Lynch likely to continue pursuing lenders -- colleagues

by Ryan Smith24 Apr 2015
If lenders are expecting freshly confirmed Attorney General Loretta Lynch to go easier on them than her predecessor, they may be in for a shock.

Lynch will most likely continue Eric Holder’s policy of making lenders pay for their role in the subprime crisis, according to a Bloomberg report.

The U.S. Attorney’s Office in Brooklyn – Lynch’s former stomping grounds – said in September that it was hiring as many as seven lawyers to go after “those responsible for misconduct related to mortgage-backed securities.” And now Lynch’s colleagues expect her to pick up where Holder – who spearheaded three multibillion-dollar settlements over lousy mortgage bonds – left off.

“Given her background and some of the mortgage-fraud cases that she’s prosecuted up in New York, I would expect that she’s not going to back away from what’s already on the table,” Clifford Rossi, finance professor at the University of Maryland, told Bloomberg.

Lynch has a reputation for even-handedness and pursuing the truth without an agenda, according to several former colleagues. However, she has received criticism for the central role she played in a controversial 2012 deal with megabank HSBC, Bloomberg reported.

The deal cost the bank $1.9 billion and required it to admit wrongdoing, but some lawmakers didn’t think it went far enough. Sen. David Vitter (R-La.) asked Holder why Lynch allowed the bank to avoid prosecution for money laundering for Mexican drug cartels and violating government sanctions against blacklisted nations like Iran, according to Bloomberg.  

Massachussetts Democrat Elizabeth Warren also criticized the deal. “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?” Warren asked a few months after the deal was finalized.


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