Massachusetts Senator Elizabeth Warren continued pressuring banking regulators Thursday, criticizing them during a Senate hearing for failing to enforce tougher penalties on the nation’s largest banks.
Warren joined other members of the Senate Banking Committee in grilling regulators on corporate wrongdoing, focusing on the punishment faced by British bank HSBC after it was caught laundering Mexican drug money. Federal regulators fined the company nearly $2 billion in December. But Warren chided them for neither forcing the bank to shut down its US operations nor prosecuting individual employees.
“If you’re caught with an ounce of cocaine, the chances are good you go to jail,” Warren said. “But evidently, if you launder nearly a $1 billion for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night…I think that’s fundamentally wrong.”
She ripped federal regulators a new one. More:
During a Senate Banking Committee hearing about money laundering, Warren (D-Mass.) grilled officials from the Treasury Department, Federal Reserve and Office of the Comptroller of the Currency about why HSBC, which recently paid $1.9 billion to settle money laundering charges, wasn’t criminally prosecuted and shut down in the U.S. Nor were any individuals from HSBC charged with any crimes, despite the bank confessing to laundering billions of dollars for Mexican drug cartels and rogue regimes like Iran and Libya over several years.
Defenders of the Justice Department say that a criminal conviction could have been a death penalty for the bank, causing widespread damage to the economy. Warren wanted to know why the death penalty wasn’t warranted in this case.
“They did it over and over and over again across a period of years. And they were caught doing it, warned not to do it and kept right on doing it, and evidently making profits doing it,” Warren said of HSBC. “How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
To be fair to the regulators, it’s up to the Justice Department, not Treasury, to determine if HSBC should be tried for criminal conduct. Still, Warren wouldn’t let up:
The regulator she was questioning, David Cohen, the Treasury Department’s undersecretary for terrorism and financial intelligence, repeatedly refused to answer the question. Like the other regulators at the hearing, he said that his department has no authority to shut down a bank unless the Justice Department — not represented at the hearing — convicts the bank of a crime. He said that Treasury had come down as hard as possible on HSBC. But he wouldn’t answer Warren’s question about when a bank deserves to be shut down in the U.S.
“You sit in Treasury and you try to enforce these laws, and I’ve read all of your testimony and you tell me how vigorously you want to enforce these laws, but you have no opinion on when it is that a bank should be shut down for money laundering?” Warren finally asked. “Not even an opinion?”