Where is Judiciary Chairman Patrick Leahy on Big Bank Crimes and Obama?

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.

Last week’s big revelation on banking is that it is now official Department of Justice policy under Obama that big banks and their executives are above the law. HSBC was caught laundering money for both terrorists and drug dealers, and DOJ officials told the New York Times that they would not prosecute the bank under money laundering statutes, lest the financial system be destabilized. This was shocking, but consistent with policy made explicit by DOJ’s Head of Criminal Division Lanny Breuer back in September.

One key question is why it is that Judiciary Chairman Patrick Leahy, a former prosecutor, is utterly unwilling to do any investigation or oversight into this critical policy question? Leahy runs the Judiciary Committee in the Senate, and it would be impossible to find a more obvious topic for that committee to address. It’s not that there isn’t interest in the Senate. Senator Chuck Grassley, a Republican, and Senator Jeff Merkley, a Democrat, both blasted Eric Holder for this decision. Republican Senator Chuck Grassley is the ranking member on the committee, which means he’s the de fact Republican Chairman. He went after Holder aggressively:

What I have seen from the Department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists.  I cannot help but agree with an editorial in the New York Times that ‘the government has bought into the notion that too big to fail is too big to jail.’

Senator Ted Kaufman, the reformer Senator who threw his body into the struggle from 2009-2010, was able to get several committee hearings on the question of whether the DOJ and FBI were enforcing the law. Where is a great reformer Senator? Where is former Rhode Island state AG and current Senator Sheldon Whitehouse? What about former Minnesota State AG and current Senator Amy Klobuchar? They know what is going on. Are they staying quiet so they can angle for Holder’s job?

On the Democratic side in the Senate, only Senator Jeff Merkley, who is not on the Judiciary Committee, has really spoken out aggressively:

“This ‘too big to jail’ approach to law enforcement, which deeply offends the public’s sense of justice, effectively vitiates the law as written by Congress.  Had Congress wished to declare that violations of money laundering, terrorist financing, fraud, and a number of other illicit financial actions would only constitute civil violations, it could have done so.  It did not.

Eliot Spitzer is also outraged, and said that Breuer should be “gone tomorrow”. Matt Taibbi penned a diatribe. Rep. Brad Miller called for the big banks to be broken up (which is something Neil Barofsky argued was necessary in order to prosecute these banks in the interview I did with him a fw weeks ago). The rationale from the other side doesn’t hold water. The argument is that a guilty verdict would cause the bank to lose its charter, which means it could not operate in the United States. DOJ officials would not even bring a case under the bank secrecy act, which would carry a much less severe penalty. Even if we accept this rationale, there is still no reason not to prosecute the individuals at HSBC who helped launder this money.

This isn’t just an Obama administration policy, it also belongs to Congress. Judiciary Committee Chairman Patrick Leahy, by doing no oversight, has consented to this policy framework. He has to date said nothing about the dramatic policy implied in the HSBC decision. Yet, last May, Leahy gave a pat on the back to FBI Director for doing a better job regarding fraud. The FBI and the Justice Department, he said, “have also worked hand in hand with us to make great strides toward more effective fraud prevention and enforcement. In the last Congress, I worked hard with Senators on both sides of the aisle to craft and pass the Fraud Enforcement and Recovery Act (FERA), the most expansive anti-fraud legislation in more than a decade.”

FERA is explicitly the law that former Senate staffer Jeff Connaughton told us was undermined by the Senate funding structure and the administration. This law was co-sponsored by Senators Ted Kaufman, Chuck Grassley, and yes, Patrick Leahy.

So at this point, it’s worthwhile to ask, when the US government has explicitly defied Congress’s will and put big bank executives above the law, where is Chairman of the Judiciary Committee Patrick Leahy?

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About Matt Stoller

From 2011-2012, Matt was a fellow at the Roosevelt Institute. He contributed to Politico, Alternet, Salon, The Nation and Reuters, focusing on the intersection of foreclosures, the financial system, and political corruption. In 2012, he starred in “Brand X with Russell Brand” on the FX network, and was a writer and consultant for the show. He has also produced for MSNBC’s The Dylan Ratigan Show. From 2009-2010, he worked as Senior Policy Advisor for Congressman Alan Grayson. You can follow him on Twitter at @matthewstoller.


    1. TitusPullo

      Leahy’s lack of interest and the DOJ’s lack of prosecution for HSBC criminality is likely due to the fact that HSBC has been working with and on behalf of US agencies (CIA, et al, explicitly – all part of a “just do what needs to be done” mentality that prevailed post-9/11.

      Ten years later, this administration, looking to line itself up for an easy financial service, pre-election prosecution (to counter the ‘soft on Banksters’ criticism) has Holder and the DOJ diligently investigate HSBC for three years. As such, the DOJ does what the DOJ does best for any incumbent President– it hands the administration an election year ‘October surprise’; an open-and-shut case to prosecute one of the biggest banks of them all, and win the election.

      So, imagine the ‘November Surprise’ when, on the eve of Holder handing out indictments, HSBC tells the DOJ that, actually, all of this nasty banking business had been for, and on behalf of, Uncle Sam’s Praetorian Guard (and it has the ‘indemnity’ paperwork to prove it); HSBC had simply administrated the financial transactions of the CIA, its friends and its clients (allies and enemies alike). Sure, there were administration fees, overheads, maybe some excessive some fX fees, but all-in-all it had been sanctioned and approved by this and previous administrations – just ask Leon Panetta and that new guy, General ‘horndog’ Petreaus.

      The DOJ had stumbled upon its own decade long Al Qaeda-Los Zetas-CIA-Iran-Contra-type funding fuckfest. The October Surprise had to transition itself through a ‘November Nonevent’ into a ‘December Dud’. The political jeopardy of this administration (or a prosecuted HSBC) announcing that the Pantheon of Wall Street is indeed a bastion of corruption, but it is this (and previous) administration’s, sanctioned corruption, was likely to be less damaging than announcing: yes, banks and the bankers are bad, we tried our best, they are still too big to fail or jail, it’s their fault, let’s discuss how bad this TBTF/J problem is and let’s not look at the underlying basis of HSBC’s actions beyond their marginal profit motive.

      1. Nathanael

        A possibility, but if true, any sane President would have simply used it as an opportunity to dismantle the CIA covert operations, which have done nothing but harm to US interests for at least 60 years (perhaps longer).

        1. Aquifer

          Any “sane” Pres. – aye there’s the rub …

          On the other hand one could argue that any politician would be insane to open that can of worms, when the process of “dismantling” the operation would no doubt create a backlash from the CIA who knows where all the bodies are buried and who buried them – I suspect Obama, Leahy et al, are very much aware of the repercussions to their little house of cards …

          I find TP’s scenario quite plausible – in fact probably the only one that makes much sense; of course that’s assuming there is any sense to be made out of it at all …

  1. from Mexico

    That the drug lords and lords of capital operate with impunity is only half the picture. The other half is this:

    “Incarcerated Americans, 1920-2006”

    Beginning in 1980, the numer of Americans incarcerated has risen almost five-fold.

    When one peels back the layers of the onion to see how Reagan’s tough-on-crime crusade (but tough on only some crime) unfolded over the past 30 years, don’t be surprised if calls for ‘law and order’ are taken with a grain of salt.

    Americans are beginning to figure out that in order to find a more corrupt and debauched criminal justice system than that of the US, they’d have to go looking in some place like Mexico. And there’s probably only one thing Mexicans distrust more than the drug lords, and that’s Mexico’s police and criminal justice system.

    1. from Mexico

      For those interested in how the marriage between the drug lords and a nation’s criminal justice system is consumated, I would recommend Julio Scherer Garcia’s The Queen of the Pacific: It’s Time to Tell.

      The Queen of the Pacific, Sandra Avila Beltran, was first married to Jose Luis Fuentes Jimenez, head comandante of the Judicial Police for the state of Durango. After he was assasinated she married (common-law marriage) Rodolfo Lopez Amavizca, head of the National Institute of the Combat of Drugs. I thought her list of cars while she was married to Lopez was telling: “I had a Mercedes, a BMW, an Intrepid an Altima, a Lobo, a Trans Am, an Audi, a Maxima. I had everything.”

      It seems like top police commanders and the major drug lords in Mexico make up one big happy (or not so happy) family. The police and the narocs are not the same, Avila says, but they have a “convivencia“. That translates to something like marriage of convenience.

      Within The Queen of the Pacific’s social circles were all the great drug kingpins: Osiel Cardenas Guillen, Rafael Caro Quintero, Miguel Angel Felix Gallardo, El Guero Palma, Alberto Beltran, Chapo Guzman, Amado Carillo, etc.

  2. NMroadrunner

    Senator Leahy woke up next to a horse’s head in the form of anthrax spores a few years ago. Haven’t seen him since.

    1. NotTimothyGeithner

      This isn’t true. Leahy was always more bark than bite. He rolled over for the wealthy on a regular basis. He voted for financial deregulation, supported devolution to the states, and has never gone after right wing Democrats. He gets by because Vermont is small and has people under a spell of folksy charm, but I wouldn’t say he changed. Being a member of the minority is easy because you get the same perks but none of the responsibilities. Throwing barbs is easy especially with the GOP.

      Leahy is the Democratic disease.

  3. ex-PFC Chuck

    One key question is why it is that Judiciary Chairman Patrick Leahy, a former prosecutor, is utterly unwilling to do any investigation or oversight into this critical policy question?

    He’s in the bag like almost everyone else?

  4. PaulArt

    Leahy and Biden have a long association going way back. Leahy is probably deferring to Biden which is a sad commentary against Leahy because he should have learnt what Biden’s colors were during the Anita Hill hearings. They have also bought completely into the Obama perspective that ‘the GOP is beating on us enough, do you want to join that parade?, why can’t we work together to pass legislation on which we agree on?’

    1. just me

      Leahy and Holder also go way back.



      When Eric Holder was up for confirmation as Attorney General, [Utah attorney Jesse] Trentadue wrote Pat Leahy and asked to testify. Here’s the PDF of Jesse’s letter to Leahy with attachments (34 pages): http://dissentradio.com/tf/121908_JESSE_T_Ltr_to_P_Leahy_Judic_Commttee.pdf

      No one could be less suitable to uphold the principles of justice in America than Eric Holder. And I would like the opportunity to appear before the Judiciary Committee to testify to that fact.

      ~ Jesse C. Trentadue to Patrick Leahy, December 19, 2008

      Leahy didn’t let him testify.

      From March 2010 Antiwar Radio interview of Trentadue by Scott Horton:


      Horton: So all those years that I was scratching my head trying to figure out how it could possibly be that Congress never convened a single hearing on any subcommittee in either house when it was run by either party on this case, it was because Eric Holder was doing the shuttle diplomacy there between branches of government preventing Dan Burton, Orrin Hatch, Arlen Specter, Patrick Leahy, people like that, from investigating this case.

      Trentadue: Both my brother’s murder and the bombing. It’s my understanding there’s never been a hearing on the bombing.

      Trentadue had FOIA’d documents that apparently showed Eric Holder, when he was an Assistant Attorney General in the Clinton administration, had been in charge of “The Trentadue Mission” to squelch Congressional oversight of his brother’s murder (apparently “suicided” in federal prison by FBI interrogators who mistook him for suspect John Doe No. 2) and the Oklahoma City bombing. That’s what was in the documents he sent to Leahy.

      1. just me

        Was that Leahy’s worst moment?

        I think this was his best:


        SEN. PATRICK LEAHY: And then you said, “I took an oath to the president, and I take that oath very seriously.” Did you mean perhaps you took an oath to the Constitution?

        SARA TAYLOR, FMR WHITE HOUSE POLITICAL DIRECTOR 2005-07: I, uh, yes. You are correct. I took an oath to the Constitution. But, uh, what —

        LEAHY: Did you take a second oath to the president?

        TAYLOR: I did not. What I should have said —

        LEAHY: The answer was incorrect.

        TAYLOR: The answer was incorrect.

        LEAHY: Thank you.

        TAYLOR: What I should have said is that I took an oath, I took that oath seriously, and I believe that taking that oath means that I need to respect, and do respect, my service to the president.

        LEAHY: No! The oath says that you take an oath to uphold and protect the Constitution of the United States. That is your paramount duty. I know the president refers to the government as being his government. It’s not. It’s the government of the people of America. Your oath is not to uphold the president, nor is mine to uphold the Senate. My oath, like your oath, is to uphold the Constitution.

  5. psychohistorian

    The justice department is too busy to prosecute the banks. They need all the energy they have to further erode the rights of the 99%

    The current administration is not just a Trojan Horse to gut the social safety net but also to keep the wagons of the global inherited rich safely encircled around the financial system they own and control the world with.

    Rule of law is for little people.

    I am proud to have Senator Merkley as the stand up Senator from Oregon.

  6. steelhead23

    You hold up HSBC’s money laudering as if it is THE BIG DEAL. It is not. Yes, it was illegal – and yes, those participating are criminals. But, the scale of the damage done to innocents pales by comparison to deals like the Magnetar and Aurora trades – these were direct frauds in which the trusts were filled with “sure to fail” securities and sold to rubes as AAA. It was that crime that caused the financial collapse. Sheesh Matt, if they won’t prosecute Jamie and JPM for those shenanigans, going after HSBC for money laudering would seem like a red herring to me. Also, you must have Leahy’s Legislative Director’s number – give him/her a call. Ask them why Leahy isn’t kicking Holder over this – I’d love to hear the answer.

    1. Goin' South

      Approaching this piecemeal will always fail.

      What’s the real message here?

      Bank profits are more important than equal justice under the law.

      There’s nothing surprising about that, especially given the current hot debate over guns. Gun manufacturers own the NRA, and through them, most of Congress.

      Gun manufacturer profits are more important than the safety, even the lives, of children.

      Similar value choices are made throughout the world.

      European bank profits are more important than the lives of Greeks.

      Cigarette company profits have been more important than the lives of young, would-be smokers for decades.

      Gas driller profits are more important than water quality–and therefore people’s health–in fracking areas.

      Medical insurance company profits are more important than Americans’ health.

      Coal and oil company profits are more important than the lives of future generations endangered by global warming.

      Can anyone ever imagine a Capitalist making choices for their companies that would put public safety and health above profit? Does anyone believe that these same Capitalists will not do everything within their great power to buy governments and media to get their way on these issues through corruption and deceit?

      Capitalists will kill not only their workers but even their customers if there’s profit in it.

      Capitalism is not an economic system. It’s a sickness. When we see how our society’s problems are the symptoms of this sickness, we’ll begin to make real progress.

    2. Lord Koos

      With the drug laundering, it’s the blatant hypocrisy that stands out. We’ve been hearing about the “war on drugs” for years, but “war on fraud”, not so much.

  7. dolleymadison

    I’m guessing he is riding around in the warm pocket of HSBC, Bofa, Wells, et al. (and here you thought they were just “happy to see you”)

  8. Eric

    Let Leahy know how you feel about this:
    Click on Senator_Leahy@leahy.senate.gov,
    and on info@judiciary-dem.senate.gov
    and then on the URL at the top of this article,
    and then click on “Edit”
    and then “Select all”
    and then “Copy”
    and then click in the message-area of the email
    and then click on “Edit”
    and then on “Paste”
    and then write something in the email’s “Subject” line such as “How can you justify this?”.
    Then click “Send.”

    1. citalopram

      He doesn’t care how you feel about this. If he was on the gallows for his crimes he sure would though!

      I’m done wasting my time begging these criminals to stop.

      1. Eric

        That’s assuring continuation of the existing non-prosecution of bankster (and other elite) criminality which has been destroying this country. Such fatalism is self-confirming; it is neither intelligent nor admirable. We all have obligations as citizens in a democracy. This is one of those obligations — to express our views when the government itself is committing (or protecting the perpetrators of) such massive crimes.

        1. NotTimothyGeithner

          Its not fatalism. Expecting a tiger to change its stripes is stupid. A young man is one thing, but Leahy has a track record of being for all good things when he has no responsibility.

          At some point, these people have to be held to account, and what this means is if a downballot Democrat wants my vote they need to be in the anti-Democratic establishment wing. They protected and glorified Lieberman. They need to go because they have had chance after chance, but Leahy and his ilk need to be exposed for the frauds they are. Maybe he has good intentions, but as we know about roads paved with good intentions, there comes a point where asking our legislators to not be hideous individuals has to stop being the strategy because it isn’t working.

        2. hunkerdown

          One of those obligations is discernment: to not waste energy on brick walls, blind alleys and whack-a-mole tables.

  9. Susan the other

    Legalize drugs. Make a deal with Iran that everyone can live with. Close down the private banks’ access to sovereign money. Write humane effective laws. Clean up the planet. Etc. The reason none of this gets done, and instead we now have entrenched criminal banks, is because there are too many special interests (sometimes referred to as a “free market”) that have all been appeased at the expense of citizens, common people. Just think how long drug money has footed the bill for black ops and lined the pockets of our disgusting politicians.

  10. just me


    “This ‘too big to jail’ approach to law enforcement, which deeply offends the public’s sense of justice, effectively vitiates the law as written by Congress.

    This doesn’t just vitiate the law as written by Congress, it vitiates the Constitution itself, which calls for all trials to be held by jury. The way the DOJ does it now, trials never get to a jury, the DOJ intercedes and pockets fines/launders contributions before cases can get there. And Deferred Prosecution Agreements mean a Corporate Monitor (like a probabtion officer had they had a trial and been convicted), which is a nice plum job for ex-AGs like Ashcroft, Mukasey and Gonzalez, who can set their own fee. It’s a sweet loop.

    And even in the cases that do make it to trial, if you look at the way the DOJ treats juries, due process has been corrupted. Juries were supposed to be the conscience and fairness test of our laws and courts so that legal would be just and reasonable, but now jurors are told they can’t use their conscience.

    http://www.bradblog.com/?p=8447 Mike Malloy Show 4/5/11, Hour 2 at 24:20:

    TIM DeCHRISTOPHER: And, you know, even though there were a lot of things that most people view as injustices in this trial where the jury wasn’t allowed to hear much evidence and they were really specifically repeatedly told that they weren’t allowed to use their conscience in making their decision, that they weren’t there to judge whether it was right or wrong, that’s really the status quo for our legal system at this point. … that’s what our legal system has evolved into, where the jury is just there to really rubberstamp the decision that the government has already made.

    Which means that, say, this guy could not sit on a current American jury:

    It’s not only ….(the juror’s) right, but his duty, in that case, to find the verdict according to his own best understanding, judgement, and conscience, though in direct opposition to the direction of the court. ~ John Adams, 1771

    He would be asked during voir dire if he agrees to follow the direction of the court, and if he doesn’t agree, if he says what’s in the quote box above, he will be booted from the jury pool. I think it’s a law, or a court rule now.

    Another way the DOJ screws the use of juries is by loading the charges so high that it makes the consequences of choosing a jury trial so dangerous that defendants plea bargain instead. See “When Prosecution Becomes Persecution,” by Scott Horton at Harper’s: http://harpers.org/blog/2011/09/when-prosecution-becomes-persecution/

    More on Tim DeChristopher’s trial here: http://en.wikipedia.org/wiki/Tim_DeChristopher#Trial

    In November 2009 DeChristopher’s defense team claimed a necessity defense,[11] which required proof that DeChristopher was faced with choosing between two evils and that his actions resulted in the lesser of the two to avoid imminent harm where no legal alternative was available. Federal prosecutors and U.S. District Judge Dee Benson prohibited the defense, precluding DeChristopher from presenting evidence that might have supported his argument for necessity defense. DeChristopher and his attorneys were also forbidden to inform the jury that the lease auction was deemed unlawful, that DeChristopher had raised sufficient funds for an initial payment to the BLM (which the BLM refused to accept), or that DeChristopher’s motives were grounded in moral convictions related to climate change.


    1. hunkerdown

      Once a juror is “in”, that juror does in fact have a lot of freedom to pull deliberations according to their preconceptions (e.g. seeding with unreasonable doubt, introducing personal experience) so long as they keep mum and make some appearance of reason and compliance. See Velvin Hogan’s recent performance on (and after) the Apple v. Samsung jury in California for a very recent lesson in just what sort of damage could be done by an indirectly self-interested juror if only they keep their mouths shut.

      1. just me

        Do you have a good link? I haven’t seen it.

        I did see the movie Runaway Jury though — anything like it?

  11. Lady Liberty

    I am not surprised. The Justice Dept. is responsible for bringing criminal prosecutions but holder is beyond corrupt. Seems the way it works is donations to obama get them a get out of jail free card. And if anyone messes with his banking buddies then they might get something more serious like UBS.

    Five Senior Goldman Sachs Execs Gave $130K To ‘Obama Victory Fund’ WHILE Eric Holder Was Deciding Whether To File Criminal Charges


    Money-Laundering Bank Was Big Obama Donor


    Remember obama’s golfing buddy at UBS who left after being criticized by the bank for his close relationship with obama?

    Obama’s BBB (Best Banking Buddy) Joins Ranks of Self-Employed


    Some of Wolf’s colleagues at UBS grew tired of his defense of Obama, according to the New York Times.


    UBS Unit Is Said to Be Close to Guilty Plea in Rate-Rigging Scandal (Criminal charges)


  12. andy synonymous

    News reports indicate HSBC clawed back bonuses from senior US-based compliance and AML executives, but the executives are not named. Are the names of those individuals a matter of public record? Do they have immunity from naming and shaming as well as immunity from prosecution?

  13. rob

    In the founding of this nation, the United states were to be the nation where the law was king.We were going to be different from the rest of the world,of the time;where the king was law. (too bad no one read the fineprint)

    1. just me

      You know, I wasn’t there. But as I understand it, both England and the American colonists as English subjects had trial by jury, an English right going back to the Magna Carta I think. Which meant that whatever the law said, its use had to be checked and approved or denied by a jury. Two of the most profoundly consequential decisions in our history were decided by juries who nullified the law. One was the trial of William Penn in England (freedom of religion, freedom of assembly and freedom of speech, and in the subsequent trial of his jurors who refused to convict, the right of a jury to nullify law. The other one was the trial of publisher John Peter Zenger in colonial New York (freedom of the press). Fascinating reading.

      Our first Supreme Court sat with a jury. Our first Chief Justice, John Jay, told the jury the decision was theirs to make, not just on the facts of the case, but on the law itself:


      “It is presumed, that juries are the best judges of facts; it is, on the other hand, presumed that courts are the best judges of law. But still both objects are within your power of decision… you [juries] have a right to take it upon yourselves to judge both, and to determine the law as well as the fact in controversy”.

      And I don’t know how that got lost, but I wish we’d find it again. How many people would it take to see a corporation isn’t a person and never was? Any 12, any time.

  14. Hugh

    Leahy is just an affable stooge. He never met a fight he didn’t walk away from. Back in the Bush years, it became a running joke. Democrats like Leahy would rationalize their political cowardice by saying they needed to keep their powder dry. They needed to pick and choose their fights. Thing is that fight never seemed to come. During Roberts’ confirmation hearing, he ducked any substantial answer on every single issue. He just dished out copious amounts of articulate sounding mush. Leahy let him get away with it and after some hemming and hawing voted for him. By not drawing the line at Roberts, Leahy insured the confirmation of a stolid hack like Alito, even more conservative than Roberts and inarticulate to boot. Those were Leahy’s singular accomplishments on Judiciary, overseeing the confirmation of two reactionary justices to the Supreme Court.

    Then Obama was elected. During his entire first term, the Senate has had a Democratic majority and Leahy has been chairman of Judiciary. And the question we all could ask ourselves during that time is where the f*ck has been Patrick Leahy. It is like he fell off the face of the earth. The greatest illegality and criminal activity at the highest levels in the nation’s history and Patrick Leahy has just been gone, absent, invisible for all of it.

    OK, so maybe he isn’t so affable.

  15. Aquifer

    I don’t know whether to chuckle or cry – all this back and forth about why these schmucks do/don’t do what they do/don’t do – they are members of the Duopoly gangs and have sworn blood oaths to their gangs. We know who they are and what they do and have known for a long time …

    For some strange and, IMO, totally dysfunctional reason we keep putting theses goons in charge of our government when we really don’t have to and then seem to derive enormous satisfaction from standing back and critiquing them. Is it really so surprising or only to be expected that when we lay down with such dogs we get up with these tremendously rapacious and humungously voracious fleas …

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