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This Standard Chartered Bank story has become really intriguing, mainly because New York Department of Financial Services head Benjamin Lawsky committed the unpardonable sin of doing his job.
The story so far: this week, the DFS cited Standard Chartered with $250 billion in illegal money-laundered transactions with the government of Iran. It’s only the latest in a series of money laundering revelations at the world’s major financial institutions, something that can only be described as epidemic. These have been resolved by global financial regulators by either ignoring it or setting up some predetermined settlement. But Lawsky didn’t get the memo. He filed the complaint and set up a court date for next week with Standard Chartered, with the ultimate goal of taking away their ability to do business in the state. The bank didn’t like that at all. They mulled over a countersuit, which is kind of hilarious, because the charges would be groundless. What exactly was Standard Chartered to say, “we were working on a settlement until the DFS blew everything?”
It turns out that the regulatory community was relatively unhappy with Lawsky as well. They didn’t want to get shown up by a vigorous regulator exposing their conduct as inept and practically abetting the misconduct. So now the regulators have attempted to corral Lawsky into a committee:
U.S. authorities are forming a group with New York’s top financial regulator to negotiate a settlement with Standard Chartered over allegations it illegally hid financial dealings with Iran.
The U.S. Treasury Department, Federal Reserve, U.S. Department of Justice and Manhattan district attorney’s office are scrambling to reach an understanding with the New York State Department of Financial Services over the ground rules for negotiations with the U.K.’s fifth-largest bank by assets, according to people familiar with the talks.
To echo Yves Smith, let’s take a look at the context here. Standard Chartered broke the law. Lawsky did his job and sued them over it, citing New York state law and not federal law. The other regulators manifestly did not do their job. They went right from revelation into negotiation, seeking a settlement out of the box.
Lawsky has every right to threaten the charter of the bank. He discovered emails that show a clear conspiracy to hide the identity of their Iranian clients. This is well within Lawsky’s authority, to act to revoke a charter if the member bank is operating in an untrustworthy fashion.
Now Standard Chartered has let loose their country’s Finance Minister to jawbone our Treasury Secretary over the matter.
US Treasury secretary Tim Geithner has reassured George Osborne that US regulators investigating breaches of sanctions by Standard Chartered will try to coordinate their actions.
As the London-based bank prepares for a hearing with New York state’s department of finance services regulator, which has accused it of moving $250bn of Iranian money around the financial system, the chancellor has sought assurances that the bank will be treated fairly.
Osborne and his team spoke to Geithner and officials on Tuesday and received assurances that the US Treasury’s Office of Foreign Assets Control (OFAC) would work with the myriad of other regulators looking at Standard Chartered’s dealing with Iranian clients between 2001 and 2007.
Sir Meryvn King, the governor of the Bank of England, had already called publicly for the US regulators to work together after the surprise decision by the New York regulator to publish an order against Standard Chartered on Monday.
Lawsky has really messed with the forces of nature. The British and US regulators are simply not supposed to seek punitive actions against an upstanding member of the financial community. Now the top regulators on all sides are working frantically to put the genie back in the bottle. Lawsky must be under a tremendous amount of pressure. If you’re so inclined, you could contact Lawsky and offer a perspective from the other side of the story.
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Unless Benjamin Lawsky is pulling a “Schneiderman”, he is dead meat.
Either Lawsky gets “in line” or he will be charged with “aiding and abetting” the terris …
Maybe, he (love the name, Law-sky) will end up as “radicalized” as Thomas Drake, but Obama has just put the “thumb” on him in the guise of Geithner.
Hell hath no fury like a bank suck-up Obama, scorned …
You can put yer money on it.
(Have you an email address, David, that we might send a word or two of encouragement to beleaguered Benjamin?)
DW
Otherwise known as a sternly worded get-out-of-jail-free card.
The Yves Smith article is a real hoot.
Everyone should read it.
So Lawsky has Cuomo’s full support, and that support cannot be making Obama happy?
THIS time … things might become VERY interesting.
How can Lawsky be muzzled or made to back off?
Lawsky wants a $700 million “settlement”, but “might” be willing to take $500 million …?
This little “Regulatory” fracus bears watching.
Thank you, DDay, for the jolly “heads-up”!
;~DW
The comments to Yves’ piece are well worth a perusal, as well.
DW
OffT
presstv doing a special on Buddhists massacring Muslims in Myanmar.
I don’t know when it actually started, but presstv started featuring it after Hillary’s visit.
Thank you, David, your links and reporting give me hope. Being able to contact these bodies leaves me feeling like I can make a difference.
Probably not, but, still, it’s a delusion I am grateful for.
In light of the no prosecutions of the banksters fdor the other crimes they committed, might Standard, who dealt with terrists, be sacrificed by Obama?
Sometimes you sweep so much shit under the rug, there’s no more room.
In my best W.C. Fields voice, “Ah yes. The old ‘Appoint Him to a Committee and Bury Him In Bullshit’ ploy. Very effective indeed.”
The big problem is that the US sanctions on Iran, no matter what they entail, are unjustified acts of war.
What Lawsky needs to do is turn down any invitation to a meeting that involves him using a small plane.
There is a very big Opportunity at this time, for banks which demonstrate honesty, openess, willingness to comply with the laws, and give up the current model of stealing investor’s money, lying, and cheating, money laundering and so on.
I expect that any such bank would be flooded with money. although one problem would be, what agency would confirm the above board practices, since the official ones are thoroughly corrupted.
That’s why regulators have to coordinate their enforcement. To make sure there isn’t a place that’s safe honest, and does the real work of banking.
Such a bank, or group of banks, might do quite a bit towards putting the criminal banks out of business.
Finally, we have an honest regulator and with balls. This guy, Benjamin Lawsky, is the real deal and he should be the Attorney General of the United States. I hope he would not back down and will bust crooked federal regulators most of whom are lap dogs of bankers.
This guy honors the rule of LAW and you can see it in his NAME: Benjamin LAWsky.
Thumbs up and big cheers for Mr. Lawsky!
yeah, but they stopped dealing with Iran a few years ago. it’s dogfight between banksters turning against each other. No need to stop that!
I hope lawsky doen’t have a proclivity for women of the evening. The banksters are probably in their NYC CIA/police/transnational biz /finance spy lair poring over credit card receipts and telephone call data right now.