Thursday, December 13, 2012

Scandalous: The Obama Administration Refuses To Prosecute HSBC For Money Laundering

HSBC, Britain's largest bank, knowingly. intentionally, and for years violated U.S. banking laws to launder billions of dollars from drug cartels and from rogue nations under sanctions. This was not simple negligence, this was purely criminal.

There should be a line of HSBC managers and compliance employees being measured now for prison suits, in addition to HSBC itself being prosecuted. Instead, the Obama administration has done precisely what they've done in virtually all high profile white collar criminal cases. They have failed to prosecute. Instead, they have given HSBC a civil fine of $1.9 billlion - a slap on the wrist for an institution that made $16.8 billion in profit in 2011.

For all of his anti-Wall St. and class warfare rhetoric, Obama has been AWOL when it comes to holding actual Wall St. criminals liable. Indeed, under Obama, if you are a criminal, the safest place to be is Wall St., a major bank or a hedge fund operator.

The economic meltdown from the housing bubble should have led to a whole host of criminal prosecutions for fraud. When sub-prime loans were being bundled and resold with a AAA rating, that was not within the realm of reasonable opinion, that was criminal. When Goldman Sachs marketed four sets of complex mortgage securities to banks and other investors without warning of the high risk, or when they "secretly bet against the investors' positions and deceived the investors about its own positions to shift risk from its balance sheet to theirs," that is fraud. Yet the Obama DOJ refused to prosecute Goldman Sachs or anyone else.

As near as I can tell, no one from the economic melt-down of 2007 has been prosecuted by Obama - and its not hard to understand why. That melt-down was caused by Democrat policies over a period of two decades - ones fought by Bush, McCain and most other Republicans. To prosecute anyone for the crimes that occurred in the creation of the melt-down would shine a bright light on the facts - as well as the utter canard that the melt-down was caused by Republican economic policies or de-regulation.

Then there is Jon Corzine, former Democratic governor of NJ, hedge fund manager of MF Global - and the man who oversaw the fraudulent misuse and loss of $1.2 billion in customer funds. He is still walking the streets - and was a major bundler of funds for Obama in the most recent election.

And now HSBC with no criminal prosecutions of either the institution or the individual culprits. As to the institution:

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.

Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.

HSBC, Britain’s biggest bank, said it was “profoundly sorry” for what it called “past mistakes” . . .

Breuer was pressed on why the US authorities had agreed to a deferred prosecution deal for the bank. He dismissed accusations that prosecutors had not been hard enough and said that the Justice Department had looked at the “collateral consequences” to prosecuting the HSBC or taking away its US banking licence. Such a move could have cost thousands of jobs, he said.

HSBC has already sacked all the senior staff involved in the scandal, and agreed to stringent monitoring – the first time a foreign bank has agreed to such oversight. “In this day and age we have to evaluate that innocent people will face very big consequences if you make a decision,” said Breuer. “I don’t think anyone is alleging that HSBC was the mastermind of the scheme,” he said. Rather it was their “incredibly lax” monitoring that was to blame. “HSBC was a vital player,” he said. “But they are not the Sinaloa cartel.”

What utter bullshit this is. One, this is a decision that HSBC is large enough that they can avoid criminal sanctions that would be used to crush smaller competitors under this scenario. Two, Breuer's attempt to minimize HSBC's actions as merely "lax monitoriong" is itself a fraud. You had employees being instructed by management to erase identifying information on transactions specifically so the U.S. authorities would not identify them as coming from unlawful sources. That wasn't lax monitoring, it was knowing and intentional money laundering. And a "my bad" from HSBC is not quite sufficient. If the only consequence for the individuals involved is that they got "sacked," that stinks of trying to hide facts that prosecution of these individuals would bring to light.

The Obama administration is utterly lawless. Obama's class warfare rhetoric is nothing but pure window dressing. This really is scandalous.

1 comment:

Anonymous said...

Anthony Gibbs, former HSBC COO of Compliance & Legal is now a Regional Director for the Consuemr Financial Protection Bureau. No prosecution, just awarded a cushy govt. compliance job! Only in America!