"What you're seeing is an effective prosecution vehicle being used across a wide swath of enforcement matters," Warin said. "You're in the Justice Department's cocoon for a long period of time, which is not a holiday party you'd want to be invited to."
In a speech in September in New York, Breuer defended the agreements as a key tool in the fight against corporate corruption and in the push for greater accountability. Deferred-prosecution agreements, he argued, have the same punitive, deterrent and rehabilitative effect as a guilty plea. "I've heard people criticize them and I've heard people praise them," he said. "What I'm here to tell you is that, along with the other tools we have, DPAs have had a truly transformative effect on particular companies and, more generally, on corporate culture across the globe."
DOJ officials are quick to argue that the increasing number of deferred-prosecution agreements has created a "sea change" in corporate compliance efforts. "Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one," Breuer said. "They know the difference between actual cooperation with a government investigation and make-believe cooperation."
White & Case partner Ernest Patrikis, who served 30 years at the Federal Reserve Bank of New York, compared a criminal indictment against HSBC to an explosion that could have wide consequences for the financial industry. "No one wants to drop a nuclear bomb on HSBC," he said. "What are the implications of that in terms of business closing down in the United States? These guys will pay one way or the other. It's the cost of doing business."
This article originally appeared in The National Law Journal.
This article originally appeared in The National Law Journal under the headline “Bank dysfunction was 'astonishing'.”