Prosecutors also expressed fear of "collateral consequences" — that going further could have sunk a company that employs tens of thousands of people and is tied tightly to the economies of the roughly 80 countries where it does business.
Such a collapse has happened in white-collar prosecutions before, most notably in 2002 when the huge accounting firm Arthur Andersen was convicted for destroying Enron-related documents before the energy giant's collapse. It was forced to surrender its accounting license and to stop conducting public audits. Only after 85,000 people worldwide lost their jobs did the court case ultimately play out, with the Supreme Court overturning the conviction too late to save the doomed Chicago-based business.
"From a policy standpoint, it's a pretty compelling argument," said Kevin O'Brien, a former federal prosecutor now in private practice. "Employees lose their jobs, towns where these businesses are located are negatively affected, stockholders which include a lot of moms and pops lose their savings and none of that is really fair. Even a large fine can sometimes have a negative effect on employees and shareholders."
Bill Black, a former financial regulator who was instrumental in uncloaking the savings-and-loan crisis in the 1980s, scoffed at such a notion. "Seriously, you want to keep felons in charge of a bank for bank stability?" he said.
To Black and other critics of the government's approach, the HSBC case is a replay of the years immediately after the 2008 financial crisis, when the people most responsible for it were never really punished. No high-profile bankers have gone to jail in the wake of the financial crisis, nor has there been any well-known, large-scale effort to recover the giant bonuses awarded to executives of failed or nearly failed banks.
Trillions Unmonitored
In the HSBC case, the bank has rescinded deferred compensation bonuses given to its most senior executives and agreed to partially defer bonus compensation for its most senior executives during the next five years.
"The guy who filed a false tax return, he's probably doing five years in prison," said Notre Dame's Gurulé. "And these guys — transactions with Iran, threatening to jeopardize U.S. national security — they don't even get prosecuted. The fairness of that system is very suspect."
The government's charges against HSBC are grim. They sketch a picture of a bank that systemically and purposefully skirted the law.
HSBC willfully failed to keep proper anti-laundering programs in place and conduct due diligence on its customers, the government said. Court documents showed the bank let more than $200 trillion slip through relatively unmonitored from 2006 to 2009, including more than $670 billion in wire transfers from HSBC Mexico, making it a favorite of drug cartels. At the same time, the bank gave Mexico its lowest risk rating for money laundering.
The cartels are a deadly force, controlling large swaths of Mexico as virtual mafias. The government of former President Felipe Calderon started reporting drug-related killings when it took office in late 2006, but stopped more than a year ago when the toll reached 47,500. Many private groups now put the number close to 60,000.
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