For the government not to go a step further and prosecute was “beyond obscene,” said Bill Black, a former U.S. regulator for the Office of Thrift Supervision who now teaches at the University of Missouri-Kansas City.
“Regulators are telling us, ‘Yes, they’re felons, they’re massive felons, they did it for years, they lied to us, and they made a lot of money … and they got caught red-handed and they’re gonna walk.’”
Black disputed the government’s concern that indicting HSBC could take down the financial system.
“That’s the logic that we get stability by leaving felons in charge of our largest banks,” he said. “This is insane.”
GRGY says:
I nominate Bill Black for Attorney General.
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12th December 2012 at 8:27 pm
Kill Bill says:
I wonder if this is how the Roman empire ended…
…with a ethically challenged group running things.
Of course it was whut wuz I thinkin!!
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12th December 2012 at 9:30 pm
GRGY says:
“The US government is expressly saying that banking giants reside outside of – above – the rule of law, that they will not be punished when they get caught red-handed committing criminal offenses for which ordinary people are imprisoned for decades. ”
http://dailybail.com/home/glenn-greenwald-hsbc-is-the-too-big-to-jail-poster-child.html
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12th December 2012 at 11:51 pm
Administrator says:
Too Big To Jail – Max Keiser
http://www.youtube.com/watch?v=IO4KRUnipNM
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12th December 2012 at 8:57 am
Administrator says:
The banking giant HSBC has escaped indictment for laundering billions of dollars for Mexican drug cartels and groups linked to al-Qaeda. Despite evidence of wrongdoing, the U.S. Department of Justice has allowed the bank to avoid prosecution and pay a $1.9 billion fine. No top HSBC officials will face charges, either.
We’re joined by Rolling Stone Contributing Editor Matt Taibbi, author of “Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.” “You can do real time in jail in America for all kinds of ridiculous offenses,” Taibbi says. “Here we have a bank that laundered $800 million dollars of drug money and they can’t find a way to put anybody in jail for that? That sends an incredible message, not just to the financial sector, but to everybody. It’s an obvious, clear double standard where one set of people gets to break the rules as much as they want and another set of people can’t break any rules at all without going to jail.”
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12th December 2012 at 10:02 am
Administrator says:
Too Big to Jail: Our Banking System’s Latest Disgrace
Neil Barofsky
December 12, 2012 | 1:43 pm
You can be forgiven if you watched the Department of Justice’s announcement yesterday of a $1.92 billion settlement with HSBC with a sense of disappointment–and déjà vu. The event checked all the boxes in a theatrical routine that has become all too familiar.
Descriptions of breathtaking misconduct involving the facilitation of massive drug trafficking and transactions with rogue terror-sponsoring nations? Check.
Broad boasts about the “historic” nature of the settlement that will certainly end the type of criminal misconduct alleged? Check.
Mea culpas from the offending institution with promises that it has really learned its lesson this time and will never ever engage in dastardly conduct again? Yep, that too.
Nothing, however, was quite as it appeared. Sure, HSBC paid a record fine, but there was something vitally important missing from yesterday’s press conference: actual criminal charges for obvious criminal conduct.
Some perspective: HSBC sent more than $800 million in bulk cash from Mexico to the United States, a good chunk of which apparently represented proceeds from some of the most notorious Colombian drug cartels. As someone who tried the first narcotics money laundering case involving extradition from Colombia, let me assure you that this is a lot of money, the discovery of which usually generates vigorous prosecutions and lengthy prison sentences. And it wasn’t HSBC’s only dirty business: There were also hundreds of millions of more dollars of illegally disguised transactions with rogue nations such as Iran and Sudan.
Why no criminal charges? Why instead only some remedial measures and a “historical” fine that can be measured in weeks — not years — of earnings? It certainly wasn’t for lack of evidence. No, instead the government determined that HSBC is not only too big to fail, but also too big to jail. As the New York Times first reported, even though there were strong voices within DOJ pushing for criminal charges, the big banks’ best friends within the government (the Treasury Department, of course, and other unnamed regulators) were too fearful that an indictment could destabilize the global financial system. Yes, it’s 2008 all over again. In the name of systemic stability, a megabank again escapes accountability for its actions, rescued by compliant officials.
In some aspects, DOJ’s surrender is understandable. Notwithstanding regulatory reform efforts in the U.S. and the UK, the largest banks are in many ways even more systemically dangerous today than when we bailed them out in 2008. This indirect acknowledgment that we have failed to fix the too-big-to-fail problem has potentially dire consequences.
One of the reasons why we have a criminal justice system, of course, is to deter criminal behavior. If you know that you will be punished for putting your hand in the cash register at your local supermarket (or illegally stripping out information from a monetary transaction that identifies the source nation as Iran), you are less likely to do so. But if the government offered a blanket waiver from criminal accountability for a certain group — let’s say all left-handed people over six feet tall or a handful of banks deemed so large and so significant that their indictment could destroy the global financial system — we would expect that those exempted would no longer be deterred from committing criminal acts. And although lefty giants may otherwise lack a predisposition for boosting cash, in recent years the largest banks have demonstrated an unbridled zeal for pushing the boundaries of the law as part of their relentless pursuit of profits. DOJ’s actions with regards to HSBC are beyond unfair: They are downright terrifying for weakening the general deterrence for megabanks, both foreign and domestic, which could rationally interpret yesterday’s actions as a license to steal.
The enduring presumption of bailouts in our banking system already drives the largest banks to take on too much risk with too little disclosure and too much leverage, a toxic cocktail that will inevitably lead to another financial crisis. Yesterday’s action now spikes the punch with a new toxin, confirmation that criminal penalties are off the table, leaving a worst-case scenario of a fine totaling far less than even a single quarter’s earnings. Given the potential profits of criminal behavior and the unlikelihood of personal consequences for the executives directing it, the message is clear: Crime pays. This will inevitably lead to more reckless risk-taking that will further undermine systemic stability and lead to an even greater financial meltdown down the road.
There is, of course, a solution for our emerging two-tier system of justice. The largest banks need to be broken up, the only realistic way to truly end both too big to fail and too big to jail. But since our government has demonstrated a reluctance to do so, perhaps the next time a megabank presents HSBC’s argument that it should not be criminally charged because it would destabilize the financial system, instead of capitulating to this threat, DOJ should require at a bare minimum that in return for allowing the bank to survive, it must break itself up, ensuring that it could never hold the justice system hostage again. Otherwise, we can look forward to many more press conferences that are long on drama but short on impact.
Neil Barofsky was the Special United States Treasury Department Inspector General to oversee the Troubled Assets Relief Program from 2009 until his resignation in February 2011. He is currently a senior fellow at the NYU School of Law and is the author of Bailout (Free Press, 2012).
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12th December 2012 at 12:13 pm
Mary Malone says:
“Black disputed the government’s concern that indicting HSBC could take down the financial system.”
I don’t know. I think the TBTF have threatened members of Congress and the Administration that they will pull the banking system if one of them gets indicted.
No proof, just a hunch…
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12th December 2012 at 1:18 pm