HSBC (Hong Kong Shanghai Banking Corp), the massive financial conglomerate and drug money launderer from recently and way way back (think China and opium), looks to have dodged a rather big bullet ... of course depending upon how you look at it. http://dealbook.nytimes.com/...
The original NYT headline was : Bank Said to Avoid Charges Over Laundering
Then it became: HSBC to Pay $1.92 Billion to Settle Charges of Money Laundering
Notice the subtle but important difference between the 2 headlines (from avoiding criminal charges to paying a fine - the second being more administration friendly)... and in that difference you have much of the story.
HSBC’s actions stand out among the foreign banks caught up in the investigation, according to several law enforcement officials with knowledge of the inquiry. Unlike those of institutions that have previously settled, HSBC’s activities are said to have gone beyond claims that the bank flouted United States sanctions to transfer money on behalf of nations like Iran. Prosecutors also found that the bank had facilitated money laundering by Mexican drug cartels and had moved tainted money for Saudi banks tied to terrorist groups.HSBC clearly broke US laws on money laundering. There is NO doubt about it. They have now agreed to pay penalties amounting to $1.9 billion. Sounds like a lot, doesn't it. Well ....
They look to have helped "play" with $60,000 billion ($60 trillion), and their fine was about $2 billion .... 30,000 to 1. Some fucking penalty.
Now of course if you or I deal drugs, or launder money or .... we go to jail. But despite the fact that HSBC is a person (remember Citizens United), the fact that they helped process $60,000 billion without required controls does not seem to warrant jail time.
Why, you ask?
Well apparently the powers that be were afraid that it would sink the bank and damage the financial system, ... and probably also cost a lot of rich people a lot of money. You see a criminal conviction (you know for doing something criminal ... like they did) would have had them lose their US banking license (kind of important) and a lot of their business with the likes of US pension funds etc.
So we have, ONCE AGAIN, a corporation (that is a person), not prosecuted because it is too big. If you think about it that means that in reality the law just simply does not apply to them. I mean if you can fiddle away illegally with $60,000 billion without more than a slap on the wrist, what use is the law.
It is time for too big to jail, to become to big to exist.
As always Matt Stoller tackles this as well over at NC.
DOJ Refuses to Indict HSBC For Money Laundering Explicitly Because It is Too Big To Fail
The fine was:
It is .003% of the $60 trillion in wire transfers that HSBC didn’t monitor for money laundering red flags. Investigators found 17,000 alerts identifying potentially suspicious activity that went unreviewed.
It’s about 2% of the company’s total income last year [diarist note - 2% of total revenue, about 10% of net income]. For a New Yorker making the median income, that’s about $1,105.More here: from the Guardian.
HSBC fine: what does it take for a bank to get prosecuted?
Well, it's a record for the offence of money laundering and breaking sanctions, which could be said to underline the gravity of the bank's actions. On the other hand, the sum represents about four weeks' earnings given the bank's pre-tax profits of $21.9bn last year.
We don't know the weight of that tale and maybe the fear of financial chaos was exaggerated. But the idea that a bank could be "too big to prosecute" is alarming. It sends a message that, whatever the scale of wrong-doing, the world's biggest banks can never lose their licence to operate overnight. Instead, a hefty fine can always make the problem go away.