HSBC's record $1.9bn fine preferable to prosecution, US authorities insist | Business 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. Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s "blatant failure" to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire. 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. The bank processed cash for Mexico's Sinaloa cartel, regarded as the most powerful and deadly drug gang in the world, among others.
9 Emails Wall Street Hoped You'd Never See It's 2013, and Wall Street still doesn't seem to understand that emails and privacy typically don't mix well. Last week, the Justice Department filed a lawsuit against S&P accusing the ratings agency of knowingly increasing its ratings on the mortgage investments that helped launch the U.S. into the 2008 financial crisis. In numerous internal emails released with the lawsuit, S&P analysts made claims suggesting that they were very aware of how little quality control was valued at S&P. This is far from the first time that Wall Street workers have incriminated themselves with emails they assumed no one other than the recipient would ever see. Here is our roundup of 9 of the most incriminating things traders have allegedly said via email: Loading Slideshow Also on HuffPost:
HSBC Fine for Money Laundering is Largest Bank Penalty in U.S. History HSBC Fine Let Bank Avoid These Charges By accepting the settlement, HSBC avoided criminal charges. The bank agreed to deferred prosecution with the Manhattan district attorney's office and the Justice Department. According to The New York Times, officials briefed on the matter said the deferred prosecution agreement requires HSBC to forfeit more than $1.2 billion and to pay about $700 million in fines. According to The Times, the settlement represents a major victory for the government but raises questions about whether some financial institutions are "too big to indict." A money-laundering indictment or a guilty plea to money-laundering charges, The Times said, would "essentially be a death sentence" for HSBC. Although HSBC was repeatedly warned by U.S. officials about its relationship with Mexico, from 2000 to 2009, the bank considered Mexico to be a "low risk" for money laundering, a U.S. HSBC to Adopt Stricter Standards In January, HSBC hired Stuart A. Related Articles and News
Royal Bank of Scotland Settles Case on Rigging Drew Angerer/Getty ImagesLanny Breuer of the Justice Department’s criminal division said on Wednesday that the investigation of banks was not finished. A campaign to root out financial fraud secured a victory on Wednesday, as authorities took aim at the Royal Bank of Scotland for its role in an interest rate manipulation scheme that has emboldened prosecutors and consumed the banking industry. American and British authorities struck a combined $612 million settlement with the bank, the latest case to emerge from the global investigation into rate-rigging. The Justice Department dealt another blow to the bank, forcing its Japanese unit to plead guilty to criminal wrongdoing. The penalty for the subsidiary, a hub of rate manipulation, underscores a recent shift in the way federal authorities punish financial wrongdoing. The R.B.S. case echoed an earlier action taken against a UBS subsidiary, which similarly pleaded guilty to felony wire fraud as part of a larger settlement.
Banks behaving badly: HSBC settles in money laundering probe The $1.92 billion deferred prosecution entered into by HSBC with US regulators is one of the most significant financial penalties imposed on a global bank. On Tuesday in a Federal Court in Brooklyn, HSBC agreed to a legally binding settlement in which it accepted responsibility for systematic sanctions violations and the facilitation of money laundering on an industrial scale. It was also held accountable for threatening national security by providing financing facilities to a Saudi Arabian bank with links to terrorist groups. “HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries,” noted the head of the Criminal Division at the Department of Justice, Lanny Breuer. The expansion of the measure reflects both its strengths and limitations.
New Questions Raised Over a Bank of America Settlement It has been a regular refrain at Bank of America. Last month, Brian T. Moynihan, the bank’s chief executive, told Bloomberg television at the World Economic Forum in Davos, Switzerland, that carrying Countrywide was like climbing a mountain with “a 250-pound backpack.” But according to new documents filed in state Supreme Court in Manhattan late on Friday, questionable practices by the bank’s loan servicing unit have continued well after the Countrywide acquisition; they paint a picture of a bank that continued to put its own interests ahead of investors as it modified troubled mortgages. The documents were submitted by three , in Boston, Chicago and Indianapolis, and Triaxx, an investment vehicle that bought mortgage securities. The filing raises new questions about whether a judge will approve the settlement. Lawrence Grayson, a spokesman for Bank of America, denied the bank was putting its own interests ahead of investors.
Obama decided that political capital better spent elsewhere than on battle over Rice The decision was hers, senior administration officials said. But Obama, who pledged to defend her vigorously just five weeks ago, did not try to talk one of his most-favored candidates out of it. His decision to accept her withdrawal served as an acknowledgment that even a president fresh from reelection has only a limited amount of political latitude in a still-sharply partisan Washington. Obama has only a few weeks to negotiate a year-end deal with congressional Republicans to avert the “fiscal cliff.” A prolonged fight over Rice’s nomination would have interrupted those plans — perhaps for only a few weeks, but perhaps for far longer given the bad blood such fights have stirred up in the past. As partisan criticism grew in recent weeks, Senate Democrats told White House officials that, while Rice’s nomination would probably succeed in the end, it would come at a steep political cost to the rest of his agenda. Republican Sens. Karen Tumulty and Paul Kane contributed to this report.
Bill Moyers and Matt Taibbi: Everyone Pays If the Banksters Don't Go to Jail February 1, 2013 | Like this article? Join our email list: Stay up to date with the latest headlines via email. From Bill Moyers.com: Journalist Matt Taibbi assesses the Obama Administration’s approach to holding banks accountable for their behavior, and early indications are not promising. Full transcript appears below the video: BILL MOYERS: I t’s time to talk with journalist Matt Taibbi. You're working on a story right now that'll come out in a couple of weeks on the HSBC settlement. MATT TAIBBI: Well, the HSBC settlement was a really shocking kind of new low in the history of the too big to fail issue. BILL MOYERS: Drug cartels? MATT TAIBBI: Drug cartels in Colombia and Mexico. BILL MOYERS: $1.9 billion, a lot of money. MATT TAIBBI: It's a lot of money. BILL MOYERS: Lenny Breuer also forced the Swiss bank UBS, as you know, to pay a big fine in the LIBOR, the price fixing conspiracy. MATT TAIBBI: This is the, I think the biggest financial scandal of all time. MATT TAIBBI: I did.
Macro Morning: Focus on the cliff Ben Bernanke would have looked at the US PPI data last night and been convinced he is doing the right thing. During November producer prices fell 0.8% from -0.2% last and -0.5% expected with the year on year rate now sitting at just 1.5%. Of course the Fed Chairman is expressly targeting unemployment now and will keep rates low until the rate falls to 6.5% but for mine the real target of his unconventional monetary policy is deflation. Bernanke is a depression scholar and knows what has occurred in Japan for the past 20 years and he knows that weak aggregate demand equals weak pricing power which ultimately can or does lead to deflation. Perhaps the markets know this too because the QE4 strength continued to fade overnight with US markets in the red from early trade following on from European stock markets which were weak from the get go as they caught up to the US reversal the previous day. There is a risk that US equity markets underperform over the final weeks of 2012.
Doubt Is Cast on Firms Hired to Help Banks Justin Sullivan/Getty ImagesA worker removed furniture from a foreclosed home in Richmond, Calif., in July. Federal authorities are scrutinizing private consultants hired to clean up financial misdeeds like money laundering and foreclosure abuses, taking aim at an industry that is paid billions of dollars by the same banks it is expected to police. The consultants operate with scant supervision and produce mixed results, according to government documents and interviews with prosecutors and regulators. In one case, the consulting firms enabled the wrongdoing. The deficiencies, officials say, can leave consumers vulnerable and allow tainted money to flow through the financial system. “How can you be independent if you’re hired by the entity you’re reviewing?” The pitfalls were exposed last month when federal regulators halted a broad effort to help millions of homeowners in foreclosure. Now, regulators and lawmakers are rethinking their relationship with the consultants.
Megabank wants your super Industry titan and NAB chairman, Michael Chaney, was on the hustings yesterday repeating the now obligatory call for productivity growth. But he followed up with this: …Mr Chaney also called for tax breaks for savers to encourage them to take out deposits.He also repeated calls for the government to open up Australia’s $1.3 trillion superannuation sector as a source of funds for the banks.“Resolving this funding issue would help us avoid constraints on Australia’s economic growth,” he said. It is interesting to speculate about this contention. Would opening “up Australia’s $1.3 trillion superannuation sector” to banks help us avoid growth constraints? If the banks were to set about shifting their orientation from mortgages to business loans then Chaney’s suggestion would work. But, if Mr Chaney is simply suggesting that we channel Megabank more savings for it to continue its habit of lending to households for swapping existing houses then it will not work in the long run.
Lesson of JPMorgan’s Whale Trade: Nothing Was Learned Details of JPMorgan Chase's multibillion-dollar trading loss — brought to light by a riveting and devastating report  from the Senate Permanent Subcommittee on Investigations — demonstrate what a sham that is. Bankers aren't acting cautious and chastened. Risk managers aren't in the ascendance on Wall Street. Regulators remain their duped and docile selves. What we now know about the incident is that, as the cliché has it, the cover-up was worse than the crime. The losses out of the London office weren't enough to take down the bank. As JPMorgan got into trouble, traders and the responsible executives treated the valuation of trading positions, made up of derivatives, as a puppet made to do what they wanted. Ina Drew, the head of the bank's chief investment office, referring to how the positions were calculated, asked an underling if he could "start getting a little bit of that mark back." This discussion did not make it into the bank's internal report on the incident from January.
Construction jobs rebound as mining retrenches By Leith van Onselen The Australian Bureau of Statistics (ABS) has released employment data for the November quarter, which has revealed some interesting and, quite frankly, counter-intuitive results. First, the below chart shows the non-seasonally adjusted change in employment by industry: As you can see, the construction industry has led jobs growth, adding 51,700 jobs over the quarter and more than reversing the loss of -34,200 jobs in the previous quarter. It’s a different result over the year, however, with the construction industry shedding -21,400 jobs over the year and mining adding 20,500 jobs: The public service is now the biggest loser over the year, shedding -39,300 jobs despite lifting employment by 9,900 in the latest quarter. Strangely, the rebound in construction industry jobs was driven by Victoria (+33,800), where new home sales have literally crashed and dwelling approvals are now coming off the boil.