Loretta Lynch’s nomination to become next attorney general on Thursday passed out of committee with nary a peep about her decision to not prosecute Wall Street criminality, as Republicans opposing her attempted to open a second front in their proxy war over President Obama’s executive order on immigration.
Lynch was approved by a 12-8 vote, with Sens. Lindsey Graham (R-S.C.), Orrin Hatch (R-Utah), and Jeff Flake (R-Ariz.) joining their Democratic counterparts on the Senate Judiciary Committee to carry the Brooklyn US Attorney’s nomination to the floor of the Senate.
Graham singled out for praise the federal prosecutor’s views on civil liberties, or lack thereof, saying she “understands the war on terror” and is in favor of policies “including American citizens as enemy combatants who collaborate with the enemy.”
He also said that incumbent Attorney General Eric Holder is “ready to go.”
“He is about to make a lot of money. Republicans are into that,” Graham said to laughter, noting that Holder will be “a one percenter here soon.”
A former partner who practiced corporate law with Covington & Burling, Holder had faced accusations that he decided not to pursue criminal prosecutions of Wall Street fraudsters involved in the 2008 financial collapse because of his ties to the private sector. Critics were particularly concerned with Holder’s statements on the matter before the same committee in 2013, when he admitted that he was concerned about the macroeconomic effect of prosecuting giant banks.
As The Sentinel reported last week, Holder defended his record of white collar prosecutions, arguing that he hasn’t thrown the book at any bankers “not for lack of trying,” and said the Justice Department would give US Attorneys until May to prove they can make cases related to last decade’s mortgage market meltdown. The statements were curious given reports that Holder in 2013 personally intervened to ensure a settlement that prevented Ben Wagner, the US Attorney in Sacremento, from bringing a civil case against JPMorgan to trial.
But the issue of rule of law, at the hearing, mostly focused on the President’s November immigration order, with every Republican senator, even those who backed Lynch, mentioning it.
Sen. David Vitter (R-La.) was the only committee member to bring up Lynch’s controversial 2012 decision as US Attorney to not prosecute HSBC for facilitating money laundering and sanctions busting.
“This is clearly a too big to prosecute and jail, and I’m very concerned about that sort of approach,” Vitter said, describing her deferred prosecution agreement as a “a real slap on the wrist.”
The deal is more than a matter of history or one that grants insight into Lynch’s mindset. HSBC was recently found to have set up a global scheme to help clients evade taxes in Switzerland, and the deal secured by Lynch required HSBC to implement sweeping reforms in order for its executives to avoid criminal charges. Reports indicate that the Justice Department in 2010 received information about the HSBC tax evasion scheme from French officials, after a whistleblower leaked them to investigators.
The DOJ is currently reviewing an independent analysis on the bank’s activities that was commissioned as a result of the settlement, and will make its assessment of the report public in April—a development that could present Lynch with her first major challenge as Attorney General, assuming that the Senate advances her nomination.
In answers to questions submitted for the record to the Senate Judiciary Committee, Lynch said that her office did not receive any documentation of the aforementioned scheme from HSBC itself. She also said that the deferred prosecution agreement “addressed only the charges filed” related to money laundering and sanctions busting, “does not provide any protection to HSBC against prosecution for conduct beyond what was described” in the deal, and “explicitly mentions that the agreement does not bind the Department’s Tax Division or the Fraud Section of the Criminal Division.”
During her confirmation hearing, Lynch attempted to distance herself from Holder’s record on Wall Street, saying that “no individual is too big to jail and no one is above the law.”
In addition to Lynch’s nomination, Republicans have also used Department of Homeland Security funding as a cudgel to attack President Obama’s executive order on immigration.
Congressional conservatives have been attempting to bind the two issues together, but Senate Republicans agreed on Wednesday to pass a bill authorizing DHS spending without a policy rider on immigration. Many Republicans in the Senate are content to let the judiciary system deal with the issue.
Speaker of the House John Boehner (R-Ohio), however, refused to comment on Thursday how the House would react to taking up that legislation. The most hardcore opposition to uncoupling the two issues has come from Congressional conservatives.
