08 March 2013

A question that has not been answered

Appearing at a Senate Banking Committee hearing Thursday, Sen. Elizabeth Warren (D-MA) grilled officials from the Treasury Department over why criminal charges were not filed against officials at HSBC who helped launder hundreds of millions of dollars for drug cartels.

The HSBC scandal resulted in the Department of Justice and Treasury announcing a record $1.92 billion fine after finding that the international bank repeatedly helped the world’s most violent drug gangs move at least $881 million in ill-gotten gains through numerous countries the U.S. has economic sanctions against.

“HSBC paid a fine, but no one individual went to trial, no individual was banned from banking, and there was no hearing to consider shutting down HSBC’s activities here in the United States,” Warren said. “So, what I’d like is, you’re the experts on money laundering. I’d like an opinion: What does it take — how many billions do you have to launder for drug lords and how many economic sanctions do you have to violate — before someone will consider shutting down a financial institution like this?”..

Warren reiterated her question and still got nowhere. “We at the Treasury Department… don’t have the authority to shut down a financial institution,” Cohen said...

“You know, if you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail,” Warren said. “If it happens repeatedly, you may go to jail for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night, every single individual associated with this. I think that’s fundamentally wrong.”
Extended excerpt from The Raw Story.  Can any reader of this blog - Democrat or Republican - justify not sending any bankers to prison?


  1. Are those bankers proven to be guilty in a court of law? Yes?

    Okay, fine. Why wouldn't you?

  2. I'd jail them for the longest terms and fines possible.

  3. Unfortunately there's no way any lawmakers would even dream of sending these scumbags to jail. They know what side their bread is buttered on.

  4. I found this comment, written by Redditor "Bumgill," to be a really great explanation of this problem:

    Chasing down the money is more time consuming, difficult, and expensive than street level busts (or even most mid-level busts). It also doesn't look nearly as good PR wise as those bricks of cocaine and piles of guns at the press conference. It also doesn't look nearly as nice in terms of stats. You can make literally hundreds or thousands of possession arrests with easy convictions in the time it takes to make a solid case on the money side (which has a better likelihood of getting beat in court than a guy with dope in his trunk).

    Then, even if you can summon the political will to start and pursue such an investigation (and political will is what's required), you quickly end up stepping on the toes of someone who wants to shut it down and has some pull somewhere along the line. It could be some corrupt government official or it could be someone deciding (like HSBC) that it's too "economically risky" to actually bring charges. Of course then you have to actually prosecute it which, as said above, is also a time-consuming, expensive, and difficult task with the added difficulty that these guys will have the cash to mount an actual criminal defense unlike your average meth-head or homeless dope fiend.

  5. I fear, not only for the country, but for society as a whole. Color me sad.

  6. One law for the rich, one law for the poor.

    1. Oh, but you're wrong!

      "The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets and to steal bread."
      --Anatole France

  7. Guys, if you really want to get to the nitty gritty then check out the corporation act.
    A corporation is (alledgedly) treated as a person and thus pays the cash and sleeps well on the profits.
    I've been told that the Government of The United States of America is actually a Corporation registered in the City of London which is, in itself, a Corporation.
    A bit like the Vatican but they want your money and don't give a monkey's * about you.

  8. It's because The U.S. is a plutocracy/oligarchy, whichever one your prefer. The country is ruled by an elite business class that aren't subjected to the same justice system that we are.

  9. In another era, many of these guys would have been swinging from lampposts. Sometimes I wonder if it's time to bring back the good old days.

    1. Yeah - I miss lampposts too.

  10. "Can any reader of this blog - Democrat or Republican - justify not sending any bankers to prison?"

    That's easy. If you send them to prison they'll stop giving huge contributions to politicians as well as not give politicians cushy jobs once the politicians retire.

    1. Then maybe the answer to all this is to have publicly financed elections, with all private, corporate contributions forbidden. Each candidate gets a fixed sum, and has to prove that no other funds were used int he campaign. Oh, yeah. In order for that to happen, Congress would have to approve it, so it will never happen.

  11. *engages devil's advocate mode*

    Finding the corporation liable is much easier than finding enough evidence to hold particular individuals liable for particular criminal activities. You would at least have to find evidence that a person knew the source of the money coming through their systems. Maybe every individual at board level has carefully established plausible deniability for exactly this kind of eventuality. It seems like the kind of thing an amoral schemer would do. Which doesn't mean there shouldn't be an investigation - but:
    1. An investigation will take a long time and be highly costly
    2. There's a high chance you won't prove anything anyway
    3. Even if you do succeed, it's unlikely to be a successful deterrent (bankers will get smarter, not less crooked)
    4. ... and you've pissed off Wall Street
    5. ... and banning HSBC from operating in the states = make a bunch of US citizens unemployed and diminish your tax revenues
    6. Even if you do succeed and it is a deterrent, then you just made the financial system even more vulnerable to liquidity crises (black market cash flows are quite useful to have around at such times)

    The only potential upside is that half a dozen criminals go to a minimum security prison, and you gain a tiny bit of popular support from the anti-banker end of the political spectrum who mostly support you anyway.

    1. Child sex offenders rationalize in same said manner....

  12. The best government money can buy!

  13. > and banning HSBC from operating in the states = make a bunch of US citizens unemployed and diminish your tax revenues

    Nonsense. That work would just be taken over by another bank. Shutting down a bank does not mean ending the demand for a bank. So, a new bank will show up. Or, an existing bank will grow. See: Wells Fargo.

  14. Hmm..

    First of all, have any of the individual involved been brought to trial in the US? Is HBSC a bank or corporation chartered in the US or elsewhere? Have indictments or legal actions been brought against the individuals in the organization in the appropriate legal jurisdictions?

    To quote the original question asked "Can any reader of this blog - Democrat or Republican - justify not sending any bankers to prison? " The answer is obviously "No, no one can jusify any person being above the law." That quesiton is rhetorical, and undeserving of a reply

    But at the same time, we need follow the precepts of the law, and ensure that prosecutions are appropriate, accurate and timely.

    In this case, reading a bit about it -- it appears that HSBC had people in the company actively working to avoid have transactions by the international bank be examined by international organizations looking for illegal transactions. This is in violation of both company rules, and international banking regulations. In the US, for example, if the US subsidiary of the international back was used to facilitate illegal money laundering then this could be a violation of federal law, and people who willfully did so could be presecuted.

    Are any of the people involved being prosecuted? I don't know.. I don't see anyone is -- Without proof, since this is an on-going legal action, I suspect we will see some although it may not make the front page headlines.


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