On Dec-11, The Department of Justice formally settled charges
with HSBC, the British owned mega-bank on charges of money laundering for Mexican
drug dealers, violating US sanctions by doing business with known terrorists through
suspect Saudi banks and outlaw regimes such as Burma and Sudan. HSBC agreed to
pay $1.92 billion in penalties, which amounts to about one month of the banks
2011 profits. When measured against its annual income, $1.92 B penalty seems
meager. However, the outrage is actually worse. The real penalty is only about
$700 million. $1.2 billion is the estimated profits that were earned in the
various transactions. Forcing a bank robber to return the fruits of his
criminality can hardly be called a penalty. The Bank will not be prosecuted criminally,
but the Justice Department held out the possibility that individual criminal
charges might still be filed. Fat chance. This investigation has been going on
for five years.
I had read bits and pieces about this over the years, but
I missed the denouement of the grand prosecution until I picked it up on Matt
Taibbi’s indispensable blog.
In the attached piece Taibbi goes into some detail
regarding the truly hollow nature of the penalties HSBC and some of it managers
will have to pay:
“So the executives who spent a decade laundering billions
of dollars will have to partially defer their bonuses during the five-year
deferred prosecution agreement? Are you fucking kidding me? That's the
punishment? The government's negotiators couldn't hold firm on forcing HSBC
officials to completely wait to receive their ill-gotten bonuses? They had to
settle on making them "partially" wait? Every honest prosecutor in America
has to be puking his guts out at such bargaining tactics. What was the Justice
Department's opening offer – asking executives to restrict their Caribbean
vacation time to nine weeks a year?”
Neither the banks penalties nor those levied against its
managers are substantial enough in any way to in any way deter this sort of
heinous behavior in the future.
The Justice department chose not to prosecute for
criminality and not to send anyone to jail because they were afraid of the
negative effect it would have on the financial industry in general and
specifically that it might bring HSBC down. The concern was that if HSBC failed
it could bring on another Wall Street crisis. What happened to the end of too
big to fail? As the NY Times said in its editorial Too Big to Fail has morphed in to Too Big to Indict.
HSBC was caught laundering money for drug lords, stained,
in some cases perhaps literally, with the blood of thousands massacred across
Mexico.
Taibbi: “The banks' laundering transactions were so
brazen that the NSA probably could have spotted them from space. Breuer [The
Assistant AG responsible for prosecution of the case] admitted that drug
dealers would sometimes come to HSBC's Mexican branches and ‘deposit hundreds
of thousands of dollars in cash, in a single day, into a single account, using
boxes designed to fit the precise dimensions of the teller windows.’
“This bears repeating: in order to more efficiently move
as much illegal money as possible into the ‘legitimate’ banking institution
HSBC, drug dealers specifically designed boxes to fit through the bank's teller
windows. Tony Montana's henchmen marching dufflebags of cash into the fictional
‘American City Bank’ in Miami was actually more subtle than what the cartels
were doing when they washed their cash through one of Britain's most storied
financial institutions.”
In addition to HSBC, Credit Suisse, Barclays, ING Bank,
and Standard Chartered, have all agreed to settlements for similar charges, each
one for hundreds of millions of dollars. By way of comparison in 2010 there were about
5,600 bank robberies across the country. The average criminal made off with about
$7,600, for a total nationwide haul of just over $43 Million. FBI statistics indicated
that about four in ten of the bank robbers apprehended had drug problems. Does
anyone else see the travesty of justice when a dozen banks accrue billions
through illegality, perhaps half or more in the drug trade, without criminal
prosecution, while thousands of others, serve time, a sizable number of them to
feed drug habits?
The six banks involved in money laundering represent only
a partial list of the recent criminality we have seen in the financial industry.
Between LIBOR (16 big banks rigging rates, skimming billions of profits) and
Goldman Sachs (calling their own investment vehicles sold to an inspecting
public “pieces of shit”) and now this the Great Bank Robbery is no longer a
Western with gunslinger criminals. The Great Bank Robbery today plays on a
recurring loop and it happens every time a multinational bank opens its doors
for business. Bernie Madoff was a drug store stick up man compared to these
guys.
Obama’s Justice Department ought to just admit they are
in the tank for powerful interests beyond their capacity to manage or regulate.
One has to wonder about the influence of Wall Street cash on these deliberations.
Somewhere someone was whispering in Geitner’s ear. “This won’t be good for
anyone”, they say. For the President’s apologists who see nothing wrong with
his Super PAC’s taking unlimited and unregulated contributions during the
campaign and now for the inaugural, we have to ask, “Is this the price for
that?”
And remember this, after allowing HSBC to launder
millions in obviously blood soaked drug money without bringing criminal
charges, the Justice Department is still considering pressing Federal charges
in Washington and Colorado, against those who would light up a legally
purchased (at least in those states) and likely locally grown (i.e. not
trafficked under threat of violence) doobie. Meanwhile America houses 2.3
million people in its prisons. With 5% of the world’s population, The US houses
¼ of the world’s inmates. While the banks help further the criminal enterprises
that make it possible, and perpetuate the cycle, it is estimated that more than
¾ of those in prison require drug treatment. Treatment costs a fraction of what
incarceration does, but for the drug gangs and now apparently the banks that is
not nearly as profitable.
This all of a piece, the Wall Street Bailouts which
included hundreds of billions for the banks, but somehow just couldn't seem to
muster the strength to help any significant number of people on the edge of
foreclosure. This is why the
Occupy people for all their meanderings and hopelessly goofy rhetoric had it
about right: The system is completed tilted now in favor of the very few and at
the expense of the very many. Of course specific connections are tenuous and perhaps
hard to make, but there is an astounding amount of smoke in the air. Because of
near total reliance politicians have on deep pocketed connections to large multi-national
financial firms, the whiff of corruption permeates everything aspect of our political
institutions. Citizens United exacerbates
the problem, but it did not create it.
It really is a pitiful commentary, particularly when
considered in the context of fiscal cliff talks, which for all the fancy
rhetoric will at best lock in a 30 year long right wing march in tax policy
which has slowly bankrupted government while showing little in the way of
progress for the American middle class. Yes, the rich will take a trim on the edges,
but even there we have seen what their well-funded and richly rewarded surrogates
in Congress will do to fight that.
Corporations pay a much smaller portion of the nation’s
total tax bill then they did 30 years ago. That won’t change. Reagan cut
Capital gains taxes in half in the 1980’s. It appears unlikely that they will
even go up in any consideration of any plan now under discussion. The middle
class got hosed, but from Wisconsin to Ohio to Michigan Unions are the problem.
It is a sick, disgusting, mess, and too many Democrats and too many liberals do
not understand the role that the Democrat party including the sainted Obama
have had in perpetuating and in some cases deepening the crisis. We are better
than this, or we ought to be.
This is obscene, a Democratic Justice Department on the
cusp of its second term hands out a slap on the wrist to a bank for helping to
wash blood from the money generated by drug dealers because the offending bank
was considered too big to fail, and so indict. Holy f***, how did we get here?
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