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In an appearance on former New York Gov. Eliot Spitzer's TV show, Rolling Stone columnist Matt Taibbi and his host were outraged that HSBC did not face criminal prosecution after the government said it allegedly helped drug dealers and terrorists launder money.
December 14
WASHINGTON — Rep. Barney Frank, the top Democrat on the House Financial Services Committee, is urging the Department of Justice and federal regulators to start prosecuting more financial industry workers who break the law.
The Massachusetts Democrat, who is retiring at the end of the term, wrote letters Tuesday to Attorney General Eric Holder and a number of regulators, just days after DOJ settled a money laundering suit with HSBC for $1.92 billion.
Many observers
"I note several instances recently in which administration officials have proceeded civilly against blatant violators of our important financial laws, in part because of the difficulty of proving cases beyond a reasonable doubt, especially where the law may have been somewhat uncertain, but also because of a concern that the criminal conviction — and even indictment — of a major financial institution could have a destabilizing effect," Franks said in the letter to Holder. "This latter consideration does not apply, similarly, to individuals."
He added: "It is, of course, the case that no corporation can have engaged in wrongdoing without the active decision of individual officers of that entity. I believe it is also the case that prosecuting individuals has more of a deterrent effect than prosecuting corporations."
Frank asked Holder to hold "a series of consultations involving law enforcement officials and regulators with the goal of increasing prosecution of culpable individuals as an important step in seeing that the laws that protect the stability and integrity of our financial system are better observed."
Letters were also sent to Treasury Secretary Timothy Geithner, Commodities Futures Trading Commission Chairman Gary Gensler, Securities and Exchange Commission Chairman Elisse Walter, Federal Reserve Board Chairman Ben Bernanke and Comptroller of the Currency Thomas Curry.
Meanwhile, Sen. Chuck Grassley, R-Iowa, also wrote a letter to Holder last week condemning the decision to settle with HSBC.
"Functionally, HSBC has quite literally purchased a get-out-of-jail-free card for its employees for the price of $1.92 billion," he said in the Dec. 13 letter. "As others have repeatedly warned, failing to prosecute individuals or banks when they have committed crimes will result in perverse incentives and ultimately undermine the integrity of the U.S. financial system and economy."
