Once again, Senator Elizabeth Warren asks the most obvious question -- why aren't banks prosecuted? -- only to get the same incredulous responses. What? Prosecute the banks? No way!
Warren took bank regulators to task on Thursday about the fact that British bank HSBC is still doing business in the U.S., with no criminal charges filed against it, despite confessing to what one regulator called "egregious" money laundering violations.
The Justice Department’s record $1.9 billion settlement with HSBC exposed the continuing ability of drug cartels, rogue nations and terrorist financiers to move billions of dollars through the international and U.S. banking systems.
Money laundering was a major focus of U.S. counterterrorism policy after the Sept. 11, 2001, attacks. The Patriot Act of 2002 included provisions that required the Treasury Department to identify banks and individuals suspected of links to terrorism. And the law instructed banks to strictly monitor and report potentially illegal transactions.
"They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it," Warren said of HSBC. "How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?"
The regulator she was questioning, David Cohen, the Treasury Department's undersecretary for terrorism and financial intelligence, repeatedly refused to answer the question. Like other regulators at the hearing, he said that his department has no authority to shut down a bank unless the Justice Department convicts the bank of a crime.
Warren said: “If you’re caught with an ounce of cocaine, chances are good you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life. But evidentially, if you laundered nearly a billion dollars for drug cartels and violated our international sanctions, your company pays a fine and you go home and sleep in your own bed at night -- every single individual associated with this. And I just -- I think that’s fundamentally wrong.”
The issue is part of a broader debate over large financial institutions and whether they are too big to be broken up. The Massachusetts senator’s comments come after U.S. Attorney General Eric Holder acknowledged Wednesday that some of the largest banks are too big to prosecute and that prosecution could have a negative impact on the U.S. and global economies.
Speaking before a Senate Judiciary Committee hearing, Holder said he is concerned that the size of some of these institutions “becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”
Holder added that “I think that is a function of the fact that some of these institutions have become too large.”
It is far past time for someone to "indicate" to Mr. Holder that he needs to prosecute the criminal banks, or someone will show him to the door.
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