The Senate has finally confirmed Loretta Lynch to be the next US Attorney General.
What does this mean for Wall Street?
What does Wall Street think of her?
We asked a bunch of sources close to the industry and to the Department of Justice.
They paint a picture of someone who, having worked in New York, has a much firmer grasp on the financial sector than her predecessor, but who will nevertheless be very tough.
Here are the details:
- After years of being dogged by investigations from departing US Attorney General Eric Holder, Wall Street banks shouldn’t expect things to get any easier for them.
- Lynch used to be the US Attorney for the Eastern District of New York. In that role, she drew mixed reviews for the work she’s done prosecuting big banks. But it’s expected she could be a unifying force between Washington and New York regulators.
- Lynch has already delivered a gut-punch to Citigroup, in the form of a $US7 billion fine, but drew criticism for being soft on HSBC.
- Lynch is widely believed to possess a better grasp of financial markets and their inner workings than her predecessor, Eric Holder, which some think could make her an even greater threat to big banks.
- An ex-DOJ lawyer said that Lynch will push more case work to New York’s Eastern District — her former stamping grounds — which will likely clear some room on Preet Bharara’s schedule. Bharara, who is the US Attorney for the Southern District of New York, was considered a potential candidate to head DOJ before Lynch was nominated and confirmed.
- “[Lynch’s predecessor, Eric] Holder and Preet didn’t get along that well,” said the ex-DOJ lawyer.
- “[H]er office did a lot of financial crimes so she knows the turf,” said one banking industry source. “Somewhat counter-intuitively, our lawyers prefer that as they like to deal with competent, well informed prosecutors who understand something about financial markets.”
- “In the less glamorous world of financial cases, she did a good job in the Citigroup mortgage case and a not-so-good job in the HSBC case,” one law professor said. Still, “she will be pressured by one side to require admissions of guilt and by the other to treat the CEOs and big banks differently than drug dealers.” He added Lynch is “afraid of nobody.”
- “She knows the investigations very deeply, at the level of understanding what was known but not put in indictments yet — much more than Holder,” said Charles Tiefer, professor at the University of Baltimore Law School. “She will back an effort to go beyond cases against entities, like banks, and seek sanctions against individuals, like bank CEOs.”