Wall Street Banks Too Big to Jail?
Friday,
February 22st, 2013
Baton
Rouge, Louisiana
BIG BANKS AND
THEIR CRIMINAL LEADERS GO SCOTT FREE!
After
years of financial chicanery, federal prosecutors have decided that Wall Street
manipulators are both too big to fail, and too big to jail. The most recent culprit, in what seems to be
a conspiracy to “go soft” on financial shenanigans, is the British owned bank,
HSBC, that was granted a criminal reprieve and monetary slap on the wrist for
confecting the largest drug and terrorism money laundering scheme in U.S.
history. To give the aura of being tough
on crime, the Justice Department levied a fine of $1.9 billion, which amounts
to about five weeks of profit for this international bank for highly suspect,
if not outright criminal actions, quite possibly extending as far back as 2001.
HSBC is
far from the only bank guilty of such deplorable dealings. There has been a pattern of the largest banks
on Wall Street engaging in the most relentless and irresponsible behavior – and
this has undermined the entire U.S. financial system. At a U.S. Senate hearing in Washington last
week, Senator Elisabeth Warren from Massachusetts confronted bank regulators
and ask if they could identify any example of Wall Street bankers being
criminally charged and taken to trial.
The regulators could only say:
“We will get back to you.”
Financial
columnist Matt Taibbi concluded in a recent column: “Nobody
goes to jail. This is the mantra of the financial–crisis era, one that saw
virtually every major bank and financial company on Wall Street embroiled in
obscene criminal scandals that impoverished millions and collectively destroyed
hundreds of billions, in fact, trillions of dollars of the world’s wealth – and
nobody went to jail. Not a single
executive who ran the companies that cooked up and cashed in on the phony
financial boom has ever been convicted.”
In the case of HSBC, it was the
financial lapdog for a number of Mexican drug cartels, many of whom were
suspected in thousands of murders during the past decade. The bank also had ties and handled money
exchanges for groups linked to Russian gangsters, Hezbollah, Iran, North Korea
and Al Qaeda. This was not your
friendly, local neighborhood bank. So
why wasn’t the bank and key employees charged with assorted federal crimes?
Simply put, the Justice
Department decided to go soft. After
all, according to the Feds, the whole future of the world economy was at stake.
“Had the US authorities decided to press criminal charges, HSBC would almost
certainly have lost it's banking license in the U.S., the future of the
institution would have been under threat and the entire banking system would’ve
been destabilized.” That according to
the Justice Department press conference to announce the fine, but no
charges. So the whole world-banking
pyramid could collapse? Over one
bank? Yeah, right!
As Rolling Stone magazine points
out: "At HSBC, the bank did more than avert its eyes to a few shady
transactions. It repeatedly defied government orders as it made a conscious,
year-long effort to completely stop discriminating between illegitimate and
legitimate money. And when it somehow
talked the US government into crafting a settlement over these offenses with
the lunatic aim of preserving the bank’s license, it succeeded, finally, in
making crime mainstream.”
It’s not just the banks getting
off with a slap on the risk when it comes to their criminal behavior. The bailouts just won’t go away. The federal government paid out billons of
dollars just five years ago purportedly to keep the big banks afloat. Insurance giant AIG, which is supposedly
regulated by state insurance commissioners, is back on the financial scene in a
bitter dispute involving more bailouts.
The taxpayers bailed out AIG to the tune of some $200 billion, and ongoing
efforts to recoup much of the money have been stymied by the New York Fed.
The financial crash in 2008 was
triggered by AIG’s selling of credit default swaps that were supposed to be
regulated by state insurance departments.
But again, AIG was one of these “too big to fail” Wall Street icons, so
state regulators turned a blind eye, and let this feckless and arrogant company continue to spread it’s toxic
insurance derivatives throughout the financial marketplace.
In an effort to recoup some of
the losses, AIG is being pushed to bring legal action against the Bank of
America, one of the recipients of over $l5 billion in bailout money. And although AIG would seem to have a valid
claim and a solid lawsuit, the New York Fed has let Bank of America off the
hook.
Here is what Ohio U.S. Sen.
Sherrod Brown, a member of the Senate Banking Committee(and a former colleague
of mine when we both served as Secretaries of State) had to say about the
actions of the New York Fed on blocking the law suit: “New York Fed’s behavior
in this case underscores that the more we learn about these bailouts, gifts and
advantages that Wall Street gets, the clearer it becomes that one set of rules
applies to the largest megabanks and another set of rules to the smaller financial
institutions and the rest of the country.”
At the
federal and state levels, the regulators and prosecutors seem to be
intimidated, even afraid to prosecute the very powerful. So we have two classes. One class that can be arrested for even the
most minor of crimes, and the other class whose members are above the law. Time
and again during the countries’ financial meltdown in 2008 and the aftermath
that continues today, the barons of Wall Street can flaunt their noses at the
law and continue to reap huge bonuses with taxpayer dollars.
As my local banker friend,
Preston Kennedy in Zachary, Louisiana told me, the answer is simple. “The solution
demands the political will to break up these greedy and corrupt giants that
threaten to engulf the financial system.”
He’s right. But does congress
have the will?
*******
“Greed is good.” Gordon Gekko
Peace
and Justice
Jim
Brown
posted by Jim Brown @ 10:07 PM
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