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The name Benjamin Lawsky shouldn't be new to members of Kos.   His nailing Standard Chartered Bank of UK with a $ 340 million fine for money laundering for Iran has been the subject of excellent diaries by 8ackgr0und N015e and by Christian Dem in NC.

How he did it is the subject of an excellent opinion piece by Johnathan Weil in Bloomberg today.

Details shared below the squiggly....

Benjamin Lawsky heads the 10-month old New York State Department of Financial Services.   He is their top regulator.

Under a "business as usual" scenario, Lawsky should kow-tow to the Federal Reserve, the Treasury Department and the Department of Justice.   In this case, Lawsky actually broke out of this box when he apparently discovered that StanChart may have defaulted on a prior agreement

The financial services department’s predecessor, the New York State Banking Department, in 2004 entered a written agreement with Standard Chartered and the Fed in which the bank promised to correct deficiencies in its anti-money-laundering systems. Lawsky contended that Standard Chartered lied to the banking department about complying with that agreement, and lied in its books and records about its transactions with Iran. Those are matters of state law over which Lawsky’s department had clear jurisdiction.
Benjamin "Badass" Lawsky decided the pace of the StanChart wasn't moving fast enough.  And then StanChart got our badass real m.a.d. - they denied the numbers and then they insulted our man Lawsky by offering to settle this little oversight by paying a $ 5million fine!

Ben "B-A" Lawsky decided he was better-off nailing StanChart based on NY State Law - so he threatened to yank StanChart's NY Banking license!   Yess!!   The proverbial s@#t hit the ceiling and had the Federal Reserve, Treasury and the DOJ very angry about this new pup pissing on their well-marked hydrants!

The threat to revoke was enough for the the CEO of StanChart Peter Sands to camp out in New York.  

StanChart caved within 8 days.

The settlement is believed to be the largest ever for an individual regulator in a money- laundering case, although Standard Chartered deserved worse. In June, ING Bank NV agreed to pay $619 million to settle criminal claims that it moved about $2 billion of prohibited Cuban and Iranian funds through the U.S. financial system.
And Benjamin Lawsky got what he set out to do.  An agreement of the numbers (which StanChart had initially challenged) and a modality for monitoring the changes the regulators had identified in 2004 and StanChart had "neglected" to implement.

It is important to highlight Jonathan Weil's conclusion

If the federal government would do a better job of overseeing large banks, rather than protecting them, there would be no opportunity or reason for someone like Lawsky to step in. Having active, competent, functional state financial regulators can only be a good thing. The country needs more.
I couldn't agree with you more Mr. Weil.  

Please accept my congratulations and gratitude Mr Lawsky - more power to you!

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Comment Preferences

  •  Tip Jar (7+ / 0-)

    Just a small-minded 'merican that wants to see the Romney 2009 FBAR

    by griz4u on Fri Aug 17, 2012 at 11:01:23 AM PDT

  •  Secrecy is the bankers' stock in trade. (0+ / 0-)

    It is the only thing of value they have.  If they have to open their books to inspection, then they are reduced to mere accountants and paper-pushers and banking becomes boring again.

    If financial institutions are chartered in New York, the New York is in charge.
    I suspect that the reason Bank of America moved to North Carolina was to escape the regulations in New York.

    Willard's forte = "catch 'n' cage". He's not into "catch and release."

    by hannah on Fri Aug 17, 2012 at 11:16:41 AM PDT

  •  I'm confused (2+ / 0-)
    Recommended by:
    Garrett, emal
    Lawsky contended that Standard Chartered lied to the banking department about complying with that agreement, and lied in its books and records about its transactions with Iran.
    So, in 2004, evidence was found that SBC was facilitating money laundering, and 8 years later the problem wasn't corrected, and was exacerabated by engaging in prohibited financial transactions with Iran, and covering them up.  And, in lying about it and abrogating the earlier agreement, hadn't the bank committed a crime?

    And they paid a crappy little fine equal to 1 month's profits? Admitted the amounts, but didn't admit that these were violations of the law? If he were "bad ass", he would have followed through, held the hearing, yanked their business license, and perp walked every one of them out of their offices on camera. Even if they had gotten a legal stay after the fact, shutting them down this week would have been a stronger move.

    He certainly did more than federal regulators, but please spare me the praise for half-ass measures with another bank that broke the law.

    Liberalism is trust of the people tempered by prudence. Conservatism is distrust of the people tempered by fear. ~William E. Gladstone, 1866

    by absdoggy on Fri Aug 17, 2012 at 12:13:33 PM PDT

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