TOO BIG TO JAIL:
INSIDE THE OBAMA JUSTICE DEPARTMENT’S DECISION
NOT TO HOLD WALL STREET ACCOUNTABLE
REPORT PREPARED BY THE REPUBLICAN STAFF OF THE
COMMITTEE ON FINANCIAL SERVICES, U.S. HOUSE OF REPRESENTATIVES
HON. JEB HENSARLING, CHAIRMAN
114TH CONGRESS, SECOND SESSION
JULY 11, 2016
In March 2013, the Committee on Financial Services (Committee) initiated a
review of the U.S. Department of Justice’s (DOJ’s) decision not to prosecute HSBC
Holdings Plc. and HSBC Bank USA N.A. (together with its affiliates, HSBC) or any
of its executives or employees for serious violations of U.S. anti-money laundering
(AML) and sanctions laws and related offenses. The Committee’s efforts to obtain
relevant documents from DOJ and the U.S. Department of the Treasury (Treasury)
were met with non-compliance, necessitating the issuance of subpoenas to both
agencies. Approximately three years after its initial inquiries, the Committee
finally obtained copies of internal Treasury records showing that DOJ has not been
forthright with Congress or the American people concerning its decision to decline
to prosecute HSBC. Specifically, these documents show that:
- Senior DOJ leadership, including Attorney General Holder, overruled an
internal recommendation by DOJ’s Asset Forfeiture and Money Laundering
Section to prosecute HSBC because of DOJ leadership’s concern that
prosecuting the bank would have serious adverse consequences on the
- Notwithstanding Attorney General Holder’s personal demand that HSBC
agree to DOJ’s “take-it-or-leave-it” deferred prosecution agreement deal by
November 14, 2012, HSBC appears to have successfully negotiated with DOJ
for significant alterations to the DPA’s terms in the weeks following the
Attorney General’s deadline.
- DOJ and federal financial regulators were rushing at what one Treasury
official described as “alarming speed” to complete their investigations and
enforcement actions involving HSBC in order to beat the New York
Department of Financial Services.
- In its haste to complete its enforcement action against HSBC, DOJ
transmitted settlement numbers to HSBC before consulting with Treasury’s
Office of Foreign Asset Control (OFAC) to ensure that the settlement amount
accurately reflected the full degree of HSBC’s sanctions violations.
- The involvement of the United Kingdom’s Financial Services Authority in the
U.S. government’s investigations and enforcement actions relating to HSBC,
a British-domiciled institution, appears to have hampered the U.S.
government’s investigations and influenced DOJ’s decision not to prosecute
- Attorney General Holder misled Congress concerning DOJ’s reasons for not
bringing a criminal prosecution against HSBC.
? DOJ to date has failed to produce any records pertaining to its prosecutorial
decision making with respect to HSBC or any large financial institution,
notwithstanding the Committee’s multiple requests for this information and
a congressional subpoena requiring Attorney General Lynch to timely
produce these records to the Committee.
- Attorney General Lynch and Secretary Lew remain in default on their legal
obligation to produce the subpoenaed records to the Committee.
- DOJ’s and Treasury’s longstanding efforts to impede the Committee’s
investigation may constitute contempt and obstruction of Congress.
The Committee is releasing this report to shed light on whether DOJ is
making prosecutorial decisions based on the size of financial institutions and DOJ’s
belief that such prosecutions could negatively impact the economy.