US Refused To Prosecute HSBC Over Fears Of "Global Financial Disaster"

Tyler Durden's picture

What had previously only been hinted by the likes of former US attorney general Eric Holder who infamous said some banks are "too big to prosecute" shortly before resigning, became fact when a US Congressional report found that US officials refused to prosecute HSBC for money laundering in 2012 because of concerns within the DOJ that it would cause a "global financial disaster."  The report also revealed that UK officials, including Chancellor George Osborne, added to pressure by warning the US it could lead to market turmoil. The report alleges the UK "hampered" the probe of the most systemically important UK bank, and "influenced" the outcome.

As BBC reminds us, some four years ago HSBC was accused of letting drug cartels use US banks to launder funds. The bank, which has its headquarters in London, paid a $1.92bn settlement but did not face criminal charges; likewise all top officials at HSBC avoided any charges.

According to the report "George Osborne, Chancellor of the Exchequer, the UK's chief financial minister, intervened in the HSBC matter by sending a letter to Federal Reserve Chairman Ben Bernanke... to express the UK's concerns regarding US enforcement actions against British banks." The letter said that prosecuting HSBC could have "very serious implications for financial and economic stability, particularly in Europe and Asia".

In other words, the US liasion who prevented justice at the time was not so much Eric Holder, who was merely doing as instructed, as the then-Fed chairman and resident helicopter money expert, Ben Shalom Bernanke.

Justice Department spokesman Peter Carr said a series of factors were considered when deciding how to resolve a case, including whether there may be "adverse consequences for innocent third parties, such as employees, customers, investors, pension holders and the public". The report also accuses former US Attorney General Eric Holder of misleading Congress about the decision.

The report says Holder ignored the recommendations of more junior staff to prosecute HSBC because of the bank's "systemic importance" to the financial markets.

"Rather than lacking adequate evidence to prove HSBC's criminal conduct, internal Treasury documents show that DOJ [Department of Justice] leadership declined to pursue [the] recommendation to prosecute HSBC because senior DOJ leaders were concerned that prosecuting the bank 'could result in a global financial disaster'," the report said. Instead, the Department of Justice and HSBC reached the settlement, which some politicians criticised for being too lenient.

Testifying before Congress in 2013, Holder infamously said the size of some financial institutions can make it difficult to bring criminal charges. He later tried to clarify those remarks telling Congress: "If we find a bank or a financial institution that has done something wrong, if we can prove it beyond a reasonable doubt, those cases will be brought."

That too was a lie.  Congress's report deemed these comments to be misleading in light of emails from Treasury Department staff that recommended criminal charges.

Eric Holder is now writing a book, due out in 2018. We doubt this episode will be featured in it.

The 2012 settlement with HSBC detailed how the bank violated US sanctions by conducting business for customers in Iran, Libya, Sudan, Burma and Cuba.

HSBC accounts were also used by the Sinaloa drug cartel in Mexico and Norte del Valle cartel in Colombia to launder $881m. The settlement allowed the bank to avoid pleading guilty to any wrongdoing.

If HSBC had been proven guilty of criminal action, it could have lost its banking charter in the US.

As BBC concludes, both HSBC and US regulators declined to comment on the report. The UK Treasury has not commented either. They would both rather comment on the economic recovery by pointing out the stock market being at all time highs.

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gmak's picture

It's so much easier to step on the little person than the big nasty conglomerate that also makes political contributions.  Any excuse not to bite the hand that feeds you, right you political scumbags?


At some point you just have to flush the toilet and deal with the consequences. Cut off a finger now, or cut off the arm (or more) later.

So Close's picture

So we can't prosecute criminality because it will bring down criminality?

philipat's picture

Yup, just like Hillary is guilty under 6 different statutes but she is "Too Big to Prosecute"? And I don't think that was referring to her cankles or fat criminal lieing ass?

There are different sets of rules for the elites in a banana Republic..

Looney's picture


Systemically important Deja Vulva all over again!   ;-)


MagicHandPuppet's picture

Any bureaucrat who refuses to prosecute a very serious crime due to political reasons (yes, this is political from every perspective) is COMPLICIT in the crime and should also be prosecuted.

SoilMyselfRotten's picture

became fact when a US Congressional report found that US officials refused to prosecute HSBC for money laundering in 2012


Yes, we know, it's an understanding you and the DOJ have with each other. You know you can do anything you want, in fact, the more egregious you are in stealing from Americans, the less chance you will be prosecuted. Assholes, both of you.

beemasters's picture

For a sound reform, we desperately need to prosecute even if it means a probable global financial disaster. Kicking the can will only make it worse down the road.

froze25's picture

Your right, not prosecuting only encourages the behavior. On its face "too big to jail" means they are "too big" and need to be "broken up" and not into pieces where the board members of the newly created entities are all the same.

MalteseFalcon's picture

HSBC knows where all the bodies are buried in the drug business.

They wouldn't bring down the economy so much as they would bring down the western political class.

Tarzan's picture

They've got us by the short hairs.


We're riding high on a magic carpet that only fly's as long as we believe.  The minute we lose faith, the rug, fiat, will be pulled from under us and we all fall together, great and small...

Déjà view's picture

Holder was way too busy 'leaning' on S&P and Egan-Jones who downgraded U.S. credit rating.


Déjà view's picture

Blue Waffle all over again?

wildbad's picture

well goldman sucks wrote holders legal non position for him, i'm sure they HSBC just plaigerized that and sent it on to holder or lynch.


professional money launderers have their hands full already, why burden them with legal trivialities

Mister Ponzi's picture

Time to prosecute Holder.

snakehead's picture

Past time. But bet your ass that the statute of limitations runs out.

Mister Ponzi's picture

It's not that difficult. Last summer, the German DOJ sacked Germany's AG after he started prosecuting two bloggers for publishing leaked intelligence documents. If you compare this to "Fast and Furious" or Holder's perjury...

Anonymous_Beneficiary's picture

Who has standing to bring these mofo's to justice when the Department of Just Us neglects to do so?

Déjà view's picture

In 2001 Bill Clinton pardoned him, his hand pushed by the Israeli prime minister, the king of Spain, an ex-head of Mossad and Mr Rich’s ex-wife Denise, who had given generously to the Clinton library and to Democratic campaigns. 


Economist art. below

Déjà view's picture

Eric Holder was also assistant AG in Clinton admin in charge of reviewing pardons, recommended a pardon for Marc Rich...

He sold Soviet oil to apartheid South Africa, despite a UN embargo, and between 1979 and 1994 made profits of around $2 billion there. He sent Soviet and Venezuelan oil to Cuba in exchange for sugar, ignoring America’s ban on trade. He sold on the global market surplus Iranian oil that had flowed to Israel down a secret pipeline, and kept the arrangement going seamlessly despite the Iranian revolution of 1979, another embargo, and the American hostage crisis.

In 1980-81 he violated America’s domestic oil-price controls by relabelling Texas crude from old fields as new-found, jacking up the price by as much as 400%. He made profits of $105m and shipped them abroad, avoiding taxes of $48m


froze25's picture

Let us not forget that he was heavily involved in the Oklahoma city bombing. I suggest watching on Youtube "A Nobel Lie"

3Wishes's picture

Sounds like its time for the self inflicted head shot!.

Anti-kleptocrat's picture

... $omeone wa$ getting $omething from the crook$ ... maybe hu$$ein? ... maybe the clinton$ ... maybe congre$$ ... maybe all of them ...  

ShrNfr's picture

When you pay a lot of money to the Clinton Foundation and give Bill a $200,000 speaking fee, lots of "reasons" suddenly pop up why you should not be prosecuted.

Kirk2NCC1701's picture

Yes, we dare not flush the toilet that hasn't been flushed in a long time.

You can keep capping in it for as long as possible, you just can't/shouldn't try to flush it.

I MISS KUDLOW's picture

They also are the custodians of the GLD ETF,,,cough cough cough,,,,cant wait to see where all that gold ends up

ArkansasAngie's picture

The DOJ is criminal.  

The current individuals in government need to all be thrown out on their ear.


Lumberjack's picture



Clinton foundation received up to $81m from clients of controversial HSBC bank

The charitable foundation run by Hillary Clinton and her family has received as much as $81m from wealthy international donors who were clients of HSBC’s controversial Swiss bank.

Leaked files from HSBC’s Swiss banking division reveal the identities of seven donors to the Bill, Hillary and Chelsea Clinton Foundation with accounts in Geneva.

They include Frank Giustra, a Canadian mining magnate and one of the foundation’s biggest financial backers, and Richard Caring, the British retail magnate who, the bank’s internal records show, used his tax-free Geneva account to transfer $1m into the New York-based foundation.

A spokesperson for Hillary Clinton declined to comment about her family foundation’s receipt of money from donors with accounts in Geneva.

Offthebeach's picture

Laundering billions to drug cartels, no problem.
Giving new full auto weapons to Mexican drug gangs, no problem.

Expired vehicle inspection sticker on 2014 truck, lights, felony pull over, olates run through data base, cop approches with gun holtered for ready, another cruiser pulls up, maybe a third Statey trooper, all lights, lots of questions why your 13,000 mile vehicle doesn't have a "valid" sticker. Ticket, insurance surcharge next 5 years.
( if illegal, no id, no license, no comprende, no problemmo)

Got to have capo cop peons keep the serf peons inline.

silverer's picture

What a bunch of total bullshit. You prosecute the people, not the company. Then you replace the jailed people with honest people to run the company. The US also bailed out AIG and left the criminals in place. Is the US saying only criminals are qualified to run these companies? Apparently.

DavidC's picture

Spot on.

To say it dismays me is an understatement.


Phoenix Pilgrim's picture

Silverer - Unfortunately, the only honest people they know and associate with are their victims.  We are trapped in the middle between oligarch apes that steal and kill via deviously created social constructs and pavement apes that steal and kill blatently.

Kirk2NCC1701's picture

And how, pray tell, did the "Oligarch apes" get there?

Could it be that "When good people remain silent, evil prospers"?

And WHY do "good people" remain silent?  Could it be because they are too scared, that they're easily intimidated, and little chickenshits full of self-righteousness?  IOW, they are the people who became sheeple, because of bullshit hippie teachings, like the 'Sermon on the Mount'?

BlindMonkey's picture

Great theory but where are you going to find honest people to run a bank?

DavidC's picture

I'm honest, I understand the 'markets', I'd do it. And I would base my salary on a multiple of the LOWEST paid member(s) of staff - if I do well, so do they.

From my past experience in the corporate world, the toilet cleaners do an untold valuable job, particularly the disgusting state that so called 'educated' people leave them in.


Doom Porn Star's picture

I'm glad I'm not the only one that understands that the company is merely the equivalent of a vehicle used in the execution of the cromes and it is the persons piloting/managing the vehicle that are personally resonsible and should be held personally liable.

Holder is proven just to be another tool of the Moneychangers.

This can likely be extenuated straight to his superior Barack Obama who either did not instruct him to do his job or had no power to instruct otherwise...

max2205's picture

Big money drops to the Clinton foundation were just coincidence 

spanish inquisition's picture

It's a tricky legal area that is resolved, and now big banks can grow bigger without fear. Remember, corporations are people and they did not intend to get caught.


1980XLS's picture

Why can't we prosecute Holder for dereliction of duty, or violating his oath of duty?

Or sue him civiliy in an attempt to clawback all his compensation and fringe benefits.


Come on Donald, say something.

factgasm's picture

It's like refraining from prosecuting Al Capone because doing so would mean his Speak Easies closing down.

Ghordius's picture

too big to be prosecuted? too big to exist

break them up. it's called anti-trust

every and each of those megabanks are an oligopoly all for themselves and together they are the biggest oligopoly ever seen on this planet

you don't get a free market by magic, you know? there is always someone that wants to corner a market

in this case, it's the market for financial business with an "Out of Prison" card built in, so they are already "playing" the game called.... "MONOPOLY"

Phoenix Pilgrim's picture

The problem seems to be the foxes run the hen house. Which of the hens is supposed to jail the foxes? The abrupt folding of Nigel Farage, Boris Johnson and then Andrea Leadsom suggests the hidden hands of power are still pulling the strings.


Panic Mode's picture

It's because the money laundering links back to the high ranks in US gov.

snakehead's picture

Don't mess with Mussolini, or the trains won't run on time.

cowdiddly's picture

This is why it will be hard for big banks to ban cash. Its because of banned substances that they keep illegal to feed the system.

Follow the money up from the small time idiot selling on the street to the drug kingpins and Chapo wannabees and you find that these billions upon bullions of dollars of cash transactiions need laundering somehow and the big corrupt banks are only all too willing to do the deed.

If the drug lords had no access to this money landering and critically needed accounts through the big banks it would be hard to do anything with the billions upon billins the illegal drug industry produces.

I( mean really, what do you think the little low level punk on the street is going to do start accepting swipe cards where you have a permanent record of every transaction? Nope you ban cash and you crony crooked ass money laundering banks and politicains like Mitch McConnel shipping are going to have to find a new gig.

40 year war on drugs. PFFFFFT. Fill the prison system with low level punks but never and I mean never go to the top to these bankers desks make a few arrests and stop it cold. Can't have than now can we?

No my friend we will always have some form of shit dollar they can print. JUSTus

swmnguy's picture

Excellent comment, but there's even more to it.  Cash that has been taken out of the above-ground economy is how mercenaries get paid, and get their weapons.  Mercenaries at arms-length are one of the primary tools of the US Empire globally.  ISIS, Al-Quaeda, Boko Haram, various factions across East Africa, the Ukranian fascists, groups in Xinjiang Province in China, across Latin America; all of them are dependent on large amounts of laundered cash.  The pallets of cash shown when a major "drug kingpin" takes a fall in a pre-arranged deal came from somewhere.  Most drug-buyers don't pay in $100 bills; how did the  $5, $10 and $20 bills turn into $100s?

The overall US economy has to balance.  For every $1 in circulation, there has to be a matching dollar in a bond.  Otherwise that dollar wouldn't have been created to be in circulation.

The Elites aren't ever going to do anything that would force a true accounting, or reveal how much of the US economy is based on illicit trade.  So HSBC and Citi and the rest of them will always be able to make huge amounts of money doing the laundry, occasionally paying a fee well less than a percent of their profits.

Phoenix Pilgrim's picture

Perhaps I'm missing something. It seems like money is a perceptual construct for exchange. If the world uses e-bills why is that any different than paper bills? I think the real issue is who controls the electronic format and physical satelite streams used to make the exchange.  The it what is so insidious about the essence of who controls the virtual world.

Swamp Yankee's picture

Burn, burn'em all.   -SY