The banking giant has escaped indictment for laundering billions of dollars for Mexican drug cartels and groups linked to al-Qaeda. The bank reportedly supplied a billion dollars to a firm whose founder had ties to al-Qaeda and shipped billions in cash from Mexico to the United States despite warnings the money was coming from drug cartels. Earlier this year, a Senate investigation concluded that HSBC provided a, quote, “gateway for terrorists to gain access to U.S. dollars and the U.S. financial system.”
Despite evidence of wrongdoing, the Justice Department has allowed the bank to avoid prosecution and pay a $1.9 billion fine. No top HSBC officials will face charges. While its reportedly the largest penalty ever paid by a bank, the deal has come under wide criticism. Officials reportedly agreed to seek the fine over concerns that criminal charges would have hurt the global financial system.
Matt Taibbi talking:
And whats amazing about that is thats Forbes saying that. I mean, universally, the reaction, even inamong the financial press, which is normally very bank-friendly and gives all these guys the benefit of the doubt, the reaction is, is “What do you have to do to get a criminal indictment?” What HSBC has now admitted to is, more or less, the worst behavior that a bank can possibly be guilty of. You know, they violated the Trading with the Enemy Act, the Bank Secrecy Act. And were talking about massive amounts of money. It was $9 billion that they failed to supervise properly. These crimes were so obvious that apparently the cartels in Mexico specifically designed boxes to put cash in so that they would fit through the windows of HSBC teller windows. So, it was so out in the open, these crimes, and theres going to be no criminal prosecution whatsoever, which is incredible.
apparently we have a very similar scandal involving another British bank, Standard Chartered, which also paid an enormous fine recently for laundering money forthrough Iran. This, again, comes on the heels of the Libor scandal, which has already caught up two major British banksthe Royal Bank of Scotland and Barclays. So, you have essentially all of the major British banks now are inveigled in these enormous scandals. We have a couple of arrests, you know, today involving low-level people in the Libor thing, but it doesnt look like any major players are going to be indicted criminally for any of this.
this whole argument that the bank is too big to indict because of the threat to the world financial system, most people dont know that HSBC stands for Hong Kong and Shanghai Banking Corporation. Its a British bank that goes back to the early days of British colonialism in Asia.
The amazing thing about that rationale is that its exactly the opposite of the truth. The message that this sends to everybody, when banks commit crimes and nobody is punished for it, is that you can do it again. You know, if theres no criminal penalty for committing even the most obvious kinds of crimes, that tells everybody, investors all over the world, that the banking system is inherently unsafe. And so, the message is, this is not a move to preserve the banking system at all. In fact, its incredibly destructive. It undermines the entire world confidence in the banking system. Its an incredible decision that, again, is met with surprise even withby people in the financial community.
I was in court yesterday, in criminal court in Brooklyn. I saw somebody come out ofcome into court who had just been overnight in jail for walking from one subway car to another in front of a policeman. You can do real time in jail in America for all kinds of ridiculous offenses, for taking up two subway seats in New York City, if you fall asleep in the subway. People go to jail for that all the time in this country, for having a marijuana stem in your pocket. There are 50,000 marijuana possession cases in New York City alone every year. And here we have a bank that laundered $800 million of drug money, and they cant find a way to put anybody in jail for that. That sends an incredible message not just to the financial sector but to everybody. Its 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 cant break any rules at all without going to jail. And I just dont see how they dont see this problem.
$1.9 billion sounds like a lot of money, and it definitely is. Its a record settlement. No bank has ever paid this much money before. But its about two months worth of profits for HSBC. Its not going to cripple this bank. Its not even going to hurt them that badly for this year. It fits in line with the Goldman Sachs settlement in the Abacas case, which was hailed at the time as a record settlement. It was $575 million. But that was about 1/20th of what they got just through the AIG bailout. So, this is not a lot of money for these people. It sounds like a lot of money to the layperson, but for the crimes they committed, getting away with just moneyand its not even their own money, its not their personal money, its the shareholders moneyits incredible. It reallyit literally is a get-out-of-jail-free card.
the way that big banks these days can borrow money from the U.S. Fed for no interest they can just take money from the government and pay the government back.
Ive asked myself that question numerous times. I really believeand I think a lot of people believe thisthat the Obama administration sincerely accepts the rationale that to aggressively prosecute crimes committed by this small group of too-big-to-fail banks would undermine confidence in the global financial system and that they therefore have to give them a pass on all sorts of things, because we are teetering on the edge of a problem, and if any one of them were to fall out, it would cause a domino effect of losses and catastrophes like the Lehman Brothers business. And I think theyre genuinely afraid of that. And so, thats the only legitimate explanation that you can possibly assign to this situation, because, as we know, Wall Street abandoned the Obama administration this year when it came to funding in the election. They heavily supported Mitt Romney and didnt give Obama much money at all.
– source democracynow.org