Republicans and Democrats Speak Out Against “Too Big to Jail” HSBC Case
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We now have bipartisan anger at the decision to hold HSBC and its executives harmlessfor years of money laundering and facilitating the culture of Mexican drug cartels. In fact, only the shareholders will pay, and not all that much, what amounts to five weeks’ worth of profits for the bank. The certainty of not being prosecuted alone should cancel that out.
Late last week, Jeff Merkley expressed his concern that, “four years after the financial crisis, the Department appears to have firmly set the precedent that no bank, bank employee, or bank executive can be prosecuted even for serious criminal actions if that bank is a large, systemically important financial institution.” When you look past the nature of HSBC’s crimes, this is the real point. The failure of deterrent won’t just extend to more money laundering but the whole of possible bank crimes.
Merkley was joined in this sentiment by Republican Senator Chuck Grassley, who is occasionally good on these issues:
The Department has not prosecuted a single employee of HSBC—no executives, no directors, no AML compliance staff members, no one. By allowing these individuals to walk away without any real punishment, the Department is declaring that crime actually does pay. Functionally, HSBC has quite literally purchased a get-out-of-jail-free card for its employees for the price of $1.92 billion dollars.
There is no doubt that the Department has “missed a rare chance to send an unmistakable signal about the threat posed by financial institutions willing to assist drug lords and terror groups in moving their money.” One international banking expert went as far as to argue that, despite the “astonishing amount of criminal behavior” from HSBC employees, the DPA is no more than a “parking ticket.”
The Justice Department should actually not solely face the blame here. The New York Times’ reporting made clear that the Treasury Department pressed DoJ not to prosecute. They clearly have no faith in the Dodd-Frank architecture they constructed and directed, which allegedly allows systemically important financial institutions to be unwound without risk to the broader financial system. Clearly they have no belief in that, if they think HSBC – not among the top 5 banks in America – needed to be protected from harm, specifically because of the ripple effect on the entire sector.
As Brad Miller points out, this is systemic corruption, with forces in the government shielding forces on Wall Street from accountability for their actions. When the US wields influence abroad, they tell other countries to curtail this corruption, to make sure that everyone faces the same restrictions under the law, no matter their power or wealth. We don’t bother with such admonishments here. We just live with a system of unequal justice.
Matt Stoller makes a very good point here: where is Patrick Leahy on this? He has made no public statement on the HSBC case, despite being the co-author of the Fraud Enforcement and Recovery Act, which was supposed to deliver funds toward prosecuting fraudulent big bank activity (it never actually did). Grassley, a co-author, has spoken out. Why not Leahy?