HSBC Violates its Sweetheart Deal and Loretta Lynch Praises It

HSBC got a sweetheart deal from the Obama administration.  It laundered vast amounts of money for Mexico’s murderous Sinaloa cartel, helped bust sanctions for terrorists and mass murderers, and did not cooperate with the investigation.  The U.S. Attorney in charge of the case, Loretta Lynch, refused to prosecute any of the HSBC bankers or even sue them individually.  Instead, there was a pathetic non-prosecution agreement limited to HSBC.  Lynch is accused of not contacting either of the primary whistleblowers in the case.  The failure to contact one of the whistleblowers has already blown up in Lynch’s face as it became public a few months ago that the governments of the U.S. and Europe were provided many years ago with data on HSBC’s Swiss affiliate that show it was helping terrorists, genocidal leaders, the most violent drug gangs, and tens of thousands of wealthy people evade taxes.  Lynch failed to bring that case or use any of the invaluable data provided by the whistleblower who copied the files from the Swiss bank.

Now comes word that, like Standard Chartered, HSBC is failing to abide even by the pathetic sweetheart deal Lynch gifted HSBC’s criminal managers with.  In the case of Standard Chartered, NY authorities came down on Standard Chartered with at least one foot on the neck.  Lynch is made of considerably less stern stuff.  She failed even to do the most obvious move of extending the agreement with HSBC.  The New York Times tells the tale in DealBook’s trademark incoherent fashion.

“The filing represents a subtle yet important shift for the Justice Department, which until now has largely applauded HSBC’s efforts since reaching the deferred-prosecution agreement and paying $1.9 billion to the federal authorities. While commending HSBC for continuing “to act in good faith to meet the requirements of the D.P.A.,” prosecutors highlighted times when bank employees resisted the overhaul.”

DealBook, of course, is not so impolite as to mention that the two clauses of the second sentence are contradictory and that HSBC is acting in bad faith and violating even the sweetheart agreement.  HSBC’s violations were a heaven sent opportunity for Lynch to undo the massive embarrassment of the shameful deal she gave HSBC – one of the world’s largest and most destructive criminal enterprises.  She could use the “watchdog” report damning HSBC to state the reality – HSBC’s managers have acted in bad faith and violated the deal that would have got them off with no real prosecution.  Lynch could now prosecute HSBC and its senior managers for all the frauds – including the vast frauds she missed last time because of her failure to talk with the whistleblowers.  And the chances of that happening closely approach zero because Obama chose Lynch to continue Holder’s shameful policies of refusing to prosecute bankers rather than change those policies.

In fairness, DealBook’s incoherence appears to reflect Lynch’s incoherence in her HSBC filing.  Consider the (unintentional) humor resident in the DealBook’s description of her filing.

“Her filing, alternating between praise and concern, reflects dueling messages from the Justice Department. Coming at a time when prosecutors are grappling with repeat offenses on Wall Street, the filing underscores the Justice Department’s efforts to stem the pattern of corporate recidivism.”

Notice the disastrous admissions tucked into the convoluted paragraph.  Holder’s refusal to prosecute the bankers has led to “repeat offenses on Wall Street.”  Ponder that which DealBook religiously refuses to ponder – if fraudulent bankers find they grow wealthy from the “sure thing” of fraud with no risk of prosecution or even being sued, why wouldn’t they respond with “repeat offenses” that would create a “pattern of corporate recidivism?”  DealBook is very sympathetic to Holder and Lynch.  They are portrayed as “grappling” with the thorny problem that because senior bankers realize that under Holder and Lynch they can grow wealthy and powerful by leading “repeat offenses” they will do so even though they promise “dad” (Holder) or “mom” (Lynch) that they’ll never do it again.  (DealBook hates to use the “f” word to describe elite bankers’ frauds.)

Read on.

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