Lanny Breuer Enters the Free Agent Market

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Sheesh. Lanny Breuer sure seems to need — and be able to demand — frequent fellations from the press.

The latest version comes from an excerpted interview with the NYT. Much of it covers familiar ground, with Lanny asserting that, really, he shares the public outrage about the banksters, then suggesting it was the USA Attorneys, not him, who chose not to prosecute them.

Q. You agreed to go on “60 Minutes” and “Frontline” to discuss the lack of crisis cases. Why open yourself to such scrutiny?

A. People have been asking legitimate questions about what happened in the wake of the financial crisis, and they deserve answers. Someone had to go on television to explain the Justice Department’s point of view, and it was appropriate that, as head of the criminal division, I would do it.

Q. But federal prosecutors in New York and elsewhere also played big roles in the crisis cases. Why you?

A. As you point out, the U.S. attorneys don’t report to me, but someone had to tell the public how hard prosecutors across the department have been investigating these cases. I was willing to talk about these issues, to continue to talk about them in the face of criticism, and I’m still willing to talk about them.

As with the earlier versions of this lame excuse, neither Lanny nor the interviewer mentions the larger task forces (like the foreclosure fraud one) where Lanny was a central player in not prosecuting banksters, nor do they mention Lanny’s past descriptions of talking to experts and CEOs before making decisions on not indicting banksters.

But the lame excuse also comes with a new twist.

Q. Given that you’ve taken a beating on crisis cases, what is your legacy here?

A. The criminal division is now at the center of criminal law enforcement, both in prosecutions and policy. I don’t think that was ever the case before.

The very next question — at least as excerpted — after reporting Lanny dodging any direct responsibility for not prosecuting banksters, Ben Protess records Lanny claiming credit for putting the Criminal Division solidly at the center of criminal law enforcement — or lack of enforcement, in the case of the banksters.

Not responsible. Responsible, In four lines or less.

The only news in this article, as far as I can see, is this exchange.

Q. What’s next?

A. I’m probably going to take a few months off. I’m also going to start talking to law firms and the like and make a decision about where I’m going to go.

Q. The interviews are just a formality, right? The legal world assumes you’re heading back to Covington & Burling.

A. I love Covington. But I’m going to look at Covington; I’ll look at other firms. It’s certainly not a formality.

The man who just finished 4 hard years of not prosecuting any banksters is going to shop around and perhaps may not return to his former spooked up, corporatist, but not necessarily the most bank focused firm.

Lanny’s gonna see how much helping banksters avoid prosecution is worth.

Free agency riches: It’s not just for sports figures anymore.

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Obama’s Treasury Department: Our Sanctions Regime Is SEKRIT

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Screen shot 2013-02-20 at 12.48.34 PMTreasury’s Office of Foreign Assets Controljust sent out its invite for a symposium helping the Financial Industry learn about how to comply with sanctions. The symposium will include the following:

The Financial Symposium will feature a Keynote Address by OFAC Director Adam Szubin and presentations by key OFAC personnel on topics such as:

  • Changes to the Iranian Transactions and Sanctions Regulations, NDAA and CISADA
  • Enforcement guidelines and enforcement actions
  • SDN List updates and information on the designation process
  • Securities and Insurance
  • Licensing procedures and guidance
  • Compliance with U.S. economic and trade sanctions

In addition to formal presentations, OFAC staff will be available throughout the day for individual questions and ad hoc roundtable discussion on issues unique to the financial industry.

It’s actually fairly important that the sanctions regime be well-publicized. Not only does it help ensure compliance from any entity that might be considered liable. But that’s what gives it legitimacy: not just the fact that sanctions and their rationale appear well thought out (if you believe Iranians should have no access to medical devices and dental equipment, that is), but also that sanctions are somewhat fairly applied (which they’re not).

Apparently, Obama’s Treasury Department doesn’t see it this way.

 The event is closed to press.

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Lanny Breuer Now Blames 94 US Attorneys for Immunizing Banksters

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Remarkably, on the same day two Senators (one of them named in the article) reminded Eric Holder that Lanny Breuer said this,

I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.

The WaPo managed to ask no direct questions about this quote–or some of the obviously spiked cases against big banks–in this sloppy fellation of Lanny Breuer.

Granted it does ask about the Frontline show itself (though, refreshing as it was, Frontline focused on just one aspect of the mortgage fraud that Lanny’s department ignored; it’s pretty clear WaPo’s Sari Horwitz doesn’t even begin to understand that, though).

In a “Frontline” program on PBS last week, Breuer and the Justice Department were harshly criticized for not bringing criminal prosecutions against any Wall Street executives in connection with the 2008 financial collapse.

Curiously, rather than admit he consults with regulators and experts before he charges banksters, rather than repeat his theory that all it takes to deter CEOs (as opposed to little people) is to chat them up,

Look, I want to be clear, I don’t want to suggest for a moment that we don’t–and we will–aggressively pursue cases criminally but, I guess both as a defense lawyer, which I was for many years, a white collar defense lawyer and now as AAG, I don’t think we should completely discount the deterrent effect when we investigate cases even if we don’t bring them.

If a CEO or CFO of a major institution feels that he or she is subject to criminal liability, when we interview them or put them in the grand jury, they have lawyers and this is hanging over their head for years and years. It may be at the end we decide not to prosecute the company or the individual but I think it’s really inaccurate to suggest that that doesn’t have a very strong effect. I’m not sure CEOs on Wall Street right now feel as if they can do what they want and there’s no deterrence.

Lanny instead adopted a new excuse to deny responsibility for letting the most destructive criminals in the country walk free (note, Lanny appears to be ignorant of SarBox regulations that wouldn’t even require this kind of intent):

“I understand why people are upset,” Breuer said. “But we have 94 U.S. attorneys and they don’t report to me. Not one of them determined that there was a criminal case to be had. These are very complicated cases and they were just simply, on the merits, not cases that could be brought criminally.”

Breuer said Wall Street executives would have been prosecuted if the investigators could have proved criminal intent. “I have the same DNA in all of these cases,” Breuer said. “It’s just not plausible that in one area we would be overly scared and in all the other areas we would be aggressive.”

Well okay then. In this article, Lanny takes or is given credit for the BP pleas, two Medicare cases, 40 corporate cases (by Robert Khuzami, almost all of which resulted in settlements), the La Cosa Nostra take down, and LIBOR “prosecutions” (reportedly DOJ will charge UBS shortly). Of those, I’m only aware of the BP investigation being led by a task force rather than a traditional US Attorney structure. Yet Lanny wants to claim credit for all these prosecutions and settlements, but blame his US Attorneys–all 94 US Attorneys (!) when we’re really talking maybe 4 or 5 who would face a complex bankster case, and really just New York’s Preet Bharara, whom Lanny himself gave jurisdiction over some of the highest profile cases–for not prosecuting the banksters.

It’s not Lanny’s fault the banksters have gone free, you see, it’s the fault of people like John Leonardo, Arizona’s US Attorney, Alicia Limtiaco, Guam’s US Attorney, or Felicia Adams, Northern Mississippi’s US Attorney, all of whom had no hint of jurisdiction in these cases.

This, in spite of the fact that Lanny has repeatedly admitted being personally involved in the bankster cases.

This, in spite of the fact that Lanny did play a leadership role in one of the few cases that had a similar task force structure as BP–the mortgage fraud settlement. In that case, Lanny under-resourced the investigative team, ensuring it would be unable to do adequate investigation to reach adequate settlement. And he didn’t even show up for the big announcement that–basically–the settlement was immunizing the banksters for stealing millions of people’s homes. Somehow, now that it’s time to claim credit, Lanny has forgotten about that willful attempt to help banks bury their crimes.

Lanny has, in the past, clearly admitted to actions that led directly to amnesty for banksters. But in his effort to shore up his reputation as he heads out the door (though not until March 1, unfortunately), he’s gonna blame everyone else for the fact that, on his watch, the most destructive criminals in the country got a pass.

Update: And he spewed the same line to NPR:

“This department has been incredibly aggressive in dealing with the issues of the financial crisis,” Breuer told NPR. “Aggressive U.S. attorneys have looked at this. But time and again the career prosecutors have come back on those cases, on those securitization cases, and said we don’t have a criminal case to be brought….My message to the American people is that this Justice Department calls it the way it sees it.”

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Sherrod Brown and Chuck Grassley Watch Frontline, Too

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Citing this line from Lanny Breuer in last week’s Frontline program,

I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.

Sherrod Brown and Chuck Grassley have sent a list of questions they want Eric Holder to answer by February 8.

The questions are:

  1. Has the Justice Department designated certain institutions whose failure could jeopardize the stability of the financial markets and are thus, “too big to jail”?  If so, please name them.
  2. Has the Justice Department ever failed to bring a prosecution against an institution due to concern that their failure could jeopardize financial markets?
  3. Are there any entities the Justice Department has entered into settlements with, in which the amount of the settlement reflected a concern that markets could be impacted by such a settlement?  If so, for which entities?
  4. Please provide the names of all outside experts consulted by the Justice Department in making prosecutorial decisions regarding financial institutions with over $1 billion in assets.
  5. Please provide any compensation contracts for these individuals.
  6. How did DOJ ensure that these experts provided unconflicted and unbiased advice to DOJ?

I’m interested in their focus on contractors. Has someone like Promontory Financial Group been making these decisions too?

In any case I await Holder’s non-responsive answer with bated breath.

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Sheldon Adelson Should Have Saved His Cash

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When Mike Allen asked Sheldon Adelson in September why he had dumped so much money in what would be an unsuccessful attempt to help Republicans win in november, Adelson’s first reason was that he was being unfairly treated by DOJ.

Self-defense: Adelson said a second Obama term would bring government “vilification of people that were against him.” He thinks he would be at the top of that list and contends that he already has been targeted for his political activity.

Adelson’s Las Vegas Sands Corp. is being scrutinized by federal investigators looking into possible money-laundering in Vegas, and possible violation of bribery laws by the company’s ventures in China, including four casinos in the gambling mecca of Macau. (Amazingly, 90 percent of the corporation’s revenue is now from Asia, including properties in Macau and Singapore.)

The country’s leading megadonor is irritated by the leaks. “When I see what’s happening to me and this company, about accusations that are unfounded, that kind of behavior … has to stop,” he said.

Adelson gave the interview in part to signal that he intends to fight back in increasingly visible ways. Articles about the investigations appeared last month on the front pages of The Wall Street Journal and The New York Times. He maintains that after his family became heavily involved in the election, the government began leaking information about federal inquiries that involve old events, and with which the company has been cooperating.

The aim of the leaks, he argued, is “making me toxic so that they can make the argument to the Republicans, ‘This guy is toxic. Don’t do business with him. Don’t take his money.’ Not all government employees are leakers, but most of the leakers are government employees.”

Asked to response to Adelson’s comments, the Justice Department said it does not comment on, or confirm, investigations.

While Adelson blames DOJ for leaks, much of the outlines of his corrupt business doings came from public court filings.

One thrust of the investigation pertains to whether the fixer Adelson’s casino company used in China, Yang Saixin, had engaged in bribery. Another involves evidence that a Chinese-born Mexican businessman with ties to the Sinaloa cartel, Zhenli Ye Gon, laundered drug profits through the Venetian casino in Las Vegas (using HSBC). And while Adelson himself has not been implicated in those and other money laundering and bribery allegations, the breach of contract suit brought by his former Macau CEO, Steven Jacobs, alleges that Adelson was personally involves in orders that Jacobs extort Chinese officials and sustain a “prostitution strategy.”

And while there were hints just before the election that Adelson and his company would be treated just like every other MOTU–given a wrist slap–the WSJ yesterday described the signs of the inevitable settlement. There’s the hiring of former US officials to internally police money laundering (and, probably, to turn the Sands into an espionage asset).

Sands has recently hired three former FBI agents to strengthen anti-money-laundering efforts and improve the background checks the company does on VIP customers and junket operators, the people familiar with the matter said.

And there’s the promises to stop allowing customers to hide their identity.

The casino operator also will no longer allow gamblers to transfer funds from their bank accounts under an alias, according to a person familiar with the matter.

[snip]

Sands and other casino operators have allowed important clients to deposit money—on occasion millions of dollars at a time, in the case of Sands at least—in accounts in one country and use it in another for gambling, according to casinos executives and documents reviewed by The Wall Street Journal. The casinos say their systems are safe against money laundering.

But law enforcement authorities say they are concerned about the use of these types of transfers across international borders, particularly from junkets; without the more specific source-of-funds and other requirements that banks provide, those fund exchanges could carry a high risk of money laundering, they say.

As well as generalized compliance improvements.

In addition, the casino operator is retraining its staff on U.S. antibribery laws and on ways to avoid doing business with people and entities on the U.S. sanctions list, which includes alleged terrorists, narcotics traffickers, and other perceived threats with whom U.S. firms are banned from doing business, according to another one of the people.

This is, in short, precisely what we see every time the DOJ lets a big financial entity off of money laundering charges that small fry like check cashing store managers would get indicted and go to prison for.

So Adelson need not have spent those millions to try to defeat Obama. Obama’s DOJ was always unlikely to go after his company aggressively.

I could be wrong, but it appears as if Lanny Breuer is about to declare the Sands casinos systematically important and therefore too big to jail.

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Day after Frontline Exposure, Lanny Breuer Resignation Reported

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Last night, Frontline had a very good show exposing how derelict DOJ has been in not prosecuting any of the banksters who ruined the economy. It could have been far, far worse, as it dealt solely with the securitization crimes that were ignored. Nevertheless, it showed Lanny Breuer to be an arrogant jerk who insisted DOJ couldn’t prosecute, in spite of the abundant evidence of crime presented in the show.

Nevertheless, DOJ spent part of the day threatening Frontline to never cooperate again.

And, presumably, part of the day planting this way-too complimentary piece in the WaPo announcing Breuer’s departure.

Golly, was it only last week I was calling for Breuer’s firing?

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Once Again Jamie Dimon Gets Special Treatment

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Yesterday, the Office of the Comptroller of the Currency issued two orders to JP Morgan Chase, one related to its London Fail Whale, the other related to failures in its Bank Secrecy Act/Anti-Money Laundering compliance. With respect to latter order, OCC said, in part:

(1) The OCC’s examination findings establish that the Bank has deficiencies in its BSA/AML compliance program. These deficiencies have resulted in the failure to correct a previously reported problem and a BSA/AML compliance program violation under 12 U.S.C. § 1818(s) and its implementing regulation, 12 C.F.R. § 21.21 (BSA Compliance Program). In addition, the Bank has violated 12 C.F.R. § 21.11 (Suspicious Activity Report Filings).

(2) The Bank has failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements due to an inadequate system of internal controls, and ineffective independent testing. The Bank did not develop adequate due diligence on customers, particularly in the Commercial and Business Banking Unit, a repeat problem, and failed to file all necessary Suspicious Activity Reports (“SARs”) related to suspicious customer activity.

(3) The Bank failed to correct previously identified systemic weaknesses in the adequacy of customer due diligence and the effectiveness of monitoring in light of the customers’ cash activity and business type, constituting a deficiency in its BSA/AML compliance program and resulting in a violation of 12 U.S.C. § 1818(s)(3)(B).

That last one is the real peach. You see, in spite of the fact the order includes 22 pages of things JPMC “shall” do to fix this problem, the order did not include any fine. Remember, it has been less than 18 months since JPMC got caught–among other things–sending a ton of gold bullion to Iran in violation of sanctions. That time, at least, Treasury’s Office of Foreign Asset Controls fined JPMC, if only $88.3 million.

Still, here were are a year and a half later, with JPMC still refusing to police what it is helping its customers do, and the government is letting JPMC off with no fine.

Compare that to the treatment of Karen Gasparian, the manager of the G&A Check Cashing company out in LA. Today, he got sentenced to five years in prison for doing precisely what Jamie Dimon did: fail to comply with BSA/AML law. In his sentencing, he even submitted record of all the big banks that have skated for doing what he did, including HSBC’s 1.9 Billion wrist slap, and noted the disparity in treatment.

An even greater problem with the Government’s seeking a sentence of incarceration in this case is the disparity when compared to other instances of the same offense, or instances involving even more egregious conduct, such as much larger financial institutions conducting business with drug trafficking organizations and terroristic regimes like Iran. Time and time again, the United States Government has offered deferred prosecution agreements (and fines) to financial institutions whose conduct was exponentially more egregious than the conduct at issue here. Mr. Gasparian’s offense, while serious, was still far short of the conduct committed by these other institutions. Any sentence of incarceration in this case would be a loud proclamation that the rich and powerful receive one type of justice, while those less powerful receive another type.

The government, of course, insisted on enhancements to Gasparian’s sentence because his crime amounted to over $100,000 in a one year period (the government sent two confidential witnesses to cash checks at G&A, which is how they proved that amount).

Remember HSBC provided over $990 million in cash to a terrorist bank over a four year period. All that’s before you consider their money laundering for Mexican cartels and probable Russian mafia. Not a single HSBC employee was so much as indicted, much less sent to jail for five years or for a lifetime for material support for terrorism.

And now JPMC–and its “manager,” Jamie Dimon–not only get off without indictments, but without even a fine (at least not from OCC–OFAC may end up fining them).

The government submitted a bunch of sealed documents explaining why Gasparian should be treated so much more harshly than the big banks. I’m just going to assume the government explained what great intelligence work the big banks are doing to avoid being subjected to the rule of law.

Predictably, Lanny Breuer waved his dick around boasted about this conviction.

“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer.  “They knew they were required to report transactions over $10,000, but deliberately failed to do so.  As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”

This is the guy who, just one month ago, failed to even mention he was letting a bank that sent hundreds of millions in cash to a terrorist bank off without any charges.

At this point, it’s beginning to look like DOJ’s disparate treatment is not just about preserving his buddies the CEOs. But it’s about eliminating the little competitors like G&A so the equally corrupt big banks can take over their markets.

Update: Adding this from the government’s sentencing motion. The government insisted that Gasparian do time … as a deterrent.

Because there are hundreds of check cashers in Los Angeles as well as an underlying health care fraud problem, it is more important that the sentence here be sufficient to promote respect for the law and general deterrence for the types of criminal activities defendant engaged in as well as the health care fraudsters. A significant sentence is also necessary to reflect the serious [sic] of the offense, deter criminal conduct, and protect the public from defendant.

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After Having Let Off HSBC with an Inadequate Fine, Regulators Prepare to Let JPMC Off with No Fine

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It has been less than 18 months since JP Morgan Chase was fined $88.3 million for–among other things–sending a ton of gold bullion to Iran.

Yet JPMC’s regulators are about to scold JPMC–and demand it improve the compliance programs it promised to improve 18 months ago–again.

Only, having found JPMC didn’t implement the promised compliance programs after being fined, JPMC’s regulators this time will not fine the bank for violating US law.

A U.S. regulatory probe of JP Morgan Chase & Co is expected to result in an order that the bank correct lapses in how it polices suspect money flows, in an action expected as soon as Friday, people familiar with the situation said.

The action would be in the form of a cease-and-desist order, whichregulators use to force banks to improve compliance weaknesses, the sources said.

The order is expected to be issued by the Office of the Comptroller of the Currency and the Federal Reserve.

JP Morgan is not expected to pay a monetary penalty, according to one person familiar with the situation.

This is what counts as seriousness from US bank regulators–ever quieting peeps when American banks openly flout the law (they’re a bit harsher with European banks, though still believe in forgiving such banks for things like material support to terrorism).

A teenager busted for shoplifting would pay more in fines than JPMC reportedly will pay for helping crooks–even alleged assassins–do their crime.

 

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Lanny Breuer Deputizes Banks Rather than Prosecuting Them

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Back when DOJ’s head of criminal prosecutions, Lanny Breuer, let HSBC off without indictments, I noted that he didn’t even mention HSBC’s significant ties to funding terrorists.

When it came to one of the world’s biggest banks, the Assistant Attorney General chose to simply ignore the threat DOJ’s been singularly dedicated to defeating since 9/11, terrorism.

But the Statement of Facts on the HSBC settlement wasn’t quite as reticent as Breuer himself. It said this about HSBC’s ties to terrorist financing:

In addition to the cooperative steps listed above, HSBC Bank USA has assisted the Government in investigations of certain individuals suspected of money laundering and terrorist financing.

That is, the court documents on the settlement talk about HSBC helping to investigate terrorist financing, rather than HSBC playing a key role in making up to a billion dollars available for terrorist financing. DOJ turned HSBC’s complicity in the central threat of our time into purported assistance pursuing it.

Poof! DOJ turned a criminal bank into a law enforcement partner, all through the secret exercise of so-called prosecutorial discretion.

Which is important background for the story about DOJ with which NPR’s Carrie Johnson has begun the year, describing how Lanny Breuer is asking banks–the same banks who crashed the economy with a bunch of criminal scams that have gone unpunished–to serve as “quasi cops.”

Every year, banks handle tens of millions of transactions. Some of them involve drug money, or deals with companies doing secret business with countries like Iran and Syria, in defiance of trade sanctions.

But if the Justice Department has its way, banks will be forced to change — to spot illegal transactions and blow the whistle before any money changes hands.

[snip]

But [former OCC head Eugene] Ludwig, who now consults for banks at the Promontory Financial Group [which makes huge money not finding crimes for the banks], says prosecutors and bank regulators can’t catch all the fraud, so they’re depending on the banks themselves to do a better job.

“Banks are not set up historically really to be kind of quasi law enforcement enterprises, which is really what the U.S. government’s asking of them,” he says.

Every time a financial institution makes a fix, criminals try to work around it. Ludwig calls it a cat-and-mouse game. “Fair or not, it’s what the government is demanding of our enterprises, and everybody has to face up to that reality, I think,” he says.

Ludwig may be publicly complaining. But his firm has already gotten consulting fees to hide the scale of Standard Chartered Bank’s fraud, and the government is about to give up on the badly-conflicted foreclosure abuse review for which Promontory consulted with Bank of American and Wells Fargo. It seems clear that Promontory will get rich whitewashing bank crimes so Lanny Breuer can pretend banks are cops, not robbers.

But that’s not the most lucrative scam here. After all, HSBC was able to reap billions because it served a key role in providing cash that went, in part, to terrorists. And yet it, unlike Muslim men, seems guaranteed under Lanny Breuer to wipe that slate clean by flipping on their former clients at a convenient time (and given that DOJ has taken no action against Al Rajhi bank, in only a limited fashion).

All this remains unstated. In fact, I guarantee you if it were ever asked, DOJ would refuse to divulge precisely what kind of quasi cop HSBC is playing, as it could under a law enforcement exception to FOIAs. Even Carl Levin’s otherwise meticulous report on HSBC was silent about what happened when Treasury’s former Under Secretary for Terrorist Finance went to HSBC.

But as part of the scam, it appears both a criminal bank and our buddies the Saudis have avoided any punishment for funding terrorism.

Which is how it works when the crooks get deputized rather than prosecuted.

 

 

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Barney Frank: “As Well as To Financial Regulators”

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When I first read about this letter from retiring Financial Services Committee Ranking Member Barney Frank to Eric Holder, I thought it akin to what retiring Homeland Security Chair Joe Lieberman did on the Sunday shows when he aggressively called for gun control: a PR stunt by an outgoing top Committee member, addressing a problem in all-but retirement that he didn’t address while he had the authority to do so in Congress.

Dear Mr. Attorney General:

I note several instances recently in which Administration officials have proceeded civilly against blatant violations 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. This latter consideration does not apply, similarly, to individuals. 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.

I am writing to you as well as to financial regulators, understanding that the decision to pursue criminal proceedings rests with the Justice Department, so I ask that there be 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.

BARNEY FRANK

And that may well be what this is: an effort to pile on all the calls for prosecuting the banksters.

But I am fascinated by that second paragraph, the mention of the financial regulators. Consider this NYT account of HSBC’s wrist-slap that Bill Black highlighted.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency pointed to potential issues with the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the effect on the broader economy.

“The Justice Department asked Treasury for our view about the potential implications of prosecuting a large financial institution,” David S. Cohen, the Treasury’s under secretary for terrorism and financial intelligence, said in a statement. “We did not believe we were in a position to offer any meaningful assessment. The decision of how the Justice Department exercises its prosecutorial discretion is solely theirs and Treasury had no role.”

Still, some prosecutors proposed that Attorney General Eric H. Holder Jr. meet with Treasury Secretary Timothy F. Geithner, people briefed on the matter said. The meeting never took place. [my emphasis]

DOJ went to Treasury and the Fed and OCC and asked for permission to get HSBC to plead guilty to Bank Secrecy Act violations. According to Cohen, Treasury said they had no meaningful assessment. According to NYT, the regulators–the Fed and OCC–raised concerns about the broader economy.

And Barney Frank says he is writing financial regulators (in addition to Holder himself) about bank immunity, but this appears not to be the letter to financial regulators, because they are not CC’ed on the letter. Yet he has not released a separate letter to regulators to the press (though if my attempts to get this letter this morning are any indication, Frank’s staffers have already moved onto look for new jobs).

This suggests there’s another letter to the people who told DOJ to let HSBC skate.

It’s worth noting that one of these regulators–OCC–was broadly implicated by the Permanent Subcommittee Investigation of HSBC.

In any case, there seems to be more to what Frank is doing. It may be he’s just trying to push Holder to meet with TurboTax Timmeh and the financial regulators, as Holder’s prosecutors attempted to make happen. Or he may be doing something else here, potentially even coaxing regulators to embrace individual indictments to stave off the larger anger about the HSBC wrist-slap.

It may well be this is a show. But it appears that we’re only seeing half the show.

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