The banking giant HSBC has
escaped indictment for laundering billions of dollars for Mexican drug
cartels and groups linked to al-Qaeda. Despite evidence of wrongdoing,
the U.S. Department of Justice has allowed the bank to avoid prosecution
and pay a $1.9 billion fine. No top HSBC officials
will face charges, either. We’re joined by Rolling Stone contributing
editor Matt Taibbi, author of "Griftopia: A Story of Bankers,
Politicians, and the Most Audacious Power Grab in American History."
"You can do real time in jail in America for all kinds of ridiculous
offenses," Taibbi says. "Here we have a bank that laundered $800 million
of drug money, and they can’t find a way to put anybody in jail for
that. That sends an incredible message, not just to the financial sector
but to everybody. It’s an obvious, clear double standard, where one set
of people gets to break the rules as much as they want and another set
of people can’t break any rules at all without going to jail."
Amy Goodman: For more on the latest bank scandals, we’re joined by Taibbi. Now, how did Forbes put it, Matt? "What’s a bank got to do to get into some real trouble around here?"
MATT TAIBBI: Exactly, exactly. And what’s amazing about that is that’s Forbes saying
that. I mean, universally, the reaction, even in—among the financial
press, which is normally very bank-friendly and gives all these guys the
benefit of the doubt, the reaction is, is "What do you have to do to
get a criminal indictment?" What HSBC has now
admitted to is, more or less, the worst behavior that a bank can
possibly be guilty of. You know, they violated the Trading with the
Enemy Act, the Bank Secrecy Act. And we’re talking about massive amounts
of money. It was $9 billion that they failed to supervise properly.
These crimes were so obvious that apparently the cartels in Mexico
specifically designed boxes to put cash in so that they would fit
through the windows of HSBC teller windows.
So, it was so out in the open, these crimes, and there’s going to be no
criminal prosecution whatsoever, which is incredible.
JUAN GONZÁLEZ: And
emails found where bank officials were instructing officials in Iran
and in some other countries at how best to hide their efforts to move
money into their system?
MATT TAIBBI: Exactly, yeah, and that’s true at HSBC,
and apparently we have a very similar scandal involving another British
bank, Standard Chartered, which also paid an enormous fine recently for
laundering money for—through Iran. This, again, comes on the heels of
the Libor scandal, which has already caught up two major British
banks—the Royal Bank of Scotland and Barclays. So, you have essentially
all of the major British banks now are inveigled in these enormous
scandals. We have a couple of arrests, you know, today involving
low-level people in the Libor thing, but it doesn’t look like any major
players are going to be indicted criminally for any of this.
JUAN GONZÁLEZ: And
this whole argument that the bank is too big to indict because of the
threat to the world financial system, most people don’t know that HSBC stands
for Hong Kong and Shanghai Banking Corporation. It’s a British bank
that goes back to the early days of British colonialism in Asia.
MATT TAIBBI: Sure.
JUAN GONZÁLEZ: And is it too big to be indicted?
MATT TAIBBI: The
amazing thing about that rationale is that it’s exactly the opposite of
the truth. The message that this sends to everybody, when banks commit
crimes and nobody is punished for it, is that you can do it again. You
know, if there’s no criminal penalty for committing even the most
obvious kinds of crimes, that tells everybody, investors all over the
world, that the banking system is inherently unsafe. And so, the message
is, this is not a move to preserve the banking system at all. In fact,
it’s incredibly destructive. It undermines the entire world confidence
in the banking system. It’s an incredible decision that, again, is met
with surprise even with—by people in the financial community.
AMY GOODMAN: On Tuesday, Thomas Curry, head of the Office of the Comptroller of the Currency, the lead regulator for HSBC in the U.S., defended the settlement.
THOMAS CURRY: These
actions send a strong message to the bank and to the financial services
industry to make compliance with the law a priority to safeguard their
institutions from being misused in ways that threaten American lives.
AMY GOODMAN: That’s
Thomas Curry, head of the Office of the Comptroller of the Currency. It
seems like a lot of people who are in prison right now—low-level
thieves, criminals, drug launderers, people who have been accused of
working with al-Qaeda—perhaps could appeal their convictions now and get
out of jail.
MATT TAIBBI: Right.
Right, yeah, exactly. I was in court yesterday, in criminal court in
Brooklyn. I saw somebody come out of—come into court who had just been
overnight in jail for walking from one subway car to another in front of
a policeman. You can do real time in jail in America for all kinds of
ridiculous offenses, for taking up two subway seats in New York City, if
you fall asleep in the subway. People go to jail for that all the time
in this country, for having a marijuana stem in your pocket. There are
50,000 marijuana possession cases in New York City alone every year. And
here we have a bank that laundered $800 million of drug money, and they
can’t find a way to put anybody in jail for that. That sends an
incredible message not just to the financial sector but to everybody.
It’s an obvious, clear double standard, where one set of people gets to
break the rules as much as they want and another set of people can’t
break any rules at all without going to jail. And I just don’t see how
they don’t see this problem.
JUAN GONZÁLEZ: Well, Matt, Assistant Attorney General Lanny Breuer outlined some of HSBC’s alleged drug cartel ties.
ASSISTANT ATTORNEY GENERAL LANNY BREUER: From
2006 to 2010, the Sinaloa cartel in Mexico, the Norte del Valle cartel
in Colombia and other drug traffickers laundered at least $881 million
in illegal narcotics trafficking proceeds through HSBC Bank USA.
These traffickers didn’t have to try very hard. They would sometimes
deposit hundreds of thousands of dollars in cash in a single day into a
single account, using boxes, as Loretta said, designed to fit the
precise dimensions of the tellers’ windows in HSBC’s Mexico branches.
JUAN GONZÁLEZ: Matt, this is like Monopoly, the board game, all over again, you know? Get out of jail free, you know.
MATT TAIBBI: Yeah.
JUAN GONZÁLEZ: Instead of $50, you pay $1.9 billion, but you’re still getting out of jail free.
MATT TAIBBI: And
this fits in the—in with the pattern of the entire financial crisis.
$1.9 billion sounds like a lot of money, and it definitely is. It’s a
record settlement. No bank has ever paid this much money before. But
it’s about two months’ worth of profits for HSBC.
It’s not going to cripple this bank. It’s not even going to hurt them
that badly for this year. It fits in line with the Goldman Sachs
settlement in the Abacas case, which was hailed at the time as a record
settlement. It was $575 million. But that was about 1/20th of what they
got just through the AIG bailout. So, this is
not a lot of money for these people. It sounds like a lot of money to
the layperson, but for the crimes they committed, getting away with just
money—and it’s not even their own money, it’s not their personal money,
it’s the shareholders’ money—it’s incredible. It really—it literally is
a get-out-of-jail-free card.
JUAN GONZÁLEZ: And, of course, the way that big banks these days can borrow money from the U.S. Fed for no interest—
MATT TAIBBI: For free.
JUAN GONZÁLEZ: For free.
MATT TAIBBI: Free.
JUAN GONZÁLEZ: Basically, they can just take money from the government and pay the government back.
AMY GOODMAN: What does the Justice Department, what does the Obama administration, gain by not actually holding HSBC accountable?
MATT TAIBBI: You
know, I think—I’ve asked myself that question numerous times. I really
believe—and I think a lot of people believe this—that the Obama
administration sincerely accepts the rationale that to aggressively
prosecute crimes committed by this small group of too-big-to-fail banks
would undermine confidence in the global financial system and that they
therefore have to give them a pass on all sorts of things, because we
are teetering on the edge of a problem, and if any one of them were to
fall out, it would cause a domino effect of losses and catastrophes like
the Lehman Brothers business. And I think they’re genuinely afraid of
that. And so, that’s the only legitimate explanation that you can
possibly assign to this situation, because, as we know, Wall Street
abandoned the Obama administration this year when it came to funding in
the election. They heavily supported Mitt Romney and didn’t give Obama
much money at all.
