August 12th, 2012Via: U.S. News and World Report:
Former U.S. comptroller general David Walker is sounding the alarm on the federal government's "financial sinkhole," which he says is growing deeper by about $10 million every minute.
By "sinkhole," Walker is not just referring to debt, but the government's total liabilities, unfunded social insurance promises, and other federal commitments. Through his fiscal responsibility group, the Comeback America Initiative, Walker wants Americans to know that the financial challenge facing our country is much larger than most people think.
To reflect that challenge, the Comeback America Initiative has produced an enhanced and more comprehensive version of the National Debt Clockthe "Burden Barometer." The Burden Barometer counts the government's financial obligations that go further than the national debt, such as retiree health obligations, Social Security and Medicare, and unfunded military pensions. As a result, the number is significantly higher than that displayed on the National Debt Clock.
At the time of this post, the National Debt Clock read $15.9 trillion, while the Burden Barometer read $69.9 trillion. (When the National Debt Clock was unveiled in 1989, it was at just $2.7 trillion.)
August 12th, 2012Via: U.S. News and World Report:
Former U.S. comptroller general David Walker is sounding the alarm on the federal government's "financial sinkhole," which he says is growing deeper by about $10 million every minute.
By "sinkhole," Walker is not just referring to debt, but the government's total liabilities, unfunded social insurance promises, and other federal commitments. Through his fiscal responsibility group, the Comeback America Initiative, Walker wants Americans to know that the financial challenge facing our country is much larger than most people think.
To reflect that challenge, the Comeback America Initiative has produced an enhanced and more comprehensive version of the National Debt Clockthe "Burden Barometer." The Burden Barometer counts the government's financial obligations that go further than the national debt, such as retiree health obligations, Social Security and Medicare, and unfunded military pensions. As a result, the number is significantly higher than that displayed on the National Debt Clock.
At the time of this post, the National Debt Clock read $15.9 trillion, while the Burden Barometer read $69.9 trillion. (When the National Debt Clock was unveiled in 1989, it was at just $2.7 trillion.)
It is really almost beyond comprehension. I do not plan to take Social Security til I am seventy but....unless SOMETHING changes radically now that til will be long empty. I mostly avoid finalcial news as it is just too damn scary. What a mess they have made, with all the wars spending our money . God I hate these bastards. Evil all of them.
Morgan Stanley Sued for Racial Discrimination in Pushing Predatory Loans to Black Homeowners
15th October 2012
Landmark Lawsuit First to Link Bundling of Mortgage-Backed Securities and Racial Discrimination; Suit Charges Violation of Fair Housing Act
ACLU press release, October 15, 2012
Redlining articleLarge 300x172 Morgan Stanley Sued for Racial Discrimination in Pushing Predatory Loans to Black Homeowners NEW YORK Morgan Stanley discriminated against black homeowners and violated federal civil rights laws by providing strong incentives to a subprime lender to originate mortgages that were likely to be foreclosed on, according to a groundbreaking lawsuit filed today.
The lawsuit, filed in U.S. District Court in New York, is the first that connects racial discrimination to the securitization of mortgage-backed securities, which were sold to institutional investors and pension funds. It is also the first case where a prospective class of victimized homeowners is suing an investment bank directly rather than the subprime lender whose loans the bank bought.
The lawsuit was filed by the American Civil Liberties Union, the ACLU of Michigan, the National Consumer Law Center, and Lieff Cabraser Heimann & Bernstein, a San Francisco-based law firm, on behalf of five Detroit residents and Michigan Legal Services. The complaint asks the court to certify the case as a class action. As many as 6,000 black homeowners in the Detroit area may have suffered similar discrimination.
While the case concerns lending abuses in Detroit, these practices were common throughout the financial services industry and victimized black and Latino neighborhoods nationwide, according to Anthony D. Romero, ACLU executive director.
"With this lawsuit, real victims of the subprime lending scandal are stepping forward to hold investment banks like Morgan Stanley accountable for the devastation the banks wrought in their lives and in our economy," Romero said. "Illegal practices surrounding mortgage-backed securities robbed people of their homes, violated our civil rights laws and left all Americans holding the bag as our economy teetered on the brink of another Great Depression."
The five homeowners in the suit received their loans from now-defunct New Century Mortgage Corp., a one-time major player in subprime lending. As Morgan Stanley ramped up its mortgage-backed securities business starting in 2004, it became New Century's largest buyer of subprime loans.
Morgan Stanley provided funds to New Century to originate the loans, and dictated the terms of the loans it wanted and ultimately purchased for its securitized pools. It pushed New Century to issue certain types of loans with no concern about risk, because it made its profit at the outset, when the securities were created and sold. Because minority residents of the Detroit region have been subjected to decades of housing and lending discrimination, and had fewer alternative sources of credit, they were natural targets for these predatory loans.
"Morgan Stanley actively encouraged the proliferation of irresponsible subprime mortgage loans, the complaint charges, in order to feed its hunger for purchasing, pooling, and securitizing mortgage debt for sale to investors," said Elizabeth J. Cabraser, a partner at Lieff Cabraser Heimann & Bernstein, and co-counsel for the plaintiffs. "The targeting of communities of color for loans that unfairly raises the risk of default and foreclosure is the quintessential reverse-redlining' outlawed by the Federal Fair Housing Act."
First enacted in 1968, the Fair Housing Act prohibits discrimination in housing transactions, including unfair lending practices. The lawsuit also alleges violations of the Equal Credit Opportunity Act, which bans discrimination for credit transactions, including consumer loans such as mortgages.
"Congress enacted these civil rights statutes to require that banks like Morgan Stanley are responsible for ensuring that their policies and practices do not perpetuate historical patterns of discrimination and banks have the duty to provide a level playing field for all consumers," noted Stuart Rossman, director of litigation at the National Consumer Law Center. "Ultimately, economic justice is a civil right in our country. This landmark case brought on behalf of African-American homeowners asserts their rights under those laws and seeks to protect the greater Detroit community from continuing to be burdened because of past acts and patterns of discrimination."
Among those affected is Rubbie McCoy, who said her mortgage broker falsified information on her loan application even though she objected. The broker also omitted critical details, including the fact that after two years, New Century would no longer pay the taxes or insurance on her loan. Those added costs have prevented her from making a payment since 2011.
"I've seen firsthand the devastation banks like Morgan Stanley have caused in communities like mine. When I first moved into my home, I knew every neighbor and most of the homes were occupied. Today, the majority of homes stand abandoned and stripped," McCoy said. "I don't like to say that I am losing my home, instead I tell my family that I'm fighting for my home. The truth is I'm afraid that today will be the day a sheriff kicks us out. No one should live with this fear."
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
U.S. Sues Wells Fargo Over Allegedly Defective FHA Mortgages
On October 9, the United States Attorney for the Southern District of New York filed suit against Wells Fargo Bank, N.A. in the United States District Court for the Southern District of New York. The civil suit seeks damages, including treble damages where available, and civil penalties for alleged violations of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, breach of fiduciary duty, gross negligence, negligence, unjust enrichment, and payment under mistake in fact. The Government's complaint alleges that Wells Fargo, a participant in the Federal Housing Administration's mortgage lending insurance program, failed to report over 6,000 mortgage loans that were in fact ineligible for FHA insurance. As a result of Wells Fargo's alleged misconduct, the Government allegedly paid hundreds of millions of dollars in connection with insurance claims made on these loans. The alleged defects in connection with Wells Fargo's origination process that violations of stated mortgage lending guidelines resulted in poor quality loans are similar to the allegations that underlie many RMBS investor actions.
Elliot Spitser was sexually assassinated so he'd stop pursuing such illegality and slimeballs. Yes, a few cases have been filed since he was done away with...but they have little in the way of 'teeth' and always end up fining the offending institutions about 1% of yearly profits for their illegal deeds. Good business model. We are sunk as a Nation unless we get the banksters in prison and out from behind the steeringwheel of state:captain:
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
Oh yeah, and Bunga Bunga Berlusconi wants to run Italy again....
Quote:ECB mulls negative rates as Europe's economic crisis deepens
The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar.
Mario Draghi, the ECB's president, said the governing council had discussed a cut in overnight deposit rate to below zero for the first time, and was "operationally ready" to do so if needed.
The comment sent the euro into a nosedive, dropping from $1.3075 to $1.2950 in just two hours. "A negative deposit rate is the mother of all sell signals for a currency," said Hans Redeker, currency chief at Morgan Stanley.
"You only do it if your purpose is to drive down the exchange rate to help exports. We know from Japan's experience that you lose control of monetary policy if you go that route. We don't think it will happen because the cost is too high, so we expect the euro to rebound."
Mr Draghi struggled to explain why the ECB held its main interest rate at 0.75pc, even though it expects economic contraction of 0.3pc next year, with inflation falling below its 2pc target. He said there had been a "wide discussion", a code term implying that several members pushed for a cut.
"It's a dereliction of duty. If the outlook is so bad, get ahead of the situation and cut now," said Stephen Pope from the consultants Spotlight.
The euro came under further pressure from the escalating crisis in Italy, where ex-premier Silvio Berlusconi withdrew support from the technocrat government of Mario Monti, vowing to fight further austerity. "The country is on the edge of the abyss: I can't allow my country to plunge into an endless recessionary spiral," he said.
Mr Berlusconi hinted at a run for office early next year, despite a four-year prison conviction for fraud - still under appeal.
"The situation today is far worse than a year ago when I left the government. We have an extra million unemployed, the debt is rising, firms are closing, property is collapsing, and the car market is destroyed. We can't keep going on like this," he said.
The rupture with Mr Monti is a stark reminder that Europe's political crisis continues to fester as the region slides deeper into slump.
The yield on German 10-year Bunds fell to a five-month low of 1.29pc on save-haven flows, while Italy's yields spiked to 4.55pc. The FTSE MIB index of Italian stock in Milan fell 1.4pc.
Mr Monti survived a senate vote on his fiscal package after Mr Berlusconi's Liberty Party abstained, but his position is becoming untenable.
Mr Berlusconi has come close to calling for a break-up of EMU, saying repeatedly that Germany should leave the euro, and break the vicious cycle by allowing the Latin bloc to regain competitiveness.
Unlike Spain, Italy has already been through the brunt of its austerity so there are hopes that Italians will start to see some light at the end of the tunnel in mid-2013.
Views are polarized, however. Citigroup expects Italy to contract by 2.1pc this year, a further 1.2pc in 2013, and again by 1.5pc in 2014, with near zero growth in each year up to 2017.
"Italy's primary budget surplus probably will be close to 3pc of GDP by end-2013, but the debt-to-GDP ratio is likely to go on rising due to the "snowball effect". Debt restructuring - probably through maturity extensions and coupon reductions - will probably be inevitable in 2015, once it becomes clear that austerity alone cannot restore fiscal sustainability," it said.
The International Monetary Fund expects Italy's public debt to reach 128pc of GDP next year, 4pc of GDP higher than forecast as recently as April.
The IMF's shifting forecast shows much damage the austerity policies are doing to Italy's underlying economy, with the "fiscal mulitplier" much higher that originally thought. It is an open debate whether Italy's is chasing its tail by tightening too hard.
Credit stress in the Club Med region is increasingly spreading to companies. The rating agency Moody's warned that default risk is rising for any European firm exposed to the EMU periphery - including the UK groups Dixons and Imperial Tobacco, with large sales in Spain. "The North South gap is widening. Crucially, contagion could affect the stable areas if macro conditions worsen."
There have been 129 downgrades in Europe so far this year, against 47 upgrades, with fears that companies will struggle to repay $363bn of junk bonds coming due over the next four years, known as the "refinancing wall".
A separate report by Standard & Poor's said "underlying economic realities" are catching up with Europe's companies. "Although the intervention by the ECB appears to have averted the crisis by reducing the risk of a disorderly break-up of the euro, the hard grind of adjustment and austerity remain."
It warned of a coming wave of defaults in steel, refining, shipping, cars, and smaller mining groups, with 200 companies "vulnerable" as debt comes due in 2013 and 2014. Some 49 are likely to default by late next year. "Companies highly exposed to the periphery of the eurozone, will remain under the intense scrutiny of trade counterparties. We see little reason to expect the growing divide between the core and periphery of Europe to close up any time soon," it said.
S&P said Spanish companies now have to pay almost twice as much as German rivals to borrow, with the premium on five-year at a post-EMU high of 250 basis points.
Some Spanish firms are trying to diversify out of their home country as fast as possible or even reinvent themselves as non-Spanish groups. Inaer Aviation has switched its headquarters to London in the hope of obtaining cheaper credit. The technology group Abengoa is pushing 99pc of its investment over the next three years into ventures outside Spain.
The risk is that this exodus will create a self-fulfillng process, leaving Spain starved of investment and even less able to claw its way out of the EMU crisis.
Jean-Michel Six, S&P's Europe economist, said EMU has degenerated into a "customs union", since the interbank market has been shut since 2011 in what amounts to a regime of "capital controls" within monetary union.
"There are two eurozones, a northern one and a southern one," he said.
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War." Gravity's Rainbow, Thomas Pynchon
"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta." The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
HSBC's penalty includes a five-year agreement under which the bank will install an independent monitor. Photograph: Stefan Wermuth/Reuters
HSBC was guilty of a "blatant failure" to implement anti-money laundering controls and wilfully flouted US sanctions, American prosecutors said, as the bank was forced to pay a record $1.9bn (£1.2bn) to settle allegations it allowed terrorists to move money around the financial system.
Hours after the bank's chief executive, Stuart Gulliver, said he was "profoundly sorry" for the failures, assistant attorney general Lanny Breuer told a press conference in New York that Mexican drug traffickers deposited hundreds of thousands of dollars each day in HSBC accounts. At least $881m in drug trafficking money was laundered throughout the bank's accounts.
"HSBC is being held accountable for stunning failures of oversight and worse," said Breuer, "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."
In Mexico the bank "severely understaffed" its compliance department and failed to implement an anti-money laundering programme despite evidence of serious risks. A complex scheme known as the black market peso exchange (BMPE) was used to launder the cash.
Manhattan district attorney Cyrus Vance said: "New York is the centre of international finance and those who use our banks as a vehicle for international crime will not be tolerated."
In the latest embarrassment for Britain's banks, Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again," he said, insisting Britain's biggest bank was "a fundamentally different organisation" now. It is the largest ever fine for such an offence and even greater than the £940m the bank had feared it faced after the allegations first surfaced in the summer in a report by the US Senate.
The fine for HSBC comes barely 24 hours after Standard Chartered paid £415m to US regulators, and as banks such as Royal Bank of Scotland and UBS brace for a wave of fines in coming days for attempting to rig Libor following the £290m penalty slapped on Barclays in June.
Gulliver was promoted to chief executive two years ago during a management reshuffle caused by the decision by Lord Green, the chairman, to quit to join the government as a trade minister.
The Department for Business, Innovation and Skills, which Green represents, said: "The report by the US Senate sub-committee sets out in detail the evidence submitted to it and the action taken by HSBC to ensure compliance with US regulations at the time that Lord Green was group chairman. At the time of the report's publication HSBC expressed its regret that there were failures of implementation and Lord Green has said that he shares that regret."
David Bagley, the bank's head of compliance, dramatically quit before the US Senate committee hearing into the case in July and, on Monday, HSBC named a former US official, Bob Werner, as head of group financial crime compliance, a newly created role, as the bank prepared for the fine related to drug allegations.
The penalty includes a five-year agreement with the US department of justice under which the bank will install an independent monitor to assess reformed internal controls. The bank's top executives will defer part of their bonuses for the whole of the five-year period, while bonuses have been clawed back from a number of former and current executives, including those in the US directly involved at the time.
HSBC has managed to avoid being criminally prosecuted a move that could have stopped the bank operating in the US.
HSBC's share price rose by 2.8p to 644p despite the size of the fine. Ian Gordon, banks analyst at Investec, said the fine was slightly lower than the $2bn he had been pencilling in to his forecasts. But he said: "HSBC's settlement with the US authorities will include a deferred prosecution agreement with the department of justice of five years' duration. Given HSBC's ongoing US business and other continuing conduct investigations, this sword of Damocles is not without teeth, albeit based on what we know, we are regarding the $1.921bn settlement as de facto 'final'."
Gulliver stressed that the bank had co-operated with the US authorities. "Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters," he said.
"We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world," he added.
The US Senate said the bank had operated a "pervasively polluted" culture that lasted for years, allowing HSBC to move billions around the financial system for Mexican drug lords, terrorists and governments on sanctions lists. HSBC's Mexican operations moved $7bn into the US operations, for instance, which the Senate was told was tied to drug money.
HSBC said it also expected to finalise an "undertaking" with the UK regulator, the Financial Services Authority, "shortly".
The bank has spent $290m on improving its systems to try to avoid a re-run of the events.
"It means this War was never political at all, the politics was all theatre, all just to keep the people distracted...."
"Proverbs for Paranoids 4: You hide, They seek."
"They are in Love. Fuck the War." Gravity's Rainbow, Thomas Pynchon
"Ccollanan Pachacamac ricuy auccacunac yahuarniy hichascancuta." The last words of the last Inka, Tupac Amaru, led to the gallows by men of god & dogs of war
The 'fine' was just the cost of doing business...and cost them only 1% of current net assets. No one went to jail....which is obscene and strange in the extreme! [a pattern followed with all the other bank crimes]. They will simply pass the slight loss on to their customers and suffer nothing at all, but a bit of their reputation. Notice, however, that their stock went UP, not down after the fine! A sure sign of the fact it was not punitive in any real sense. They and the other banks will continue doing what they have been, but find better ways of hiding it though cut-outs.
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
JUAN GONZÃLEZ: Well, let's go on to HSBC. The banking giant has escaped indictment for laundering billions of dollars for Mexican drug cartels and groups linked to al-Qaeda. The bank reportedly supplied a billion dollars to a firm whose founder had ties to al-Qaeda and shipped billions in cash from Mexico to the United States despite warnings the money was coming from drug cartels. Earlier this year, a Senate investigation concluded that HSBC provided a, quote, "gateway for terrorists to gain access to U.S. dollars and the U.S. financial system."
Despite evidence of wrongdoing, the Justice Department has allowed the bank to avoid prosecution and pay a $1.9 billion fine. No top HSBC officials will face charges. While it's reportedly the largest penalty ever paid by a bank, the deal has come under wide criticism. Officials reportedly agreed to seek the fine over concerns that criminal charges would have hurt the global financial system.
Loretta Lynch is U.S. attorney for the Eastern District of New York.
LORETTA LYNCH: We are here today to announce the filing of criminal charges against HSBC Bank, both its U.S. entity, HSBC U.S., and the parent HSBC group, for its sustained and systemic failure to guard against the corruption of our financial system by drug traffickers and other criminals and for evading U.S. sanctions law. HSBC, as you know, is one of the largest financial institutions in the world, with affiliates and personnel spanning the globe. Yet during the relevant time periods, they failed to comply with the legal requirements incumbent on all U.S. financial institutions to have in place compliance mechanisms and safeguards to guard against being used for money laundering.
HSBC has admitted its guilt to the four-count information filed today, which sets forth two violations of the Bank Secrecy Act, a violation of the International Emergency Economic Powers Act, or IEEPA, and violation of the Trading with the Enemy Act. As part of its resolution of these charges, HSBC has agreed to forfeit $1.256 billion, the largest forfeiture amount ever by a financial institution for a compliance failure.
AMY GOODMAN: That was U.S. Attorney Loretta Lynch.
Meanwhile, HSBC Group Chief Executive Stuart Gulliver said in a statement, quote, "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them." He added the bank had, quote, "taken extensive and concerted steps to put in place the highest standards for the future."
News of HSBC's fine comes as three low-level traders were arrested in London as part of an international investigation into 16 international banks accused of rigging a key global interest rate used in contracts worth trillions of dollars. The London Interbank Offered Rate, known as Libor, is the average interest rate at which banks can borrow from each other. Some analysts say it defines the cost of money. The benchmark rate sets the borrowing costs of everything from mortgages to student loans to credit card accounts.
Well, for more on the latest bank scandals, we're joined by Matt Taibbi, contributing editor for Rolling Stone magazine. His latest book is Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.
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 inamong 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 GONZÃLEZ: 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 forthrough Iran. This, again, comes on the heels of the Libor scandal, which has already caught up two major British banksthe 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 GONZÃLEZ: 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 GONZÃLEZ: 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 withby 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 nowlow-level thieves, criminals, drug launderers, people who have been accused of working with al-Qaedaperhaps 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 ofcome 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 GONZÃLEZ: 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 GONZÃLEZ: Matt, this is like Monopoly, the board game, all over again, you know? Get out of jail free, you know.
MATT TAIBBI: Yeah.
JUAN GONZÃLEZ: Instead of $50, you pay $1.9 billion, but you're still getting out of jail free.
MATT TAIBBI: And this fits in thein 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 moneyand it's not even their own money, it's not their personal money, it's the shareholders' moneyit's incredible. It reallyit literally is a get-out-of-jail-free card.
JUAN GONZÃLEZ: 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 GONZÃLEZ: For free.
MATT TAIBBI: Free.
JUAN GONZÃLEZ: 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 thinkI've asked myself that question numerous times. I really believeand I think a lot of people believe thisthat 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.
"Let me issue and control a nation's money and I care not who writes the laws. - Mayer Rothschild
"Civil disobedience is not our problem. Our problem is civil obedience! People are obedient in the face of poverty, starvation, stupidity, war, and cruelty. Our problem is that grand thieves are running the country. That's our problem!" - Howard Zinn
"If there is no struggle there is no progress. Power concedes nothing without a demand. It never did and never will" - Frederick Douglass
