What did Brady Dougan know -- or not know? Photographer: Gianluca Colla/Bloomberg
What did Brady Dougan know -- or not know? Photographer: Gianluca Colla/Bloomberg

Eric Holder wants you to know there is no such thing as "too big to jail."

To prove it, the U.S. attorney general this week won a guilty plea from Credit Suisse AG, the largest financial company in 20 years to cop to a crime: helping thousands of U.S. citizens dodge taxes. Credit Suisse will pay $2.6 billion in penalties, a record amount for a tax-related offense.

In many respects, the plea agreement is a grand experiment in law enforcement. It's meant to find the right balance between punishing criminal wrongdoing by large companies while avoiding the harm to innocent bystanders that would follow if the firm were put out of business. Not an easy task -- but if Holder really wants to put "too big to jail" to rest, future plea deals ought to be a bit less forgiving.

The bank has admitted to serious offenses. It employed hundreds of people who, for decades, helped U.S. account holders deceive the Internal Revenue Service by concealing assets and income in secret bank accounts held in the names of sham foundations. One Credit Suisse unit began using the sham-entity ruse more than a century ago, according to a court document filed in the case. Once notified in 2010 of the investigation, the bank destroyed evidence.

Its penalty, in effect, is a deferred-prosecution agreement, similar to the arrangements the Justice Department has struck for dozens of miscreant corporations since indicting Arthur Andersen in 2002 -- and promptly driving it out of business. The fallout from the accounting firm's conviction, which was later overturned by the Supreme Court, led prosecutors to pull their punches in later cases. Some corporations may then have decided to push the envelope.

The Swiss bank won't lose its charter to operate in the U.S., thanks to months of painstaking negotiations between Holder and bank regulators. Institutions and customers so far don't appear to be fazed by the guilty plea, so the firm's revenue losses could be minimal. Credit Suisse's shares rose 1 percent on the first trading day after its guilty plea.

What's more, the bank won't have to hand over the names of the thousands of Americans it helped to conceal income from the IRS. The chairman and chief executive officer will apparently keep their jobs.

To some critics, the agreement does not, as Holder insists, hold the bank properly accountable. This goes too far. A guilty plea is a big step, the fine is huge, and eight bank employees, some of them managers, have been indicted since 2011. It would be useful, though, for the Justice Department to consider improvements before it uses this case as a template for others.

In the future, agreements of this kind should require banks to identify customers who may have cheated on their taxes. Some 20,000 Americans had accounts at Credit Suisse, and most of them never revealed this to the IRS, as the law requires.

There's a precedent for such disclosure. UBS AG had to hand over almost 5,000 account holders' names after it paid $780 million to settle similar charges in 2009. (UBS got a deferred-prosecution agreement and didn't have to plead guilty to a crime.) For this to happen, Swiss secrecy laws had to be overridden through emergency legislation, a step the Swiss government is reluctant to repeat. Next time, the U.S. should insist.

Then there is the matter of Chairman Urs Rohner and Chief Executive Officer Brady Dougan, an American who has been with the bank for 25 years and has held the top job since 2007. Investigators don't appear to be able to pin malfeasance on either one personally. Directors and shareholders are nonetheless entitled to ask: Where were they? How could hundreds of bank employees aid and abet the crime the bank has admitted it committed without top management knowing?

The U.S. has 13 other Swiss banks in its sights, while 100 others have volunteered to settle similar violations. In addition, large U.S. banks, including JPMorgan Chase & Co. and Citigroup Inc., are under criminal investigation for money laundering, price fixing and other alleged misdeeds. As these cases move forward, avoiding collateral damage is important -- but holding the guilty accountable matters, too.

To contact the senior editor responsible for Bloomberg View's editorials: David Shipley at davidshipley@bloomberg.net.