Too Big to Jail

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  • TOO BIG TO JAIL:

    INSIDE THE OBAMA JUSTICE DEPARTMENTS 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

    This report has not been officially adopted by the Committee on Financial Services and may not necessarily reflect the views of its Members.

  • TABLE OF CONTENTS

    Executive Summary ................................................................................................. 1

    Background .............................................................................................................. 3

    The Federal Governments Investigations and Enforcement Actions Involving

    HSBC for Violations of U.S. Anti-Money Laundering and Sanctions Laws .......... 3

    DOJ and Treasury Representations Regarding DOJs Consideration of the

    Potential Impact to the Financial System of Prosecuting HSBC ............................ 8

    Attorney General Holder Walks Back His March 6, 2013, Testimony Suggesting

    that Some Banks Are Too Large to Prosecute .......................................................... 10

    The House Financial Services Committees Investigation into DOJs Exercise of

    Prosecutorial Discretion Concerning HSBC and Other Large Financial

    Institutions ....................................................................................................................... 12

    Committee Findings .............................................................................................. 12

    Senior DOJ Leadership, Including Attorney General Holder, Overruled an

    Internal Recommendation by DOJs Asset Forfeiture and Money Laundering

    Section to Prosecute HSBC Because of DOJ Leaderships Concern that

    Prosecuting the Bank Would Have Serious Adverse Consequences on the

    Financial System ............................................................................................................. 12

    Notwithstanding Attorney General Holders Catch that HSBC Agree to DOJs Take-It-Or-Leave-It DPA Deal by November 14, 2012, HSBC Appears to Have

    Successfully Negotiated with DOJ for Significant Alterations to the DPAs

    Terms in the Weeks Following the Attorney Generals Deadline ......................... 18

    DOJ and the Federal Financial Regulators Were Scrambling at an Alarming

    Speed to Complete Their Investigations and Enforcement Actions Involving

    HSBC Before the New York Department of Financial Services ............................ 20

    In Its Haste to Complete Its Enforcement Action Against HSBC, DOJ

    Transmitted Settlement Numbers to HSBC Before Consulting with OFAC to

    Ensure that the Settlement Amount Accurately Reflected the Full Degree of

    HSBCs Sanctions Violations ........................................................................................ 21

    The FSAs Involvement in the U.S. Governments HSBC Investigations and

    Enforcement Actions Appears to Have Hampered the U.S. Governments

    Investigations and Influenced DOJs Decision Not to Prosecute HSBC ............. 24

    Attorney General Holder Misled Congress Concerning DOJs Reasons for Not

    Prosecuting HSBC .......................................................................................................... 26

  • DOJs and Treasurys Longstanding Efforts to Improperly Impede the

    Committees Investigation Appear to Constitute Contempt and Obstruction of

    Congress ............................................................................................................................ 27

    DOJ Stonewalling of the Committees Information Requests and Subpoena ............................... 27

    Treasury Stonewalling of the Committees Information Requests and Subpoena ....................... 29

    The American People and the Congress Deserve to Know the Truth About the

    Merits of DOJs Decision Not to Prosecute HSBC or Any of Its Executives or

    Employees for Violating U.S. AML and Sanctions Laws ......................................... 33

    Appendices .............................................................................................................. 34

    Appendix 1 ........................................................................................................................ 34

    Letter from Chairmen Hensarling and McHenry to Secretary Lew and Attorney General

    Holder (March 8, 2013) ............................................................................................................ 35

    Appendix 2 ........................................................................................................................ 38

    Email Regarding HSBC Developments (September 4, 2012) ........................................................ 39

    Appendix 3 ........................................................................................................................ 40

    Emails Regarding the Next Interagency Coordination Call on HSBC (September 7, 2012) .... 41

    Appendix 4 ........................................................................................................................ 42

    Letter from Chancellor Osborne to Chairman Bernanke and Secretary Geithner (September

    10, 2012) ................................................................................................................................... 43

    Appendix 5 ........................................................................................................................ 46

    Email Regarding HSBC Update (September 11, 2012) .................................................................. 47

    Appendix 6 ........................................................................................................................ 48

    Email from Dennis Wood Regarding HSBC (September 11, 2012) ............................................... 49

    Appendix 7 ........................................................................................................................ 50

    Email Regarding HSBC (September 28, 2012) ............................................................................... 51

    Appendix 8 ........................................................................................................................ 52

    Email Regarding Updated Secretary Travel Schedules to India and Japan Oct. 5 (October 7,

    2012) ......................................................................................................................................... 53

    Appendix 9 ........................................................................................................................ 58

    Email Regarding AGC Meeting (October 11, 2012) ........................................................................ 59

    Appendix 10 ...................................................................................................................... 60

    Email Regarding HSBC (November 5, 2012) .................................................................................. 61

    Appendix 11 ...................................................................................................................... 62

    Email Regarding HSBC Is Now An Out of Control Express Train (November 7, 2012) ........ 63

    Appendix 12 ...................................................................................................................... 64

    Email Regarding New Developments in HSBC (November 8, 2012) ............................................ 65

    Appendix 13 ...................................................................................................................... 66

    Email from Dennis Wood Regarding HSBC (November 9, 2012) .................................................. 67

  • Appendix 14 ...................................................................................................................... 68

    Email Chain Regarding HSBC (November 9, 2012) ....................................................................... 69

    Appendix 15 ...................................................................................................................... 71

    DOJ Settlement Documentation Transmitted to HSBC (November 9, 2012) .............................. 72

    Appendix 16 .................................................................................................................... 152

    Emails Regarding New Developments in HSBC (November 13-14, 2012) ................................. 153

    Appendix 17 .................................................................................................................... 156

    Email from Tyler Hand Regarding New Developments in HSBC (November 14, 2012) ........... 157

    Appendix 18 .................................................................................................................... 159

    Email to Christopher Meade and Christian Weideman Regarding HSBC Status (November

    14, 2012) ................................................................................................................................. 160

    Appendix 19 .................................................................................................................... 162

    Email Regarding HSBC Update (November 30, 2012) ................................................................. 163

    Appendix 20 ...............................................................