GOP committee blasts the Justice Department over big bank case

GOP committee blasts the Justice Department over big bank case
© Getty Images

A House committee is charging that the Justice Department misled Congress when it opted not to pursue criminal charges against a large bank.

Specifically, the House Financial Services Committee states in a new report that top officials at the Justice Department overruled an internal recommendation that the government file criminal charges against HSBC Bank for years of violating money laundering laws.


The bank agreed in 2013 to pay $1.9 billion to settle charges that it helped Mexican drug cartels, as well as nations like Iran and Libya, skirt economic sanctions and launder funds.

But the settlement included no criminal charges against the bank or any executives, setting off a raft of complaints from lawmakers who wanted more severe action.

Monday’s report, based on internal Treasury Department documents, claims that while the government was mulling whether to pursue charges, it faced pushback from British regulators, who worried what a criminal case against a bank as large as HSBC could mean for the economy.

Under the law, if HSBC were found guilty of the potential charges it faced, U.S. regulators would be required to review, and potentially revoke, its charter to do business in the U.S. British regulators warned that pulling the charter of such a large bank, or even the threat of it, could spur a “global financial disaster.”

The debate over the HSBC settlement eventually spurred a broader discussion about whether large banks are so central to the global economy that they cannot face major criminal cases, lest it upend the entire system.

Then-Attorney General Eric HolderEric Himpton HolderWhy a special counsel is guaranteed if Biden chooses Yates, Cuomo or Jones as AG Joe Biden's continued 'Russian misinformation' defense of Hunter is conspiracy-level laughable Tyson fires 7 after probe into managers coronavirus betting MORE sparked controversy in 2013 when he suggested during congressional testimony that the size of some banks does make it difficult to build cases, out of concern for the broader economic repercussions. In subsequent statements, Holder vehemently insisted that the government would build any case it could against a bank regardless of size, but the prosecution of banks has remained a contentious topic in Washington.

Monday’s report, which was the product exclusively of panel Republicans, zeroes in on the controversy over whether any banks are “too big to jail.” It charges that the Justice Department did consider “serious collateral consequences” for bringing a criminal case against the bank, contrary to Holder’s later assertions.

A Justice Department spokesperson said the agency's handling of the HSBC case was consistent with its stated policies, which includes considering "substantial collateral consequences" that could come with a criminal case.

"This includes whether the prosecution may have substantial adverse consequences for innocent third parties, such as employees, customers, investors, pension holders and the public," said Peter Carr, a department spokesman. 

"The Department of Justice is committed to aggressively investigating allegations of wrongdoing at financial institutions, and, along with our law enforcement partners, holding individuals and corporations responsible for their conduct. Indeed, in the past several years we have done exactly that," he added.

The report also found that the federal government rushed its HSBC probe, likely to ensure it struck a settlement with the bank before the New York Department of Financial Services did.

A substantial portion of the new report was spent arguing the Justice Department was “stonewalling” the panel’s investigation by refusing to hand over requested information years after it was first requested.

To date, the report said the Justice Department has not produced “any records pertaining to its prosecutorial decision making” despite a subpoena from the committee for that information.

The report added that both Attorney General Loretta Lynch and Treasury Secretary Jack LewJacob (Jack) Joseph LewApple just saved billion in tax — but can the tax system be saved? Lobbying World Russian sanctions will boomerang MORE are “in default of their legal obligation” on this front.

The panel did not say what actions it could take but warned that the executive branch’s actions “may constitute contempt and obstruction of Congress.”

This post updated at 1:30 pm.