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HSBC Settlement
December 13, 2012 1:15 PM   Subscribe

The US Justice Department has settled with the banking giant HSBC for $1.92 billion dollars for money-laundering. Here are Matt Taibbi's and Glenn Greenwald's takes on it
posted by Cloud King (111 comments total) 27 users marked this as a favorite

 
Oligarchy, Fuck Yeah!


Err, wait. I mean Fuck You.
posted by absalom at 1:20 PM on December 13, 2012 [7 favorites]


Asking the two people with no experience in that area of the law? Who are both bomb-throwing polemicists? One of whom is only a reporter with no training at all?

No thanks.
posted by Ironmouth at 1:21 PM on December 13, 2012 [9 favorites]


With these two writers, I expected opinions to range from 'fuck these guys' to 'seriously, fuck these guys.' I whole-heartedly agree. I was outraged this morning when I heard this on NPR, still outraged now. Apparently we don't want to hurt "the little guys", that's why we didn't drop the hammer on these assholes. That's rich.
posted by Mister_A at 1:22 PM on December 13, 2012 [16 favorites]


"HSBC is being held accountable for stunning failures of oversight,"

Such a generous way of putting it! The next time I rob a bank, I'll make sure people refer to it as 'a spectacular neglect of remembering that it's illegal to take money from banks at gunpoint'.
posted by FatherDagon at 1:22 PM on December 13, 2012 [26 favorites]


Arthur Andersen and the Myth of the Corporate Death Penalty: Corporate Criminal Convictions in the Twenty-First Century
The conventional wisdom states that prosecuting corporations can subject them to terrible collateral consequences that risk putting them out of business and causing massive social and economic harm. Under this viewpoint, which has come to dominate the literature following the demise of Arthur Andersen after that firm’s prosecution in the wake of the Enron scandal, even a criminal indictment can be a “corporate death penalty.” The Department of Justice (“DOJ”) has implicitly accepted this view by declining to prosecute many large companies in favor of using criminal settlements called deferred prosecution agreements, or “DPAs.”
posted by the man of twists and turns at 1:23 PM on December 13, 2012 [10 favorites]


I mean its like asking the Pope and Pat Robertson what they think of atheists giving abortions. I'd like to see a former prosecutor of financial crimes explaining the nuts and bolts of whether this deal is a good, bad, or so-so thing.
posted by Ironmouth at 1:24 PM on December 13, 2012 [7 favorites]


This is good, and I seriously doubt we'd have seen this under any other presidential administration in my lifetime.

That said, $1.92 billion is just under 6 weeks worth of profit for HSBC.

Not revenue.

Not income.

Profit.

Yes, this will put a significant dent in their bottom line for the quarter, but in perspective, HSBC are paying the equivalent of a fine for a minor moving violation.
posted by schmod at 1:26 PM on December 13, 2012 [21 favorites]


When I launder billions in drug money, I go to jail. No one gives a shit that my family goes hungry, my kid ends up psychologically scarred, that I used my ice cream shop as a front, or whatever.

You can not use impersonal financial penalties to punish banks. These clowns believe that they're the masters of the universe and that all money flows from them anyway, remember? If you want to make sure that this kind of junk doesn't happen again, the only way to do it is to take money away from natural persons, and to put whomever made the decisions in jail.
posted by 1adam12 at 1:26 PM on December 13, 2012 [48 favorites]


Arthur Andersen and the Myth of the Corporate Death Penalty: Corporate Criminal Convictions in the Twenty-First Century
The conventional wisdom states that prosecuting corporations can subject them to terrible collateral consequences that risk putting them out of business and causing massive social and economic harm. Under this viewpoint, which has come to dominate the literature following the demise of Arthur Andersen after that firm’s prosecution in the wake of the Enron scandal, even a criminal indictment can be a “corporate death penalty.” The Department of Justice (“DOJ”) has implicitly accepted this view by declining to prosecute many large companies in favor of using criminal settlements called deferred prosecution agreements, or “DPAs.”


That's the type of analysis I'm talking about. Whose talking about this from the prosecutorial side right now regarding this specific deal?

Great find.
posted by Ironmouth at 1:27 PM on December 13, 2012


Asking the two people with no experience in that area of the law? Who are both bomb-throwing polemicists? One of whom is only a reporter with no training at all?

It turns out Obama is to blame.
posted by Artw at 1:28 PM on December 13, 2012 [2 favorites]


In fairness, HSBC said they were sorry and it wouldn't happen again.
posted by Egg Shen at 1:28 PM on December 13, 2012 [16 favorites]


Yeah, it sucks. But are there really any instances where individual employees are held accountable for collective action by a corporation? This is an honest question for corporate law types. Corporations exist in part to to provide limited liability for shareholders. Are the shareholders ultimately responsible here?

"US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the 'collateral consequences' of taking the bank to court. . . .

Where did this 1.9bn fine come from? What does it mean to prosecute a corporation, is he talking about some sort of RICO charges? How do you punish a corporation besides fines, or dissolution.

That article made me even more confused.
posted by Ad hominem at 1:36 PM on December 13, 2012


Ok, I see they settled for a 1.9bn fine and some people think it should have went to court.

I bet the guy who coined "too big to fail" is kicking himself.
posted by Ad hominem at 1:40 PM on December 13, 2012


Reuters - HSBC regulation won't stop cartels from laundering

UK financial news - Partial bonus deferral is "chilling"

ChiefOfficers.net - LEAVE HSBC ALONE (sob)
posted by RobotVoodooPower at 1:42 PM on December 13, 2012 [4 favorites]


What a very roundabout way for cartels to pay taxes.
posted by effugas at 1:46 PM on December 13, 2012 [32 favorites]


I'd like to see a former prosecutor of financial crimes explaining the nuts and bolts of whether this deal is a good, bad, or so-so thing.

By what means could even a former prosecutor make it make sense that a FINE is an appropriate penalty for MONEY LAUNDERING?
posted by EmpressCallipygos at 1:46 PM on December 13, 2012 [4 favorites]


You don't need legal expertise to be legitimately angry about this.

MEXICO CITY — The Mexican government updated its drug war death toll on Wednesday, reporting that 47,515 people had been killed in drug-related violence since President Felipe Calderón began a military assault on criminal cartels in late 2006.

The cartels are scarier than Al Qaeda, a bank that helps them so blatantly must be seriously punished. It didn't happen. You don't need to be a legal expert to grasp many of the reasons that is beyond messed up.
posted by Drinky Die at 1:46 PM on December 13, 2012 [21 favorites]


It would be interesting to know what the 1.9 bil is compared to the revenue related to the money laundering itself and the relationships with the money launderers. Without knowing that it is sort of hard to have an opinion on the sufficiency of the punishment
posted by JPD at 1:47 PM on December 13, 2012 [1 favorite]


By what means could even a former prosecutor make it make sense that a FINE is an appropriate penalty for MONEY LAUNDERING?

Because we don't know what the evidence looked like. Its one thing to prove a civil case against HSBC, it is harder to prove a criminal case against people who worked at HSBC.
posted by JPD at 1:49 PM on December 13, 2012


Government of the people for the "job creators" by the "job creators."
posted by grouse at 1:49 PM on December 13, 2012 [2 favorites]


At least it was good, old fashioned, honest money laundering and not fancy pants speculation on complex derivatives, mis-selling or outright theft. No one was ripped off. Shareholders weren't exposed to undue risk, fine excepted. Transaction banking (as opposed to investment banking, prop trading or market making) is a great low risk, low capital business to be in.
posted by Damienmce at 1:50 PM on December 13, 2012


I bet the guy who coined "too big to fail" is kicking himself.

I bet he is chortling heartily as he cashes another paycheck.
posted by FatherDagon at 1:58 PM on December 13, 2012 [2 favorites]


1adam12: If you want to make sure that this kind of junk doesn't happen again, the only way to do it is to take money away from natural persons, ...
Which is being done. Some good (but not great) news from TFA:
In regard to bonuses, the rumour is that the deal will provide that the HSBC's top executives are to defer a portion of any bonuses that they are awarded for the next 5 years. This is another example of the US regulators trying to sheet home responsibility to individuals and those financial measures are, with the exception of custodial sentences or removal of authorisation, the most chilling sanction available. Again, the UK regulators are following this approach. Andrew Bailey, head of the Financial Services Authority's prudential business unit, wrote to bank chief executives in late October ahead of this year's bonus round warning them that the watchdog would be looking for evidence they had "clawed back" deferred bonuses from people involved in scandals.
While it's far, far short from sending bank officers and BoD members to jail for committing a/o authorizing criminal activities, it's at least sending punishments of some sort directly to the people (not corporations!) themselves. The bonus deferments should be retroactive (that is, fines relative to past bonuses, when the crimes were actually committed), because otherwise retirees are given carte blanche. But it's still a step in the right direction.

A small step, probably engineered to appease us while not biting any corporate hands too hard.
Ad hominem: Are the shareholders ultimately responsible here?
No, nor should they be. A grandmother in Duluth with money in a 401k plan fund that invests 1% of its money in this bank bears no real responsibility. As I said, the officers and the BoD bear all of it - and should be treated as such.
posted by IAmBroom at 2:00 PM on December 13, 2012 [4 favorites]


Ad hominem, the entire corporation can be held criminally liable for the crimes of its employees under certain circumstances, and what this usually means is fines. While it is theoretically possible to revoke a corporation's charter in punishment for criminal acts, the power rests with state attorney generals, and that kind of thing never, ever happens. Hasn't happened in America since the early 19th century. HSBC is a Maryland corporation, and the statute that governs revocation of a charter there is here, for what it's worth. The standard of knowledge required among the directors is pretty damned high.

Enough people were probably involved in these crimes at HSBC that it would be possible to hold the bank itself liable. The shareholders can be held liable for the criminal acts of a corporation in limited cases, such as when the corporation itself is basically a sham entity that exists only for the benefit of a few shareholders, and commits criminal acts at their direction. But in this case the shareholders would almost certainly be safe. It's worth noting that the prosecutor didn't rule out the possibility of criminal cases against individual employees, and that this only pertains to the criminal case against HSBC. I'm not exactly holding my breath.
posted by 1adam12 at 2:00 PM on December 13, 2012 [2 favorites]


What a very roundabout way for cartels to pay taxes.

Money laundering and tax evasion are two very different things. Laundering is about getting money from an illegal source into the system so it appears legal, indeed businesses set-up for this sort of thing should have impeccable tax arrangements so as to avoid undue attention. Criminals are usually happy to pay a % to get the money in and kept safe (Indeed some would suggest that Switzerland's secrecy laws attracted vast dodgy deposits of people who were more concerned with hiding money than the % return, allowing Swiss corporates access to lots of cheap funding given them unfair advantages). Tax evasion/planning is about minimising tax burden on perfectly clean money (or rather income), lets move to Delaware,Cayman,Ireland etc.
posted by Damienmce at 2:01 PM on December 13, 2012


Something is rotten in the state of America if laundering money brings a $2 billion penalty while basically the same cats got off scott free after they wrecked the economy.
posted by nowhere man at 2:01 PM on December 13, 2012 [2 favorites]


So, apparently it's "too big to jail" as well.
posted by Malor at 2:12 PM on December 13, 2012 [11 favorites]


In other words: if you're a banker, you can do fucking anything and they won't touch you. You just have to make sure the crime is big enough.
posted by Malor at 2:12 PM on December 13, 2012 [11 favorites]


Ad hominem, the entire corporation can be held criminally liable for the crimes of its employees under certain circumstances, and what this usually means is fines. While it is theoretically possible to revoke a corporation's charter in punishment for criminal acts, the power rests with state attorney generals, and that kind of thing never, ever happens.

The OCC (the banking regulator) though has in the past pulled banking licenses from recidivist money laundering banks. Which in this case would just as good as revoking the charter.

But that's not what was ever going to be on the table here.
posted by JPD at 2:16 PM on December 13, 2012 [1 favorite]


The shareholders can be held liable for the criminal acts of a corporation in limited cases, such as when the corporation itself is basically a sham entity that exists only for the benefit of a few shareholders, and commits criminal acts at their direction

No, nor should they be. A grandmother in Duluth with money in a 401k plan fund that invests 1% of its money in this bank bears no real responsibility. As I said, the officers and the BoD bear all of it - and should be treated as such.

I was specifically wondering because it seems like HSBC was involved in some sort of ongoing criminal conspiracy. It is true though, that they were not acting under the direction of granny in Duluth, or any of the other people who own part of the company through a 401k.

It is kind of odd to think that some grandmother in Duluth, and likely the rest of us with a 401k, did profit from laundering cartel drug money.
posted by Ad hominem at 2:16 PM on December 13, 2012 [1 favorite]


As noted above, I'm relieved that there's a financial scandal/banking malfeasance of which I can understand the nuts and bolts of opposed to the last one in 2008 where I was left scratching my head trying to piece together exactly what happened.

This story is heartbreaking in contrast to this post earlier today.
posted by Keith Talent at 2:17 PM on December 13, 2012 [2 favorites]


I bet the guy who coined "too big to fail" is kicking himself.

I bet he is chortling heartily as he cashes another paycheck.


Actually, he's dead.
posted by spitbull at 2:23 PM on December 13, 2012 [2 favorites]


HAHAHAHAHAHAHAHAHA



no, at this point I truly don't know how else to react
posted by xqwzts at 2:27 PM on December 13, 2012 [2 favorites]


In other words: if you're a banker, you can do fucking anything and they won't touch you[r employer]. You just have to make sure the crime is big enough.
posted by monju_bosatsu at 2:31 PM on December 13, 2012


a reporter with no training at all?

That's the way I like my reporters. 'Training' gets you writing the same shit as everyone else.
posted by colie at 2:32 PM on December 13, 2012 [6 favorites]


No, nor should they be. A grandmother in Duluth with money in a 401k plan fund that invests 1% of its money in this bank bears no real responsibility. As I said, the officers and the BoD bear all of it - and should be treated as such.

If they were, then shareholders and funds would do more due diligence on the sorts of companies they invest in. It only takes a few people losing a million dollars before investors start paying attention, I think.
posted by empath at 2:38 PM on December 13, 2012 [2 favorites]


Okay, I agree that Greenwald and Taibbi are polemicists. But seriously:

Breuer 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."

They were bringing in boxes of cash. Shaped to just fit the teller windows. Over and over again. And this is not criminal complicity on the part of the bank?

Sometimes blind seething rage is all we have left.
posted by RedOrGreen at 2:42 PM on December 13, 2012 [12 favorites]


"Everything's fucked up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that."
posted by vidur at 2:48 PM on December 13, 2012 [4 favorites]


If I know my myths then eventually from under the city will awake the furies who can only be appeased with blood.
posted by Shit Parade at 2:51 PM on December 13, 2012 [4 favorites]


Of course, by fining the company they actually are punishing, you, me, and granny in Duluth. If you are a shareholder through some means that is.
posted by Ad hominem at 2:53 PM on December 13, 2012 [3 favorites]


If you wanted a legal solution to all this, nothing would come close except making all the officers of every bank, and its board, criminally and financially liable for the actions of the bank. As it stands, the charter of a bank is basically a license to commit crime.
posted by graymouser at 2:59 PM on December 13, 2012 [2 favorites]


What is this, bad news dump week?

UBS is close to finalizing a settlement with authorities over the manipulation of interest rates, a deal that is expected to include at least $1 billion in fines. [...] The Swiss bank has reached a conditional immunity deal with the antitrust arm of the Justice Department, which may protect the bank from criminal prosecution [..].
posted by RedOrGreen at 3:05 PM on December 13, 2012 [2 favorites]


Well it is a WAR on drugs, you can hardly expect banks not to profiteer.

But what is significant here is the investigation was solid enough to make HSBC waived federal indictment, admit to the charge (the El Dorado task force and Homeland Security Investigations has been kicking serious ass. Not just the cartels but just in May they took down a huge offshore gambling outfit which was also mostly money laundering) and the prosecution was strong enough to make it stick ("robust result" starts on page 2)

"As required by the DPA, HSBC also has committed to undertake enhanced AML and other compliance obligations and structural changes within its entire global operations to prevent a repeat of the conduct that led to this prosecution...

Also "Why Money Laundering Matters" as to how it all fits together.

This had its genesis in Operation Cornerstone
(which was under an (R) administration. And a good idea. But Tom Ridge himself was still a tool)

I love all this stuff: the Black Market Peso Exchange is good reading (and was a show on PBS); microstructure money laundering is like smurfing for meth makers.

Very interesting and engrossing.
Not that I'm good at it. I can maybe shoot a guy. Push someone over. But still, I think a lot of people don't have respect for this kind of investigation and how important it is.

The monetary penalty isn't the thing.
...well, ok, it's part of the thing and yeah it's barely a blip.

But too, the restructuring, the admission and acquiescence to greater oversight and cooperation obligations, corporate structural changes which allow the investigators to pierce the veil, dumping the senior management and shitcanning their bonuses (gives me a smile and a chubby) and putting more responsibility for any future actions on the top senior execs (whoever they might be coming in) for any future AML foulups .... it's not as bad as it seems at first blush.
It allows investigators to jump on illegal activity.

Stuff that's not illegal - plenty of legal ways to shaft people - we have to talk to our politicians about.
But at least someone is doing their jobs while the senators and representatives play grab ass.

Not that this doesn't just shit all over those people too. I mean you get Joe Agent, he doesn't necessarily believe cocaine is bad, m'kay, but maybe he's not into the massive bloodshed over it and while we're looking for a reasonable policy, he maybe tries to stem that tide for a bit and he gets shot at by desperate people working for even more desperate people.

Then you have these guys sitting on their asses making it easier for people to exploit the desperate which causes chaos which, yes, will eventually come to their community too. It's not like wealthy bankers don't get f'ed up on cocaine.
But paying guys like Joe Agent tax money (albeit while trying to avoid taxes offshore) and supporting "law and order" politicians (read: "Republican") to keep a lid on it.

Make money off of the destruction of lives and financial chaos, but spend money to support stupid policies that put in harms way the very people you purport to support, then pray the train wreck doesn't hit you too while rolling the same dice every day.

Evil is more than evil, it's stupid too.
I really wish more people didn't think of it as getting away with something.
"Hey, I'll give you $1,000,000 to pour strychnine into your own water supply."
"1,000,000!? Cool! I'll do it! (later) ...oh, I don't feel very good. Why me?"
*sigh*
posted by Smedleyman at 3:05 PM on December 13, 2012 [8 favorites]



Serious question here. If instead of negotiating the 1.9 billion fine, what if the government held fast to 100 billion. What would be likely to happen. Obviously I pulled 100bn out of my butt. But what happens if we are not willing to settle for relative peanuts?
posted by notreally at 3:10 PM on December 13, 2012


DrinkyDie : The cartels are scarier than Al Qaeda, a bank that helps them so blatantly must be seriously punished. It didn't happen.

Nobody on earth wants to tell the murderous 800 pound gorilla that their money is no good here. Cartel guys aren't known for taking "no" for an answer.
posted by dr_dank at 3:11 PM on December 13, 2012


When I launder billions in drug money, I go to jail

Some residents of Blue-I-stan talk about 'not being lawyers' and how the 'not being lawyers' is why you should not be listening to them.

But the idea of fairness when dealing with the Government was the minority (AKA loosing) position in Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 384-388 (1947) The dissent by Justice Jackson included a nice turn of phrase on the Holmes maxim: “It is very well to say that those who deal with the Government should turn square corners. But there is no reason why the square corners should constitute a one-way street.”

You're position, while being "equitable" under law, is not how the Courts rule - and when lawyers are calling for rule of law ... remember what they are asking for - the Government to not deal with "us" the same way they'll treat "us(our)" interacting with them.
posted by rough ashlar at 3:11 PM on December 13, 2012 [1 favorite]


It's embarrassing to read educated, intelligent individuals offering us purely ad hominem "rebuttals" of these articles. The idea that only a tiny number of people who also happen to be within this tiny world can possibly have a valid opinion on this case is bogus - and indeed probably one of the causes of the systematic criminality that pervades this industry.

It's particularly embarrassing since the main points of these articles are so very clear, but are simply ignored.

The first point is that that the HSBC money laundering was a massive, gross, huge, obvious crime - as someone points out above, "deposit[ing] 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."

And yet no criminal charges were filed against any individuals - even though it's impossible that there weren't many individuals committing multiple felonies in order for this to happen. And this isn't just an isolated incident, it is the rule in Wall Street cases. The only case I can think of where any ringleaders were prosecuted, let alone convicted, was Madoff - and that was an individual, and this wasn't just breaking securities laws but plain ol' non-SEC fraud.

So under what circumstances could someone high up in a Wall Street firm be criminally prosecuted simply for failing to follow securities laws? I think the answer is clearly "under no circumstances" - and if you believe otherwise, I'd say in December 2012 after years of this shit, the onus would be on you to prove to us otherwise.

The next point is the following: given that you as a senior manager of a large Wall Street firm are sure that you cannot possibly go to jail, exactly why should you not be planning to engage in systematic criminal activities if you evaluate that your expected value from your crime is greater than the expected value in fines you'd have to pay?

The answer would only be "ethics, morals and a respect for the law." I don't see that being an impediment to anyone, particularly for people who feel that they must win at any cost.

And the final point is that it is extremely bad for society if a tiny number of extremely powerful individuals can commit crimes with impunity. These crimes are so profitable exactly because they involve harming very large numbers of individuals. Take HSBC - they were laundering money for murderous dictatorships and the ultra-violent drug dealers that have caused such horrors in Mexico. When you see those endless pictures of mutilated bodies in Mexico, remember that HSBC knowingly and willingly helped the people who caused those murders. It's not like the money laundering is peripheral - that's why people become druglords, for the money, and without HSBC these druglords would not have had their money.

These are gross, huge points and I see no rebuttal of them above amidst the childish taunts of "bomb-throwing polemicists" above.

So don't give us this stuff, telling us we don't understand, that only a tiny number of individuals can possibly understand. It's intellectually dishonest, and by this time, almost no one believes it any more.
posted by lupus_yonderboy at 3:14 PM on December 13, 2012 [59 favorites]


Nobody on earth wants to tell the murderous 800 pound gorilla that their money is no good here. Cartel guys aren't known for taking "no" for an answer.

What if one could scan the UPC bar code and then decide not to buy that item based on what the UPC assoication says?

What would a Nation do if citizens of another Nation decided to not buy based on the UPC and what was claimed?\\

How can the '800 lbs gorilla' claim a right of vengeance because others opt not to buy?
posted by rough ashlar at 3:19 PM on December 13, 2012


"As required by the DPA, HSBC also has committed to undertake enhanced AML and other compliance obligations and structural changes within its entire global operations to prevent a repeat of the conduct that led to this prosecution...

We send the drug addicts who steal an iPad to jail, and the money addicts that steal billions to rehab.
posted by Drinky Die at 3:21 PM on December 13, 2012 [3 favorites]


When I read about this and that some of the business they did was with state sponsors of terrorism, it most starkly stood in contrast to Tarek Mehanna being sent to prison for two decades via the USA PATRIOT Act for "providing material support to terrorists" by translating a Youtube video while thinking unacceptably sympathetic thoughts.
posted by XMLicious at 3:22 PM on December 13, 2012 [4 favorites]


[Folks please take additional meta-issues with the site to MetaTalk where they belong and keep this thread on the topic of the thread. Thanks.]
posted by jessamyn at 3:29 PM on December 13, 2012


Nobody on earth wants to tell the murderous 800 pound gorilla that their money is no good here. Cartel guys aren't known for taking "no" for an answer.

That's right. So, the right thing to do is to take the money, credit it to their account while keeping the actual banknotes aside, and then immediately alert the authorities about the suspicious accounts.

But that's just a theoretical aside. In reality, the bank teller and the branch manager were probably riding the gravy train anyway.
posted by vidur at 3:30 PM on December 13, 2012 [1 favorite]


a reporter with no training at all?

That's the way I like my reporters. 'Training' gets you writing the same shit as everyone else.


He's a joke. He doesn't understand the law, or finance. That's the point. His reporting goes for the flashy rather than understand what exactly is wrong. He looks for the easy story rather than seeing the whole picture.

Plus the throwing the pie filled with horse semen at another reporter and then attacking another journalist who he agreed to have interview him by throwing coffee in his face and the accosting him kinda tells you what kind of person he is. About the latter attack, he said "that's not how I've behaved over the last six or seven years."

There's other stuff I will leave out.
posted by Ironmouth at 3:33 PM on December 13, 2012


The level of disgust may require raising the disgust ceiling. Can anyone imagine how many billions they passed under the table? It seems we have reached the point where we take the shit into our collective mouth, but at least we didn't swallow...yet.
posted by crushedhope at 3:36 PM on December 13, 2012


It's particularly embarrassing since the main points of these articles are so very clear, but are simply ignored. The first point is that that the HSBC money laundering was a massive, gross, huge, obvious crime

Crime? A crime depends on the "rule of law" being followed.

After the rule of law - was there a crime? (not to Hitler the thread - what did Hitler do was all legal?)
posted by rough ashlar at 3:36 PM on December 13, 2012


plenty of legal ways to shaft people

Smedlyman - can you just repeat that so it can be favoured?
posted by rough ashlar at 3:39 PM on December 13, 2012


He's a joke. He doesn't understand the law, or finance. That's the point.

Nut up - show that you are better.
posted by rough ashlar at 3:41 PM on December 13, 2012


That is what I am left wondering. Seems like some laws must have been broken, but which ones? Who goes to jail, the tellers that took the money? The managers who turned a blind eye? The execs in the US who didn't say "where the fuck is all this money coming from?" Investors who demand growth at all costs?

I'm all for throwing some people in jail, but who?
posted by Ad hominem at 3:44 PM on December 13, 2012


A money-laundering indictment, or a guilty plea over such charges, would essentially be a death sentence for the bank. Such actions could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency pointed to potential issues with the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the effect on the broader economy.

posted by Shit Parade at 3:47 PM on December 13, 2012 [3 favorites]


You could start with the people writing the emails that argued the benefits of doing business with organisations supporting terrorism. Plenty of smaller fish have been jailed for less.
posted by bashos_frog at 3:47 PM on December 13, 2012 [2 favorites]


Therein lies the problem. Calling it the Department of Justice is just doublespeak at this point, much like the Department of Defense or Homeland Security.

These officials are so woefully inept at solving crimes and meting out justice that it almost seems like willful, criminal negligence by all parties involved.
posted by Johann Georg Faust at 3:50 PM on December 13, 2012


I'm all for throwing some people in jail, but who?

You headhunt for the bosses. First arrest the low level criminals and try and get them to flip in exchange for lighter treatment. Then, you prosecute the top of the pyramid with anything you can prove, even if it isn't for the crimes they are notorious for.
posted by Drinky Die at 3:53 PM on December 13, 2012


Laundering money to dictators and drug barons is an ethical issue, not a moral one. Whether or not people have died as a result of drug wars and terrorists is outside of HSBC's domain. They offer a service, one that they probably should not have offered to such abhorrent people but the human rights violations are not on HSBC, they are on the drug barons and dictators. Just like how we, the public, didn't expect OJ Simpson's lawyers to go to jail with him, we cannot hold HSBC accountable for the crimes they didn't commit. It's why we were so up in arms over ACTA and SOPA; it's not YouTube that should be taken down for copyright infringement or for providing a platform, it's the end-users who are the offenders.

Whether or not the bankers at HSBC should have gone to jail for the grievous crimes that they did commit, I'll leave up to the lawyers and the courts. Whether or not HSBC is shunned by the banking world on ethical grounds, I'll leave up to the economists and the ethicists. But I don't believe that the people working for HSBC are murderers and neither should we pronounce them that. They are just enormous assholes with a bit of the institutionalized sociopathy that must come with graduating from a business school. But that is something we've always known.
posted by dubusadus at 3:53 PM on December 13, 2012 [1 favorite]


When approached by the Justice Department for their thoughts, the regulators cautioned about the effect on the broader economy.

So that makes you and me and all of us either complicit in the crime or its hostages. Both, probably.
posted by notyou at 3:53 PM on December 13, 2012 [2 favorites]


It is true though, that they were not acting under the direction of granny in Duluth, or any of the other people who own part of the company through a 401k.

Surely if it's a crime to fund terrorists and drug dealers, then it should be a crime to invest in other sorts of criminal enterprise.
posted by kengraham at 3:56 PM on December 13, 2012


Clearly, the government has bought into the notion that too big to fail is too big to jail.
posted by Shit Parade at 3:56 PM on December 13, 2012 [1 favorite]


Taibbi was on Democracy Now today: After Laundering $800 Million in Drug Money, How Did HSBC Executives Avoid Jail?

Matt Taibbi on the Unfolding Libor Scandal and What Sen. DeMint’s Departure Means for Fractured GOP
posted by homunculus at 3:58 PM on December 13, 2012 [2 favorites]


The level of disgust may require raising the disgust ceiling. Can anyone imagine how many billions they passed under the table?

Passed? What makes you think they stopped?
posted by dirigibleman at 3:58 PM on December 13, 2012


(Anyone with a bank account does it, but it's irresponsible to invest in something one hasn't researched, or that one doesn't know explicitly that one is investing in it (because it could be a criminal or otherwise unethical enterprise, for one), so I don't see why liability for corporate crimes shouldn't extend to shareholders, in proportion to how much they invested. Corporations would probably behave better if they knew that everyone with a bank account was policing them lest they do something for which the unwitting investor could get into a small amount of legal trouble.)
posted by kengraham at 4:07 PM on December 13, 2012


That's the type of analysis I'm talking about. Whose talking about this from the prosecutorial side right now regarding this specific deal?

He's a joke. He doesn't understand the law, or finance. That's the point.

Not only is there a claim of understaning of Economics their is a claim of law?

Oh do show how you are actually qualified?


Dress up the same points and call Ironmouth when it's published in a law review.
posted by T.D. Strange at 4:10 PM on December 13, 2012


Man, that is just a terrible, terrible idea. No one has the time or resources to investigate every company they might possibly invest in through an index fund or something, especially if the companies are trying to hide something.
posted by adamdschneider at 4:11 PM on December 13, 2012 [2 favorites]


He's a joke. He doesn't understand the law, or finance. [etc.]

If you have a rebuttal of their articles or more information, lay it on us. These repeated ad hominem attacks are, as I said above, embarrassing.
posted by lupus_yonderboy at 4:14 PM on December 13, 2012 [15 favorites]


The hard part is proving any one individual responsible for the crime.

And what is being fought here is the way in which the crime is committed. It's not as straightforward as an individual crime.
Someone deals drugs - a cop finds the drugs and money, you prosecute him. Simple.

But the whole point of an operation like black market peso exchange is the only thing the banks see is dollar transactions.
So - drugs sold, there are smugglers who take the cash to Mexico (obviously outside U.S. jurisdiction so problem 1 there) and exchange it for pesos.
Someone brings in microstructured exchanges and uses 500 people swapping $800 each, there's problem 2 - how do you prosecute the currency trader? How do you prove they knew where the money is from?
And so they bank it or whatever - now what? Currency trader banks money. The crime there?

So let's go back to the U.S. and buy big ticket or expensive items (Beyonce's new perfume, say, or whatever) - problem 3.
Is Beyonce supposed to know her perfume is being bought with drug money? Or the retailer? (Or wholesaler if they're smart). It's just an import/export business (currency trader) buying goods and selling them. Banks record/ handle the transactions same way they handle any other one. No obvious crime.

So now a shipping container full of perfume that smells like Beyonce's ass goes to Columbia or wherever - and you can't blame the shipping guy for doing his job which is shipping stuff and Beyonce perfume isn't (AFAIK) weaponized.
And they sell the perfume and get more local currency.

What's the perfume vendor done? Nothing. Sold perfume.

Proving failure to do due diligence, much easier. You can show HSBC didn't respond to the red flags that went up in checking for money laundering patterns. Or show they failed to have the capacity to adequately check. Then you can prosecute them.
If you can tie them with knowledge that the money was illegally sourced, all the better.

So what you have to fight is the process. Same deal as counterterrorism.

Don't get me wrong, from the gut I'd like to put a bullet into everyone in the upper eschelon of HSBC, but that wouldn't stop the process anymore than killing Bin Laden stopped terrorism.
Jailing them wouldn't work either. Would you do 10 years in prison for (just off thumbnail here) $50 million dollars? Some people would. Corporations have long memories. They'd be happy to feed you some fall guys.

I mean, plenty of people (including me) bitch about the oppressive Orwellian surveillance capacity in the U.S. and data privacy, etc. Any tradeoffs in privacy which benefit individuals also (unfortunately) benefit corporations.

But that aside it's simply easier for a cop to nab a junkie than it is for even a sophisticated law enforcement system to nab multi-billion dollar multinational corporations.

The junkie doesn't have lobbyists who can change the law out from under the cop.
"Oh, sorry officer friendly, heroin was legal for the 10 minutes that our client was doing it. Then it became illegal again, but as it had been introduced into the bloodstream while it was legal, he can't be held responsible for his body's slow processing - blah blah blah."
posted by Smedleyman at 4:23 PM on December 13, 2012 [3 favorites]


we don't know what the evidence looked like.

And the reason we don't know what the evidence looked like is because HSBC paid the US government off to drop the case.
posted by EmpressCallipygos at 4:28 PM on December 13, 2012 [4 favorites]


> The hard part is proving any one individual responsible for the crime.

Not at all. Under Sarbannes-Oxley, for example, you do not have to prove that upper management knew what was going on. It is their responsibility to find out - and they can be charged criminally if they don't.

This makes perfect sense. It's far, far too easy for someone to set up a criminal operation and make sure that he or she does not actually know the specifics of any criminal activity. "I didn't know," is not a defense if you are a senior manager - it is your responsibility to actively prevent the criminal activity, and if you don't you can go to jail. It is theoretically possible under Soxley for a CEO to go to jail over an inadvertent mistake committed by an underlying, if that mistake is gross enough, though it hasn't happened to the best of my knowledge.

oppressive Orwellian surveillance capacity... Any tradeoffs in privacy which benefit individuals also (unfortunately) benefit corporations.

Simply and completely wrong. Corporations are already and always have been required to keep very complete records of their financial transactions - and falsifying or destroying them is almost always a felony. These records can be exposed during legal discovery.

This has zero, nothing, bupkis, squat to do with personal privacy.
posted by lupus_yonderboy at 4:34 PM on December 13, 2012 [11 favorites]


lupus_yonderboy you're talking courts. I'm talking enforcement.
If I craft a perfect violin, it doesn't mean a thing if it's not played.

It is their responsibility to find out - and they can be charged criminally if they don't.
As far as I know, that was the threat. The deal was cut to avoid conviction. If I read you correctly, you believe the courts could have, and should have, dealt with HBSC instead of cutting the deal.
I agree.
posted by Smedleyman at 5:00 PM on December 13, 2012 [1 favorite]


Screw the legal/ethical hair splitting. These bankers were doing the bidding of US intelligence services, who have been in on the ground floor of both international narcotics movement and "terrorism". They still are needed, fugedabout any meaningful enforcement of US law. Remember BCCI?
posted by bert2368 at 5:12 PM on December 13, 2012


This is what StanChart did:

Standard Chartered moved more than $200m through the US financial system primarily on behalf of Iranian and Sudanese clients by removing information that would have revealed the payments, the authorities said. "These transactions otherwise would have been rejected, blocked, or stopped for investigation under OFAC regulations," the Justice Department said.

There was another article some time ago that mentioned that StanChart had SOP manuals about how to hide the names of Iranian recipient entities from such money transfer instructions.

Forget the SOP, actually. At the very least, at some step of the financial chain, someone within StanChart knew that the money was going to entities that weren't supposed to receive it, and took the trouble to scrub money transfer instructions.

So, even though these things took place over years, against our better judgement, let us just imagine that it was just one person who did this. The Rogue Banker. He changed the SOP manual. Everybody else was just doing their job in the chain across years and across various countries. Nobody knew or suspected a thing. It was the almost-perfect crime. Just one guy.

So, what I would like to see is for that one goddamn criminal to be put on trial.

And then we will see whether it was just one guy or whether everybody was in on the con. It is complete and utter bullshit to suggest that these crimes can't be prosecuted because every step in the chain is individually clean-looking to the person who carried out that step.

I am so angry I should just take a break. And I think I will.
posted by vidur at 5:13 PM on December 13, 2012 [4 favorites]


IamBroom: Some good (but not great) news from TFA. In regard to bonuses, the rumour is that the deal will provide that the HSBC's top executives are to defer a portion of any bonuses that they are awarded for the next 5 years.

Inigo Montoya: "I do not think that word means what you think it means." A deferral is just a temporary postponement. They get to keep all their bonuses but don't get to actually put it in their pockets until the five years is up. They will likely collect interest on the amount for the deferral period.
posted by JackFlash at 5:19 PM on December 13, 2012 [1 favorite]


And it is just a "partial" deferral. Apparently they get to collect some of their bonuses right away. The rest will be put away for them to collect in five years. Please don't throw me in that briar patch!
posted by JackFlash at 5:25 PM on December 13, 2012 [2 favorites]


Soxley for a CEO to go to jail over an inadvertent mistake committed by an underlying, if that mistake is gross enough, though it hasn't happened to the best of my knowledge.

You sure about that? I'm pretty sure SOX applies to financial reporting, not random mistakes or even criminal activities committed by a random employee.
posted by Ad hominem at 5:28 PM on December 13, 2012


> I'm pretty sure SOX applies to financial reporting, not random mistakes or even criminal activities committed by a random employee.

You're quite right that it's only applicable to financial reporting, but I took a (short) course in Soxley after it came out and at the time it was claimed to me in the course materials that the CEO of a company could potentially be criminally liable for errors in reporting if they were gross enough, even if the errors were inadvertent.
posted by lupus_yonderboy at 5:33 PM on December 13, 2012


criminally liable for errors in reporting if they were gross enough, even if the errors were inadvertent.

Ok, yeah. There are criminal and civil penalties. Part of SOX is that there must be internal reporting procedures to ensure accurate reports, implemented and signed off on by the CEO and CFO.The internal procedures need to be audited and rated as well as financials.
posted by Ad hominem at 5:42 PM on December 13, 2012


God people are idiots. Officials are on record stating they did not pursue criminal charges because it might damage the world financial economy.

No wonder this happens it's hard not to have a contempt for such stupid people.
posted by Shit Parade at 5:42 PM on December 13, 2012 [2 favorites]


Soxley is by no means the only body of applicable laws where senior management can been held legally liable for criminal actions taken by their subordinates without having to actually prove knowledge.

As I have mentioned here before, I have never understood why the RICO Act, which also doesn't require you to "prove he knew", has never been invoked for any of these financial crimes. The Act specifically mentions both "money laundering" and "obstruction of justice" and was crafted precisely to deal with corrupt organizations that systematically commit crimes as part of their day-to-day business.
posted by lupus_yonderboy at 5:47 PM on December 13, 2012 [11 favorites]


And look at this - I'd forgotten that my old firm, Drexel Burham Lambert, got RICO'ed, and got out of it by pleading no contest: "If the bond ever had to be paid, its shareholders would have been practically wiped out. Since banks will not extend credit to a firm indicted under RICO, an indictment would have likely put Drexel out of business," (although they went out of business pretty soon anyway.)

Ah, the past.
posted by lupus_yonderboy at 5:51 PM on December 13, 2012


The document from the DoJ with all the fun details on the money laundering is this PDF. It's fascinating.

As far as I can tell, part of the problem with prosecuting most of the cases where someone intentionally tried to evade US sanctions by stripping transactions of information is that they occurred at non-US subsidiaries of HSBC and potentially by non-US citizens.

That also raises a more fundamental question, even if this activity did occur in the US, is it actually criminal? The executive order establishing the sanctions on Iran clearly prohibits such activity, but it is unclear exactly what enforcement actions could be take against an individual that commits such an act (it's more obvious how enforcement would play out against a corporation). What crime could one be charged with?
posted by kiltedtaco at 5:54 PM on December 13, 2012 [2 favorites]


Before I get crap for this, I'm going to add an addendum that I'm not advocating for this to be super legal and for nobody to receive any punishment ever. I'm asking exactly what that criminal prosecution would look like.
posted by kiltedtaco at 5:57 PM on December 13, 2012 [1 favorite]


kiltedtaco: excellent question.

My best guess is that the moment the money and information "gets into the system" of the US bank then it comes under US jurisdiction. But I'm quite sure that when the bank does something described like what the article describes as, "HSBC's Mexico unit shipped $7 billion in cash to the bank's U.S. affiliate," that it's a crime under US law, and the fact that the crime started in Mexico is irrelevant.

Money laundering is widely accepted as a crime internationally. Police departments of the world work closely together through Interpol and other organizations to track it down and crush it. While it may practically be more costly or time-consuming to gather the evidence and present the case if more than one country is involved, it should present no impediment at all to a good stiff prosecution and a lot of jailing.
posted by lupus_yonderboy at 6:12 PM on December 13, 2012 [2 favorites]


Ironmouth: He's a joke. He doesn't understand the law, or finance.

Matt Taibbi? I can't speak to his legal knowledge, but he understands finance better than most. He knows, and tells, what's actually going on, not what banks say is going on.

He's the guy jumping up and down, yelling about things like the money laundering, while the banks all pretend to roll their eyes at what he's saying. And guys like you, whether knowingly or unknowingly, are complicit in the disinformation.

At this point, if Taibbi says one thing, and the banks say something else, why on earth would anyone trust the banks without hard, absolute proof? That entire sector of the economy has gone corrupt, and it is holding the rest of the economy hostage.
posted by Malor at 6:16 PM on December 13, 2012 [19 favorites]


kiltedtaco: is that they occurred at non-US subsidiaries of HSBC and potentially by non-US citizens.

Yeah, big deal. We've made it clear on many occasions that our laws apply anywhere we want them to apply. We sent in a SWAT team against Dotcom in New Zealand for freaking copyright infringement, but we can't prosecute these bankers?

Bullshit. Absolute, utter, corrupt bullshit.
posted by Malor at 6:19 PM on December 13, 2012 [9 favorites]


God people are idiots. Officials are on record stating they did not pursue criminal charges because it might damage the world financial economy.

....Exactly who are you accusing of being the "idiots" in that statement, exactly?
posted by EmpressCallipygos at 6:21 PM on December 13, 2012 [2 favorites]


It is not just American laws. The FATF has 36 member countries that cooperate and collaborate on measures against money laundering and terrorist financing. Governments are not innocent babies. It is quite well-known that these are transnational crimes and require a lot of cross-border action to stop such criminals. And that is something that they routinely do every day. The selective application of laws in the preset set of cases is just plain disgusting.
posted by vidur at 6:41 PM on December 13, 2012 [1 favorite]


God people are idiots

God People is a good cop!

I have never understood why the RICO Act, which also doesn't require you to "prove he knew", has never been invoked for any of these financial crimes.

Well, again, from an enforcement perspective, investigations like that, say RICO, require a great deal of resources and time. Typically you need a multi agency task force (as the investigators that were on HSBC were) since there are different degrees of power and talents agency cadre have as well as different jurisdictions.
And you pretty much have to apply for a (often highly competitive) grant.

Which can be hard to get if someone with a lot of juice gets wind that you might be investigating their buddy. And that interference can take a multitude of forms.
(I think Taibbi has a point on drug seizure laws. But the reason such injustice exists is because it's easier to take money from someone who can't lawyer up and fight you for decades. Not saying I'm a fan. It's what it is.)

And data protection/ data privacy laws can put a real stick into the spokes of anti-money laundering law.
I'm not saying I understand it all. But there is definitely friction between privacy rights and anti-money laundering law enforcement. The Office of Technology Assessment as far back as 1995 was saying there would be social costs in fighting international financial crime.

It's not like they just roll over with the information (I don't dispute that they're supposed to by law). You have to search through data. So, you're way ahead on Sarbannes-Oxley, I'm still back here on Katz v. United States.

The PATRIOT Act has money laundering provisions. And I'm sure we're all big big fans of how well vetted that was.
So more of a general point and agreement with the hypocrisy in what we focus on politically.

The real tragedy here is not ... wait, let me amend that ... one of the plethora of major catastrofucks here is not just how this (HBSC) went down.

It's that it happened before (with Wachovia).
Big quote from that story: "After the Wachovia case, no one in the regulatory community has sat down with me and asked, 'What happened?' or 'What can we do to avoid this happening to other banks?' They are not interested. They are the same people who attack the whistleblowers and this is a position the [British] Financial Services Authority at least has adopted on legal advice: it has been advised that the confidentiality of banking and bankers takes primacy over the public information disclosure act. That is how the priorities work: secrecy first, public interest second."

"Meanwhile, the drug industry has two products: money and suffering. On one hand, you have massive profits and enrichment. On the other, you have massive suffering, misery and death. You cannot separate one from the other.

"What happened at Wachovia was symptomatic of the failure of the entire regulatory system to apply the kind of proper governance and adequate risk management which would have prevented not just the laundering of blood money, but the global crisis."


In theory, the way the law is supposed to aid in investigation, the bank is supposed to help you catch the drug cartels.
As it's shaking out, once you drive a stake into the cartels, they help you catch the banks.

It's not that there are two justice systems. It's that there's one Aristocracy.
posted by Smedleyman at 6:51 PM on December 13, 2012 [4 favorites]


I find this both funny and sad. Sad because this ruling is weak. The DoJ has just sent the message that with enough money you can do whatever the fuck you want. (I guess we already knew that.) Sad because SOMEONE signed off on that illegal activity and somewhere in the past they would have been prosecuted and convicted for those actions.

The funny part is how transparent this is and yet it's not being called out for what it is. The War on Drugs is the biggest make-work program (along with the prison system and the War on Terror) in U.S. history.

Just like the War on Terrorism, there has never been a plan or goal to win because the war employs so many fucking people. It's like FDR with psychosis on steroids and meth. The fear is what allows the Rs to get away with funding the biggest make-work social projects ever while succeeding in not looking like liberal money-spending make-work social project builders.

So in effect the HSBC, the drug lords and the terrorists are all allies of the fear mongoring Republicans and they will be protected.
posted by snsranch at 6:53 PM on December 13, 2012 [3 favorites]


Smedleyman: your heart is in the right place but Katz doesn't protect corporations from having to expose their books and other records to law-enforcement and the SEC - there are numerous explicit laws forcing them to do so, and there is no conceivable expectation of privacy with respect to the records and internal communications of a corporation.
posted by lupus_yonderboy at 7:04 PM on December 13, 2012 [2 favorites]


I'm skeptical about the "box designed to fit exactly through the tellers window" especially since the quote seems to be coming from the AG.

First off if you are going to custom order a box to deposit currency you'd optimize it to hold bills (IE: be a multiple of a US dollar bill wide and long) not fit through the tellers window. I mean you'd feel pretty foolish if HSBC changed there layout and the boxes wouldn't fit anymore.

Second: what possible benefit would their be to optimizing the shape to fit through a tellers window anyways? So you could get away with one box rather than two?

Third: Maybe things are different for either Cartels or in Mexico but I practically never see people who make regular cash deposits use boxes; everyone uses cloth or tyvek bags. Caveat: coin gets boxed in the boxes we get it in.

Even if the Cartels were using boxes it seems a lot more likely that some common box (a shoe box or maybe a take out box) is the same size as the window to within an inch or two and this has been exaggerated to "custom boxes the Exact size of the window."
posted by Mitheral at 7:29 PM on December 13, 2012


I've been brooding on this since I heard it on NPR.
And I have a solution:

Take their assets, and break up the "too big to fail" businesses. Then start chucking people who wilfully broke the law into actual jails. And ban them from running businesses, and none of this bullshit five year bands. Life bands.
And make them toxic to deal with.
Make it so they can't wheel and deal behind the scenes.

In conclusion: Fuck these people.
posted by Mezentian at 9:31 PM on December 13, 2012


This situation shows that we need a new legal order.

Clearly we are now living in a society where corporations, including banks, can commit acts which, while not technically criminal, because of the deplorable state of current law, should be criminal, because they are damaging to society as a whole and deserve the public censure of the entire community.

By now, the evidence that this is the case, particularly but not exclusively in the financial sector, is overwhelming.

Current law is clearly inadequate to deal with these issues, in at least two ways:

1) It is an insufficient deterrent
2) It is an inadequate punishment

The end result is repeated and manifest injustice.

We need to change what the law says a company can be, what a company can do and what protections it affords to its leaders. At the moment, we have a situation where large, rich and unaccountable organisations can exist in the larger body of society, acting with impunity, their behaviour supposedly justified by pursuit of profit. The intellectual defences of this state of affairs are shoddy and inadequate; the social consequences disastrous.

Taking these two inadequacies in turn:

1) Acts like those undertaken by HSBC, or other corporate criminals discussed above, should result in criminal punishments - i.e. jail time - for individuals. These individuals should be named, publicly censured and imprisoned as the threat to wider society that they are. They should not receive any bonuses, "deferred" or otherwise. Experience suggests that nothing less than this will have the necessary deterrent effect.

The only argument with any reason or justice behind it for not doing this applies only to this case, and it is that we should not punish people retroactively. But even if we accept that, the law needs to be changed at once.

2) Whenever a corporation is due to be fined or punished, its defenders will complain that destroying the corporation would involve punishing the innocent. This is true. To a certain extent, punishing a criminal will always involve hurting innocent parties - every criminal has brothers, sisters, parents etc. who did not commit the crime and will suffer if the criminal suffers.

But I think we can do better than that: society, through government, should be prepared for corporations to commit crimes on this scale. After all, they have done it numerous times in the past. We could set up institutions that could handle the process of nationalising a corporation that did this kind of thing - since it has clearly proven that it cannot be trusted in the free market. Or the corporation could be transferred into the hands of its innocent members and become a worker's self-directed enterprise.

A corporation or a bank is a creation of law. That means that we define it and we can redefine it completely if we choose. The veil of corporate personhood can be lifted, dismissed or restricted to a tiny number of situations (e.g. personal bankruptcy).

Of course, the real obstacle to this is not reason, or justice. It is power. As people have said above, there are laws that might actually prevent these abuses already on the books, but the problem is that they will almost certainly never be adequately enforced.

The only solution for this is for people who care about these issues to organise and inform others and be more aggressive about taking power. In the first half of the twentieth century, humanity made great moral strides because people finally decided that an absurd, selfish and ignorant ruling class could no longer be trusted with power and formed institutions strong enough to resist them: early unions, in particular.

It is not enough to demonstrate: the left must be much more determined about seeking power in all levels of society and then reforming society - by changing the kind of institutions that we use to govern our lives - in order to make it more functional. I say this with regret, as I personally would very much like to live in a well-organised and just environment, rather than a battleground. I am a bit of a hobbit at heart. But the relentless pushing of terrible, stupid and harmful ideas over the past fifty years has led to this: an environment in which a major bank can commit repeated, horrible crimes and be hit with - what? - a fine that amounts to six weeks of its profit.

When that happens, something must change.
posted by lucien_reeve at 1:52 AM on December 14, 2012 [4 favorites]


Guys, "corporation" is so five years ago. The new term is "job creator".
posted by telstar at 2:27 AM on December 14, 2012


I have never understood why the RICO Act, which also doesn't require you to "prove he knew", has never been invoked for any of these financial crimes.

RICO tends to be used by the Feds when they want to nab someone.

As noted elesewhere - the Federal Government has staff who've said how they didn't want to damage the world banking system.

As for drugs and money big red button. (I'll let ya'll find your own way to a 1970's publication called Dope Inc)

But hey, if there are true believers about a lack of linkage between Wall Street and Drugs - do explain the picture of the Stock Exchange head Richard Grasso and FARC upper brass Raúl Reyes meeting in the jungle.
posted by rough ashlar at 6:03 AM on December 14, 2012


SOPA

Now these people are claiming they are going to make a 'generic' boycott application. One that could be used to have you avoid HSBC - if it worked.
https://play.google.com/store/apps/details?id=com.boycottsopa.android

posted by rough ashlar at 6:30 AM on December 14, 2012


Current law is clearly inadequate to deal with these issues, in at least two ways:
1) It is an insufficient deterrent
2) It is an inadequate punishment

I don't know that any punishment/deterrent would be adequate short of the death penalty. Even then...
It's amazing that more people are willing to throw themselves under the bus for a bank than for ideological or criminal enterprises with quasi-mystical rites. But they are.

Detection is a big gorilla there. Law, for the most part, can't even find the evidence of wrongdoing in the first place without catching the drug lords first.
And even when it's done, most prosecutors don't want to spend months doing math in front of a jury on a complex case that spans years of behavior by hundreds of different people.
Joe Junkie stole this car radio, Tuesday. Three day trial. Easy jail time. Gooses his win/loss ratio. Joe Prosecutor can run for office on his record.

We need a social sea change as to what crimes are humiliatingly wrong. Right now, if you're a drug dealer, you're a scumbag who harms children and belongs in prison forever.

If you're a white collar criminal who facilitates drug money operations, you're just a sharp, aggressive entrepreneur who's being punished for cutting a few arbitrary corners made by a regulation happy big government that's being an inhibitor not a catalyst.

The laws are there (I'll defer to lupus_yonderboy - but the rhetoric at least from the business folks is that disclosure - or even the appearance of investigation - can destroy the integrity of the markets, stop people from investing because of privacy concerns, promote cats and dogs living together, mass hysteria, etc.), but either way the will to empower law enforcement to investigate isn't.
- At least barring that you capture Pancho Villa in a spectacular manner first.

Another (old) piece (because not much has changed) well worth the read:
In the full ten years from 1992 to 2001, according to TRAC data, SEC enforcement attorneys referred 609 cases to the Justice Department for possible criminal charges. Of that number, U.S. Attorneys decided what to do on about 525 of the cases--declining to prosecute just over 64% of them....
There are plenty of legitimate reasons, he says, why a prosecutor would choose not to pursue a case--starting with the possibility that there may not have been true criminal intent.

But many federal regulators scoff at such bravado. "We've got too many crooks and not enough cops," says one. "We could fill Riker's Island if we had the resources."

posted by Smedleyman at 8:04 AM on December 14, 2012 [1 favorite]


Too Big to Jail – Our Banking System’s Latest Disgrace
By Neil Barofsky, former Special Inspector General for the Troubled Assets Relief Program
Some perspective: HSBC sent more than $800 million in bulk cash from Mexico to the United States, a good chunk of which apparently represented proceeds from some of the most notorious Colombian drug cartels. As someone who tried the first narcotics money laundering case involving extradition from Colombia, let me assure you that this is a lot of money, the discovery of which usually generates vigorous prosecutions and lengthy prison sentences. And it wasn’t HSBC’s only dirty business: There were also hundreds of millions of more dollars of illegally disguised transactions with rogue nations such as Iran and Sudan.

Why no criminal charges? Why instead only some remedial measures and a “historical” fine that can be measured in weeks — not years — of earnings? It certainly wasn’t for lack of evidence. No, instead the government determined that HSBC is not only too big to fail, but also too big to jail. As the New York Times first reported, even though there were strong voices within DOJ pushing for criminal charges, the big banks’ best friends within the government (the Treasury Department, of course, and other unnamed regulators) were too fearful that an indictment could destabilize the global financial system. Yes, it’s 2008 all over again. In the name of systemic stability, a megabank again escapes accountability for its actions, rescued by compliant officials.
posted by the man of twists and turns at 10:57 AM on December 14, 2012 [6 favorites]


curse you man of twists and turns! I was just going to post that link.

It supplies exactly what Ironmouth asked for: a prosecutorial side view that calls for action. In this case, breaking up the bank so it's no longer "too big" to anything.
There is, of course, a solution for our emerging two-tier system of justice. The largest banks need to be broken up, the only realistic way to truly end both too big to fail and too big to jail. But since our government has demonstrated a reluctance to do so, perhaps the next time a megabank presents HSBC’s argument that it should not be criminally charged because it would destabilize the financial system, instead of capitulating to this threat, DOJ should require at a bare minimum that in return for allowing the bank to survive, it must break itself up, ensuring that it could never hold the justice system hostage again.
posted by warbaby at 12:37 PM on December 14, 2012


oh, and previously on Naked Capitalism the mess in Eurozone
posted by warbaby at 2:43 PM on December 14, 2012


Why It is Essential That Criminal Bankers are Prosecuted
There is a growing groundswell of informed opinion among modern commentators and even some politicians that financial regulators should be far more willing to bring criminal charges against those financial practitioners whose actions should be construed as more than just negligent or incompetent.
posted by the man of twists and turns at 6:46 AM on December 18, 2012 [3 favorites]


An Open Letter to David Cameron, the Prime Minister of the United Kingdom of Great Britain and Northern Ireland, from Mrs N Turner
Mr Cameron, unless I am completely mistaken, Mr Bailey seems to be telling us that banks, and therefore bankers, are now officially considered to be above the law in this country and that, in the interests of confidence in the banking industry (which is already at rock bottom among the British public, and therefore can hardly sink any lower), they cannot be prosecuted.

I am writing to ask you, as Prime Minister, for some clarification.

Does your government endorse the notion that banks and bankers should be given a licence to commit criminal acts without any fear of prosecution? Is this now official government policy? Are the British public now being asked to accept that, despite incontrovertible evidence of multiple criminal acts by banks, including money-laundering, drug-money-laundering, Libor rigging, multiple frauds and assorted Ponzi schemes, bankers are considered to be immune from prosecution? And if so, can I ask on what grounds your government, or indeed the government of any democratic country, can justify such a policy?
posted by briank at 12:01 PM on December 18, 2012 [1 favorite]


A white house petition has started. I find the language rather shrill, here's a different one, it is marginally better.

What's sad is even engaging in this behavior -- petitioning the white house -- which will be utterly ineffective, only creates within me additional apathy and wistfulness. The despondency of being powerless while seeing corruption go creeping on is, at times, rather difficult to bear; little wonder people fritter away their time on trivialities, at least in such small realms they can pretend to be gods.
posted by Shit Parade at 12:50 PM on December 18, 2012 [1 favorite]


DOJ Refuses to Indict HSBC For Money Laundering Explicitly Because It is Too Big To Fail
posted by the man of twists and turns at 11:53 AM on January 10, 2013


Jon Stewart Tears Into ‘Disgraced Financial Institutions’ For Leading The World ‘To The Brink Of Armageddon’
posted by homunculus at 7:24 PM on January 11, 2013


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