[Vision2020] Too Big to Indict

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>

------------------------------
December 11, 2012
Too Big to Indict

It is a dark day for the rule of law. Federal and state authorities
havechosen not to
indict<http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money-laundering/?ref=business>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<http://dealbook.nytimes.com/2012/12/11/hsbc-to-pay-record-fine-to-settle-money-laundering-charges/>,
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.

Those findings echo those of a Congressional report, issued in
July<http://www.hsgac.senate.gov/subcommittees/investigations/media/hsbc-exposed-us-finacial-system-to-money-laundering-drug-terrorist-financing-risks>,
which said that between 2001 and 2010, HSBC exposed the American “financial
system to money laundering and terrorist financing risks.” Prosecutors and
Congressional investigators were also alarmed by indications that senior
HSBC officials might have been complicit in the illegal activity and that
the bank did not tighten its lax controls against money laundering even
after repeated urgings from federal officials.

Yet government officials will argue that it is counterproductive to levy
punishment so severe that a bank could be destroyed in the process. That
may be true as far as it goes. But if banks operating at the center of the
global economy cannot be held fully accountable, the solution is to reduce
their size by breaking them up and restricting their activities — not
shield them and their leaders from prosecution for illegal activities.

-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mailman.fsr.com/pipermail/vision2020/attachments/20121212/bbfe8fce/attachment.html>