Dec 20 2012

Lesser Evilism

If you happen to be a terrorist and drug syndicate money laundering operation.

Where is Judiciary Chairman Patrick Leahy on Big Bank Crimes and Obama?

Monday, December 17, 2012

Matt Stoller, Naked Capitalism

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.

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.”

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?

1 comment

  1. ek hornbeck

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