HSBC: Too Big to Jail?

So London-based bank HSBC has been in the news lately.

US investigations uncovered that HSBC laundered $7 billion in drug money for the Mexican cartel and that, at its peak, the bank was washing 60% to 70% of all the dirty money in Mexico.

HSBC also helped rogue nations like Libya, Sudan, Burma and Iran to flaunt US laws banning those countries from moving money through the US banking system. HSBC helped Iran move $19.2 billion by hiding the source of the money in nearly 25,000 transactions.

Evidence was also found that HSBC maintained a relationship with Al Rajhi bank even after it was designated a terrorist support organization for financing bin Laden's and Al Qaeda's move to Afghanistan and funneling money to one of the 9/11 hijackers.

One would think that with all the damning evidence against HSBC that the DoJ would be prosecuting the sh*t out of the bank and its executives for violating US and international law for nigh on a decade. But you would be wrong.

Instead, the DoJ announced that HSBC has agreed to pay a fine of $1.9 billion. DoJ honchos are trying to play up the fine, saying that it is a record amount (which it is), but they aren't mentioning that the fine amounts to about a month of HSBC's profits. Hardly more than an effete slap on the wrist.

Now US government officials are claiming that they went after a fine instead of prosecuting the banks because of the "collateral consequences" of taking the bank to court, mainly that it would have lost its US banking license and likely destabilized the international banking system.

Rolling Stone's Matt Taibbi explained just how much the DoJ pussed out in going after HSBC, especially as it relates to the War on Drugs. He pointed out that the forfeiture laws in effect in most of America allows the police to seize any and all money they merely suspect is related to the drug trade as well as seize anything bought with said drug money. If the same laws that apply to the average citizen applied to HSBC, the government should have fined the bank all the profits it made over the past decade as well as forced its executives to pay back their salaries and bonuses while confiscating everything they bought with that tainted money.

What a f*cking mess.

I am very excited to take this article to my friend who got very angry and self-righteous with me when I mentioned that "too big to fail" had national security consequences.

yeah there is this one and they just had news today about UBS being fined a billion for the libor fixing...

Nobody goes to jail, the execs that resign typically end up in another cushy exec job, and the world continues to spin....

Certainly doesn't seem to be sending the right message. I've heard people say that if they did arrest people for stuff like this it would destabilize the banking industry and cause overall economic issues... My B.S. meter goes off when I hear that one. Just like the whole "job creator" thing...

Yet more evidence that the oligarchy gets to play by a completely different set of rules than 99(.9)% of the population has to.

I thought HSBC's dirty hands had been common knowledge for a long time. We suddenly pretend to care now because why?

clover wrote:

I thought HSBC's dirty hands had been common knowledge for a long time. We suddenly pretend to care now because why?

I think it's a matter of everyone knowing about it but being almost numbed to the idea that nothing will be done about it. Now, we have a situation where the situation was officially acknowledged and government agencies decided to "do something"... and it turned out to be effectively nothing. It's certainly going to cause some waves.

Nice of the DoJ to establish the profit margins required to make financial services for drug cartels and terrorists a near risk free venture. I would expect that market to grow now.

nossid wrote:

Nice of the DoJ to establish the profit margins required to make financial services for drug cartels and terrorists a near risk free venture. I would expect that market to grow now.

I like this statement very much. It efficiently contains pretty much all of my problems with the whole situation.

clover wrote:

I thought HSBC's dirty hands had been common knowledge for a long time. We suddenly pretend to care now because why?

That they're dirty is not what's new, it's that the DoJ has decided on their punishment.

Bloo Driver wrote:
nossid wrote:

Nice of the DoJ to establish the profit margins required to make financial services for drug cartels and terrorists a near risk free venture. I would expect that market to grow now.

I like this statement very much. It efficiently contains pretty much all of my problems with the whole situation.

So very very true.

clover wrote:

We suddenly pretend to care now because why?

Because it's at least a double hypocrisy on the part of government.

One hypocrisy is what Farscry pointed out: the rich and corporations are allowed to flaunt laws that would crush you or I if we ran afoul of them. This is nothing new necessarily, but it also comes on the heels of absolutely no one in the financial system being punished for causing the Great Recession. I look at it as adding some more straw to the camel's back. It's going to break sometime.

Another hypocrisy is that, as others pointed out, the US government is kind of saying it's OK to launder drug money while spending tens of billion a year fighting the so-called War on Drugs. Couple that with the first hypocrisy and you get the things that Taibbi pointed out in the Rolling Stones article: our existing drug forfeiture laws say that *all* of HSBC's assets should be considered fair game for confiscation. Not only that, but the salaries and bonuses of their executives should be confiscated as well, along with everything they bought with that money, because it's all considered fruit from the tainted tree.

Worse, letting all those Savile Row-wearing mofos get off Scot-free erodes the public's confidence in the entire justice system and capitalism in general.

Will this cause riots on the street? I doubt it. But it is another load of straw on the camel's back (and there's already a lot of straw there considering not one banker or Wall Street muckety-muck is serving time for causing the Great Depression).

You did a far better job of writing that up concisely and sensibly than I possibly could have, OG. /salute

Meanwhile, they will literally destroy your life for a quarter-ounce of pot.

To paraphrase Judy Savage: it's like they're trying to make communists of us all.

Malor wrote:

Meanwhile, they will literally destroy your life for a quarter-ounce of pot.

I was actually going to contrast the DoJ's treatment of HSBC with a guy in California who's serving 55 years for selling $350 of pot. One of the charges the Feds hit him with was, ironically, money laundering. He has to face most of his life in jail over a couple hundred bucks and the HSBC execs can continue on with their careers without a whiff of wrongdoing on their resumes after they laundered $9 billion in drug proceeds.

Our laws need some serious revision and one of the things that I would really like to see is much harsher sentences for white collar crimes. There's no reason that someone who holds up a gas station for $23 should be serving more and harder time than some accountant that embezzled millions and destroyed people's lives.

I don't understand why any legitimate business could ever make any deals with these people in good faith. If they're willing to lie to the US and British governments in order to finance drug cartels and terrorists, what's stopping them from altering audits, quarterly reports, balance sheets, etc? It seems to me that going light on them now just means that we're looking at another financial crisis from these sorts of structural problems down the line.

*Googles HSBC US election contributions*

Cod wrote:

*Googles HSBC US election contributions*

Without even looking, I'm assuming they gave heavily to both team Red and Blue. These guys are not the type to gamble and lose.

It feels great to re-affirm that I don't have the same rights as someone in a significantly higher tax bracket. Is this more of that "change we can believe in" stuff?

Ballotechnic wrote:

It feels great to re-affirm that I don't have the same rights as someone in a significantly higher tax bracket. Is this more of that "change we can believe in" stuff?

Ummmm... do we have sources that the President was involved in the decision to fine versus prosecute/seize?

Does the buck not stop with him anymore? If Obama can tell the DoJ to not defend DOMA, he can tell them to prosecute HSBC. We held Bush accountable with the mess of Attorney General Gonzalez when he couldn't keep recalling, I don't see why we can't hold Obama accountable for this.

Edwin wrote:

Does the buck not stop with him anymore? If Obama can tell the DoJ to not defend DOMA, he can tell them to prosecute HSBC. We held Bush accountable with the mess of Attorney General Gonzalez when he couldn't keep recalling, I don't see why we can't hold Obama accountable for this.

Don't get me wrong, I'm very much of the opinion that this fine barely qualifies as a slap on the wrist... I just don't see this as part of the platform Obama ran on either, and I think trying to link the two is somewhat flimsy. I'd like to know if the President was a part of that discussion. I'd like to know what his recommendations were, and how that played out between him and the DoJ. I'm just wondering if we can say Obama approved this or not with facts versus speculation.

My point was whether or not the previous decision was originally made with input from the White House, they can say "This is silly, prosecute the criminals."

Edwin wrote:

My point was whether or not the previous decision was originally made with input from the White House, they can say "This is silly, prosecute the criminals."

Yeah, this is a case where inaction can lead to guilt. If this was any sort of big deal to Obama or his administration, he would have stepped in or made a commentary. By merely sitting there and letting it happen, it shows that he either 1 - Doesn't think anything of this one way or the other (or is at least unmoved enough to not make it worth a fight to him), or 2 - Agrees with what's going on. It's fair to be irritated and/or make a judgment on Obama based on that.

Edwin wrote:

My point was whether or not the previous decision was originally made with input from the White House, they can say "This is silly, prosecute the criminals."

Indeed. This is fully on Obama and the people he has selected. The President picks the department heads, he gets to set the directions they go in.

Bloo Driver wrote:
Edwin wrote:

My point was whether or not the previous decision was originally made with input from the White House, they can say "This is silly, prosecute the criminals."

Yeah, this is a case where inaction can lead to guilt. If this was any sort of big deal to Obama or his administration, he would have stepped in or made a commentary. By merely sitting there and letting it happen, it shows that he either 1 - Doesn't think anything of this one way or the other (or is at least unmoved enough to not make it worth a fight to him), or 2 - Agrees with what's going on. It's fair to be irritated and/or make a judgment on Obama based on that.

I'm really more in the camp of, being President has apparently become being a referee to a group of legislators, so I really doubt he had been involved in this directly. That doesn't make it any better, but what can we do, we're all fiscal cliff in politics right now. Does it still speak to his choice for leading the DoJ? Yes, and I suspect he may have to answer to that if the public still has any interest in it after even more current events are dealth with.

Demosthenes wrote:

I'm really more in the camp of, being President has apparently become being a referee to a group of legislators, so I really doubt he had been involved in this directly. That doesn't make it any better, but what can we do, we're all fiscal cliff in politics right now. Does it still speak to his choice for leading the DoJ? Yes, and I suspect he may have to answer to that if the public still has any interest in it after even more current events are dealth with.

When it comes to laws being created, your point stands. Enforcement is almost entirely under the President's control, generally through the various department/agency heads. So Obama can't set the laws to say what is illegal and what the punishments are, but he can push for more stringent or lax enforcement of said laws(see: federal marijuana prosecution in WA/CO now).

Demosthenes wrote:
Ballotechnic wrote:

It feels great to re-affirm that I don't have the same rights as someone in a significantly higher tax bracket. Is this more of that "change we can believe in" stuff?

Ummmm... do we have sources that the President was involved in the decision to fine versus prosecute/seize?

I wasn't trying to point the finger at the President regarding any wrongdoing, but voice my ongoing frustration that business as usual in Washington is well...business as usual.

*but since you're going in that direction, pressing the DoJ to throw the book at them or calling on Congress to enact tougher laws and penalties would be a good start. Hell, I'll take a symbolic action too.

Ballotechnic wrote:
Demosthenes wrote:
Ballotechnic wrote:

It feels great to re-affirm that I don't have the same rights as someone in a significantly higher tax bracket. Is this more of that "change we can believe in" stuff?

Ummmm... do we have sources that the President was involved in the decision to fine versus prosecute/seize?

I wasn't trying to point the finger at the President regarding any wrongdoing, but voice my ongoing frustration that business as usual in Washington is well...business as usual.

*but since you're going in that direction, pressing the DoJ to throw the book at them or calling on Congress to enact tougher laws and penalties would be a good start. Hell, I'll take a symbolic action too.

I suspect, sadly, while this is important, this has most likely been overshadowed now. News stations being chomping at the bit on this Thursday didn't give even lip service to the issue today.

I believe you are correct, in the wake of Newtown this will be relegated to the back burner, at least for awhile. Surprising when you consider when you consider the lives indirectly destroyed by their greed. Sigh.