"Too big to jail" is a clever slogan, but not to base prosecutorial decisions and regulatory policy.
First, Mary Jo White—President Barack Obama's current nominee to head the Securities and Exchange Commission—pointed out in an interview several years ago that criminal indictments of corporations should be the exception, not the rule. As Ms. White explained, "It should be the very rare case where an entire entity is subject to a criminal charge." Moreover, White said that prosecutors should consider "the awesome collateral consequences" of pursuing criminal action, including "the impact on the innocent employees or shareholders."
Second, lost in the blind bloodlust targeted at financial institutions and their employees is an appreciation for the complexity of many of the laws and regulations they face. Facts matter. Sometimes, on a careful reading of the facts, there is not a civil—let alone a criminal—case to be made. In my experience, government attorneys don't need any encouragement—beyond the prospect of resume bling—to bring big cases.
Finally, rejecting the "too big to jail" phenomenon is not the same as denying the existence of the real "too big to fail" issue. The taxpayer-funded scurrying by the regulators to save large financial institutions and their creditors during the last crisis showed that the "too big to fail" phenomenon was a real issue before Dodd-Frank. The ongoing work by the Financial Stability Oversight Council to groom the next set of "too big to fail" entities demonstrates that "too big to fail" is also a post-Dodd-Frank problem.
Moving past the "too big to jail" hype will enable us to productively focus on solving the "too big to fail" problem through clear, strong, procompetitive, market-discipline-focused rules.