NYT slams the government for choosing not to prosecute HSBC top-bankers

[Welcome_hubby]

Editorial, Dec. 11. 2012:

Excerpt:

It is a dark day for the rule of law. Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system. They also have not charged any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

Clearly, the government has bought into the notion that too big to fail is too big to jail. When prosecutors choose not to prosecute to the full extent of the law in a case as egregious as this, the law itself is diminished. The deterrence that comes from the threat of criminal prosecution is weakened, if not lost.

In the HSBC case, prosecutors may want the public to focus on the $1.92 billion settlement, which includes forfeiture of $1.26 billion and other penalties, as well as requirements to improve its internal controls and submit to the oversight of an outside monitor for the next five years. But even large financial settlements are small compared with the size of international major banks. More important, once criminal sanctions are considered off limits, penalties and forfeitures become just another cost of doing business, a risk factor to consider on the road to profits.

There is no doubt that the wrongdoing at HSBC was serious and pervasive. Several foreign banks have been fined in recent years for flouting United States sanctions against transferring money through American subsidiaries on behalf of clients in countries like Iran, Sudan and Cuba. HSBC’s actions were even more egregious. According to several law enforcement officials with knowledge of the inquiry, prosecutors found that, for years, HSBC had also moved tainted money from Mexican drug cartels and Saudi banks with ties to terrorist groups.

http://www.nytimes.com/2012/12/12/opinion/hsbc-too-big-to-indict.html?hp&_r=0&pagewanted=print

[MannyGoldstein]

1. The NY Times is lying. Dodd-Frank made this situation impossible.

Just ask any Third Wayer - they'll tell you.

And I'm still waiting for my bleeping fairy tale.

[jsr]

8. Yep, their hands are tied

very tightly tied.

[banned from Kos]

9. What are you babbling about? What HSBS did was and is illegal.

Thus the fine.

Dodd-Frank set up NEW regulations aside from money laundering. Its up to prosecutors to enforce them.

[roguevalley]

21. eric holder is protecting his future employment.

Mr. Obama will own this if he allows this. It is his attorney general. It is evil that nothing is being done to them.

[1StrongBlackMan]

26. It's ...

PRESIDENT Obama. Thanks.

[AnotherMcIntosh]

30. Yep, except for the "will own" part. Won't his true believers excuse him for all of his actions and

inactions?

[bvar22]

42. Its ALL Joe Lieberman's fault.

[roguevalley]

44. probably

[ProSense]

23. This has nothing

"Dodd-Frank set up NEW regulations aside from money laundering. Its up to prosecutors to enforce them."

...to do with Dodd-Frank, which isn't even fully implemented yet.

HSBC was thrust into the spotlight in July after a Congressional committee outlined how the bank, between 2001 and 2010, “exposed the U.S. financial system to money laundering and terrorist financing risks.” The Permanent Subcommittee on Investigations held a subsequent hearing at which the bank’s compliance chief resigned amid mounting concerns that senior bank officials were complicit in the illegal activity. For example, an HSBC executive at one point argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda, according to the Congressional report.

Despite repeated urgings from federal officials to strengthen protections in its vast Mexican business, HSBC instead viewed the country from 2000 to 2009 as low-risk for money laundering, the Senate report found. Even after HSBC’s Mexican operation transferred more than $7 billion to the United States — a volume that law enforcement officials said had to be “illegal drug proceeds” — lax controls remained.

<...>

On Monday, the bank said it was promoting Robert W. Werner, who oversaw the group at the Treasury Department that enforces sanctions, to run a specially created division focused on anti-money laundering efforts.

Regulators have also vowed to improve. The Congressional hearings exposed weaknesses at the Office of the Comptroller of the Currency, the national bank regulator. In 2010, the regulator found that HSBC had severe deficiencies in its anti-money laundering controls, including $60 trillion in transactions and 17,000 accounts flagged as potentially suspicious, activities that were not reviewed. Despite the findings, the regulator did not fine the bank.

- more -

http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money-laundering/

What this case should do is impress upon everyone the need for stronger regulations. As for Dodd-Frank, the financial institution lobbyists are spending millions to try to weaken the provisions.

Deconstructing Dodd-Frank
http://www.nytimes.com/interactive/2012/12/11/business/Deconstructing-Dodd-Frank.html

[banned from Kos]

24. tell Manny, not me.

It is in the top post of his.

[ProSense]

25. You made the point about Dodd-Frank rules and enforcement. n/t

[MannyGoldstein]

36. True or false:

"Too big to fail" is over.

[RKP5637]

2. The message I get from this is 'do as you damn well please' and just hold some reserve cash for

paying off the cost of doing business (the penalty is more like a bribe.) And the people that well might have died as this went on, oh well, just collateral damage, corporate profit is the #1 objective/priority. Nice.
Point in fact! This OP. http://www.democraticunderground.com/10021959946

[banned from Kos]

3. All banks launder drug money - they just don't know it or don't care.

I think my dealer back in the 80s used Suntrust.

Arrest them now, dammit!

[MannyGoldstein]

4. Ergo, no money launderers should be arrested.

Seems reasonable to me.

[banned from Kos]

5. Which would hurt HSBC more? A $1.9 billion fine or some mid-level New York account rep

being indicted?

You won't get to the top executives. They have plausible deniability. This is a primarily a pan-Asian/Euro bank.

Your hatred of banks is so great it clouds your reason.

[RKP5637]

15. Yep, very good point. The little guys would be rolled over as scapegoats, but those up the

chain would be untouchable. Yep, I agree, in the big picture the $1.9 billion fine is best!

[MannyGoldstein]

37. Good point. When Bush went after Arthur Anderson for abetting Enron?

Anderson repelled that like water off of a duck's back.

I guess we just need to suck it up.

[Maven]

43. They should have done BOTH.

Prosecuting executives would break the omerta that allows this kind of organized crime to continue unabated. If similarly situated executives at other banks saw that participating could land them at Sing Sing, they'd sing. To the authorities, that is.

Meanwhile, prosecutions accompanied with hefty fines would send the message up the ladder.

Your love of the monied establishment is so great it clouds your sense of justice.

[jsr]

10. Perfectly Sensible.

What's good for Wall Street is good for the universe.

The Masters of the Universe know best.

[1StrongBlackMan]

40. Even in charging HBSC ...

criminally, would not result in money launders being arrested. For that to happen, the officers of HBSC would have to be charged for criminal conduct.

[Dustlawyer]

6. At least with BP they offer us some low level sacrificial lambs! If you have money in this country,

or you are a big company who makes political donations and have K street lobbyists, no one goes to jail if you don't want them to!

[banned from Kos]

7. Yes, that is my point. When a corporate crime is committed one must find the culprit.

I worked in software for a big company (Oracle). One of our sales execs bribed a city official for a $15 million contract. The official and the employee were indicted.

Was Larry Ellison indicted? No fucking way was he responsible.

Same way here. The HSBC top guns have plausible deniability.

[AnotherMcIntosh]

31. "When a corporate crime is committed one must find the culprit." If that's not what Holder says,

why should we?

[Baitball Blogger]

11. Too big to fail.

The worse they get, the more timorous we are of prosecuting them.

That just sucks.

[Baitball Blogger]

12. Nothing said about HSBC removing the people who were involved?

[RKP5637]

14. I heard on the news last night that HSBC claimed those individuals had been let go. Was not

much discussion, just that they had been let go. At one branch, so they said, special containers had been provided by that branch for depositors to put money into that was too be laundered. And that would be passed through the teller's window in these special containers designated for money laundering. As I recall, it was the CBS evening news ...

And that the higher ups claimed they did not understand/know the sources of the cash inflows, but liked the profitably of whatever was going on.

[Baitball Blogger]

16. Thank you very much for that thorough explanation.

[ProSense]

13. I agree with the NYT, and to

some extent Robert Reich made a relevant point related to BP:

Why BP Isn’t a Criminal

Friday, November 16, 2012

The Justice Department just entered into the largest criminal settlement in U.S. history with the giant oil company BP. BP plead guilty to 14 criminal counts, including manslaughter, and agreed to pay $4 billion over the next five years.

<...>

But it defies logic to make BP itself the criminal. Corporations aren’t people. They can’t know right from wrong. They’re incapable of criminal intent. They have no brains. They’re legal fictions — pieces of paper filed away in a vault in some bank.

<...>

Punishing corporations as a whole almost always ends up harming innocent people – especially employees who lose their jobs because the corporation has to trim costs, and retirees whose savings shrink because their shares in the corporation lose value... the people responsible for BP’s deaths and oil spill weren’t BP’s rank-and-file employees or its shareholders. They were the executives who turned a blind eye to safety while in pursuit of their own rising stock options, and who conspired with oil-services giant Halliburton to cut corners on deep water drilling when they knew damn well they were taking risks for the sake of fatter profits.

They’re the ones who should be punished. Failure to punish them simply invites more of the same kind of criminal negligence by executives more interested in lining their pockets than protecting their workers and the environment. (Today brought another tragedy in the Gulf when an oil rig exploded off the Louisiana coast — killing at least two workers and sending four others to hospitals Friday while two others were believed to be missing.)

- more -

http://robertreich.org/post/35848994755

When I initially read this, I objected, but Reich is correct to a point. Frankly, both should occur. There needs to be stronger oversight, regulations and deterrents or these illegal activities will continue.

In the case of HSBC, some one was responsible for the money laundering operation. Still, while corporations aren't people, but these entities can be held accountable with fines.

Do both.



It doesn't have to be either or, and the notion that a corporation is doing something not driven by an actual person is absurd.

[ProSense]

17. Here's the key point from the editorial:

They also have not charged any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

Someone is responsible, and it's possible to prosecute top executives.

Former BofA Exec Indicted For Fraud
http://livewire.talkingpointsmemo.com/entry/former-bofa-exec-indicted-for-fraud

Three former UBS execs convicted of fraud involving contracts for muni bond proceeds investment
http://www.democraticunderground.com/10021250815

[Orrex]

18. When a corporation is found guilty in this fashion, it should come under government control

At least as long as an equivalent criminal sentence would be assigned an individual guilty of a similar crime.

How long would I be jailed for my guilt on 14 counts of manslaughter? That's how long the corporation should be under government control. Profits and executive salaries/bonuss should go to the government during that time.



Someone will ask me for precise details on how this might be implemented, and obviously I don't have them, but we should really have some alternative to the current wrist-slap fines imposed on habitually criminal multinationals.

[uponit7771]

19. The upper ranks have some plausible deniability in this case, they can say they didn't know...

...proving they did KNOW about the the laundering operations would be hard.

[Orrex]

22. Their ignorance should itself be culpable

If they don't have enough awareness and control over their companies to prevent multibillion dollar money laundering, then they sure as hell shouldn't be entitled to bonuses for their management ability.

[woo me with science]

20. Had enough yet? nt

[MrYikes]

27. lol

[1StrongBlackMan]

28. I wonder if ...

people really understand the effect that "toppling" a bank the size of HSBC would have on the larger economy.

I'm not saying they shouldn't be punished (e.g., a forced break up); but to advocate for putting them out of business should not be taken lightly.

[frylock]

33. explain to us that don't understand how imprisoning a few top execs..

would have a large effect on the economy please. because until that happens, shit like this will continue. and shit like this effects the economy more then some shithead spending a few years behind bars.

[1StrongBlackMan]

39. I'll have to go back and read through the article again; but ...

There is a huge difference between charging a corporation with criminal conduct and charging the officers of the corporation with criminal conduct.

I believe the OP is upset that the corporation was not charged criminally.

[99Forever]

29. Banksters are immune from prosecution, besides..

... Eric Holder has pot smokers to save the world from. Thanks Prez Obama for putting that beacon of justice in charge of the AG's office.


Gotta have your motherfucking priorities straight, doncha know?

[Safetykitten]

32. Meanwhile in a simpler, non-too big to fail or fuck with time...

The Savings and Loan clusterfuck had prosecutions.

Under one Bush the Elder.

This is it? This really is fucking it? Amazing that there are people just fine with this gig.

[woo me with science]

34. We are to cheer because a further, devastating blow *might* be withheld, maybe.

This is how low the bar is now set:

http://www.democraticunderground.com/10021966324

[indepat]

35. Jail is largely for poor people committing petty crimes or possession of a

minuscule amount of marijuana, i.e., the unwashed, not the beautiful people, the shakers and movers.

[woo me with science]

38. It's profitable!

Financial growth of the private prison industry
http://www.democraticunderground.com/1002430630#post4

And now with cameras and microphones everywhere, there will be a never-ending supply of potential violations!
http://www.democraticunderground.com/10021965291


Everybody knows that bankers just tend to be highly creative people!
http://www.dailykos.com/story/2011/11/28/1040669/-Pres-Obama-Bankers-Were-Creative-but-Their-Actions-Weren-t-Necessarily-Illegal

[woo me with science]

41. kick