Asian American-Owned Banks Do Count: No Wrongful Jailing of Abacus Bank

Abstract

The 2008 financial crisis, described as the worst U.S. economic disaster since the Great Depression, resulted in the criminal prosecution of just one, singular bank: Abacus Federal Savings Bank. This small, family-run community bank based in NYC's Chinatown, catering primarily to Chinese immigrants, never invested in the mortgage-backed securities nor originated the subprime mortgages that were at the root of the financial crisis. Moreover, institutions such as Abacus provide critical services to underbanked populations and support the economic prosperity of minority communities. Yet, the Manhattan District Attorney aggressively prosecuted Abacus Bank with a 184-count indictment. Ultimately, after a four-month jury trial and 10 million dollars in defensive litigation costs, Abacus Bank, a bank deemed "small enough to jail" as opposed to "too big to fail," remains the only U.S. bank indicted for mortgage fraud related to the 2008 crisis. Manhattan District Attorney Cyrus R. Vance pushed the boundaries in his aggressive pursuit of a lowest hanging fruit minority bank. This analysis addresses why Abacus Bank did not attempt to allege selective prosecution to quash the DA's case and also never brought a suit against the government in connection with the aggressive prosecution tactics used by the DA. The Abacus Bank trial still serves as a lesson for prosecutors to understand and use as future guidance in how they should remain aware of cultural context and implicit biases when exercising their discretion in targeting businesses that cater to underserved minority communities.