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发帖数: 29846 | 1 It is not often that I find myself in agreement with the editorial page of
the New York Times, but I did on Wednesday. The Times criticized the $1.92
billion settlement agreed to by HSBC as “a dark day for the rule of law.”
No bank executives, according to the LA Times, were charged. While $1.92
billion sounds like a lot, it is about 0.06% of the banks $2.6 trillion in
assets. All banks stretch the limits and meaning of regulation. HSBC, the
world’s third largest bank, and one that has been frequently warned, has
simply been the most egregious. Without the rule of law, civil society
devolves into either totalitarianism or anarchy.
The problem is not just the fact that no one at HSBC was jailed for criminal
activities that make Jessie James, Willie Sutton and Bernie Madoff look
like amateurs; it is that there seems to be collusion between the bad guys (
the big banks) and government. The government imposes fines, which appear
steep but are manageable, payable to the agencies charged with monitoring
their behavior. It is symbiotic, crony capitalism. Banks simply look at
fines as a regular cost of doing business. Agencies view them as a source of
revenues. It is the public, the bank’s customers and shareholders who bear
the cost. Society’s moral fiber becomes weakened.
What HSBC did was knowingly launder money for drug cartels in Mexico and
Colombia, and provide banking services for countries known to harbor
terrorists and for exporting terrorism. Both are in contradiction with
stated American policy, but more importantly, both violate common rules of
humanity. Mexican drug lords are not known for their niceties. According to
the current issue of the Economist, 60,000 Mexicans, including 60 mayors,
have been killed in the past six years. Bloomberg reports that the cartels
used cash boxes precisely the dimensions of “tellers’ windows in HSBC’s
Mexican branches.” Colombian narcotics dealers sell drugs in the U.S and
then send the funds to Mexican banks to be converted into Colombian pesos.
Additionally, the bank has provided banking services for countries like Cuba
, Iran, Libya and Sudan. Stuart Gulliver, CEO of HSBC, in paying the fine
and accepting responsibility, said “We are profoundly sorry” for what his
bank did. Really?
American officials said that they were fearful of imposing punishment so
severe that a bank could be destroyed in the process. Fed officials have
little concern about smaller banks and the hedge fund industry, which they
persist in trying to topple. But big banks remain in a class by themselves.
Senator Carl Levin (D-MI) praised the settlement saying that it sends a “
powerful wake-up call to multinational banks about the consequences of
disregarding their anti-money-laundering obligations.” I suspect the real
message is get big enough and you won’t have to worry. It seems beyond
credibility that executives who so blatantly violated federal laws should be
allowed to go free. While HSBC stock, at $51.68, remains below its all-time
high price of $99.52 set in October 2007, it is up 36% year-to-date – not
too shabby.
Despite the reluctance of the federal government to prosecute executives of
very large banks who have violated more laws than Willie Sutton, we are
living, according to the New York Times, in “the era of the star prosecutor
in white-collar crime.” The paper noted that Preet Bharara, U. S. Attorney
for Manhattan, was on the cover of Time magazine and got a shout-out from
Bruce Springsteen during a recent concert, because of his decision to go
after hedge funds for “insider trading.”
Certainly trading on inside information is wrong and deserves punishment,
but in a world in which information flows like the Mississippi it is
difficult to determine what is right and what is wrong. The real reason the
Bharara’s of the world go after hedge fund managers is because of the
widely spread notoriety of their incomes, which, admittedly, seem excessive
at a time of persistent high unemployment. However, their incomes are paid
by sophisticated investors. Nevertheless, even if their crimes prove true,
their actions pale in comparison to the practices of banks like HSBC. The
bank laundered $881 million from drug cartels like Sinaloa in Mexico and
Norte del Valle in Colombia. Thousands of deaths have resulted from these
cartels and millions of Americans have suffered the consequences of their
products. The same bank violated sanctions imposed against regimes by our
government. The sanctions were meant to contain terrorist activity. Are not
these crimes far more damaging to our society than those highly publicized
investigations into the possibility that some hedge funds traded on
information that may or may not have been received legitimately?
What message about our society does all this send to our children and to all
those who strive to play by the rules? You can escape punishment if you
become an executive at a bank “too big to fail and jail,” As a prosecutor,
you get shout-outs from rock stars if you indict a well known hedge fund
manager, even if his innocent. If, as a hedge fund manager, you achieve
enormous financial success you are automatically deemed a piranha to society
, and thus a target for an over-eager prosecutor looking to add another
notch to his holster. Firms too small to defend themselves are deemed small
enough to fail and jail. It is a rotten message, but unfortunately one that
captures the spirit of the downward spiral of our culture. |
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