Rep. Barney Frank (D-Mass.) has joined a growing contingent of people outraged by Justice Department’s decision not to prosecute HSBC banking executives. The department instead opted for a record $1.9 billion deal with the British-based bank, settling wide-ranging money-laundering charges.
Frank, who is retiring this year, wrote a letter Thursday to Attorney General Eric Holder asking for increased prosecutions of culpable individuals in financial crime cases. His letter follows several others who have spoken out against the Justice Department’s decision. The outrage comes from a variety of sources, including former federal prosecutors and legal scholars.
About a week ago, the Justice Department announced it would not prosecute HSBC for helping Mexican drug cartels to launder money and Iranian groups to skirt U.S. sanctions. The Justice Department settled with HSBC and the bank will pay a $1.9 billion fine.
Frank’s letter said that the Justice Department must increase prosecution of individuals to ensure the “integrity of our financial system.” One concern is that prosecution would disrupt stability of the financial system. Critics, including Frank, assert that failure to prosecute individuals will lead to the same disruption because of moral hazard.
“Officials of the administration have argued with some basis that instituting criminal proceedings against financial institutions can be destabilizing, and have instead opted for civil proceedings against acknowledged violators of laws that are important for the maintenance of the stability and integrity of our financial system,” Frank wrote. “But these constraints do not apply to prosecution of the individuals who have perpetrated these acts, and this should be vigorously pursued. From the standpoint of deterrence, prosecuting individuals is preferable as this raises few if any questions about institutional stability.”
Frank co-wrote the 2010 The Dodd–Frank Wall Street Reform and Consumer Protection Act after the 2008 financial crisis. The Dodd–Frank enacted the most extensive regulatory reform since the Great Depression.
“We have received the letter and are reviewing it,” the Justice Department told MSNBC.com.