was able to get several committee hearings on the question of whether the DOJ and FBI were enforcing the law. Where is a great reformer Senator? Where is former Rhode Island state AG and current Senator Sheldon Whitehouse? What about former Minnesota State AG and current Senator Amy Klobuchar? They know what is going on. Are they staying quiet so they can angle for Holder’s job?

On the Democratic side in the Senate, only Senator Jeff Merkley, who is not on the Judiciary Committee, has really spoken out aggressively:

“This ‘too big to jail’ approach to law enforcement, which deeply offends the public’s sense of justice, effectively vitiates the law as written by Congress. Had Congress wished to declare that violations of money laundering, terrorist financing, fraud, and a number of other illicit financial actions would only constitute civil violations, it could have done so. It did not.

Eliot Spitzer is also outraged, and said that Breuer should be “gone tomorrow”. Matt Taibbi penned a diatribe. Rep. Brad Miller called for the big banks to be broken up (which is something Neil Barofsky argued was necessary in order to prosecute these banks in the interview I did with him a fw weeks ago). The rationale from the other side doesn’t hold water. The argument is that a guilty verdict would cause the bank to lose its charter, which means it could not operate in the United States. DOJ officials would not even bring a case under the bank secrecy act, which would carry a much less severe penalty. Even if we accept this rationale, there is still no reason not to prosecute the individuals at HSBC who helped launder this money.

This isn’t just an Obama administration policy, it also belongs to Congress. Judiciary Committee Chairman Patrick Leahy, by doing no oversight, has consented to this policy framework. He has to date said nothing about the dramatic policy implied in the HSBC decision. Yet, last May, Leahy gave a pat on the back to FBI Director for doing a better job regarding fraud. The FBI and the Justice Department, he said, “have also worked hand in hand with us to make great strides toward more effective fraud prevention and enforcement. In the last Congress, I worked hard with Senators on both sides of the aisle to craft and pass the Fraud Enforcement and Recovery Act (FERA), the most expansive anti-fraud legislation in more than a decade.”

FERA is explicitly the law that former Senate staffer Jeff Connaughton told us was undermined by the Senate funding structure and the administration. This law was co-sponsored by Senators Ted Kaufman, Chuck Grassley, and yes, Patrick Leahy.

So at this point, it’s worthwhile to ask, when the US government has explicitly defied Congress’s will and put big bank executives above the law, where is Chairman of the Judiciary Committee Patrick Leahy?