British bank cozying up with the Iranians despite sanctions

[Gerarddm]

What I wonder is, will anybody ever go to jail? How it is that bankers have seemingly become some kind of immune sub-species?

http://www.nytimes.com/2012/08/07/bu...anians.html?hp

[George Jung]

Yeah, I saw that. Good question; I wonder if we'll even hear anything more about the 'investigation'.... 'wink/wink'

[wardd]

unlike american banks, british banks are all about money and greed

[Old Dryfoot]

Maybe it's time to update Shakespeare to something akin to "Kill all the bankers"...

[purri]

Hey, bizniz is bizniz.

[skuthorp]

Too big to fail, too rich to jail, too well connected to prosecute successfully (after all the lawyers, judges and not a few of the parliamentarians went to the same schools) and too big a scandal might panic the punters, what?

[PeterSibley]

unlike american banks, british banks are all about money and greed

[Rum_Pirate]

unlike american banks, british banks are all about money and greed

[JimD]

... How it is that bankers have seemingly become some kind of immune sub-species?

For the most part they always have been.

[Andrew Craig-Bennett]

Sorry; I'm not buying this.

Most people won't have heard of Standard Chartered before today; I had, though.

All we've seen from Lawsky are accusations, in colorful language; enough to knock 25% off the share price, but sounding over hyped.

The idea of boring old Standard Chartered being some kind of "rogue" financial institution is very silly.

What is really interesting is Standard Chartered's reaction - they are fighting back, which suggests they don't exactly feel that they have sins to atone for.

So, which US bank wants to buy Standard Chartered's very solid business in Asia at a cut price?

Incidentally I am putting some of my money where my mouth is.

[Cuyahoga Chuck]

Sorry; I'm not buying this.

Most people won't have heard of Standard Chartered before today; I had, though.

All we've seen from Lawsky are accusations, in colorful language; enough to knock 25% off the share price, but sounding over hyped.

The idea of boring old Standard Chartered being some kind of "rogue" financial institution is very silly.

What is really interesting is Standard Chartered's reaction - they are fighting back, which suggests they don't exactly feel that they have sins to atone for.

So, which US bank wants to buy Standard Chartered's very solid business in Asia at a cut price?

Incidentally I am putting some of my money where my mouth is.

When you get it from the New York Times you are, most likely, getting as good an account of what has been going on as is available. Remember the New York Times is the paper the The Gaurdian turned to when it was unsuccessful at lighting a fire under Murdoch and the phone tappers at the Sun. If it wasn't for the New York Times Andy Colson would still be bringing Murdoch's messages to 10 Downing Street.
You can be sure the story will be carried by the NYT if Standard Chartered is exonerated.

[PhaseLockedLoop]

When you get it from the New York Times you are, most likely, getting as good an account of what has been going on as is available.

Balls.

[Cuyahoga Chuck]

Balls.

Well, the editor of the Guardian seems to think they were the key to stopping Murdoch and they were. Anything you read that has that kind of reach?

[George Jung]

Anything new? Last i had read, the 'thought' was the problem was much bigger than currently stated. Interesting take by ACB; if I 'knew' how this would shake out, I'd put an investment in, as well. I don't, so I won't.

[Gerarddm]

If I had only one choice for a news source in the US, it would be the NYTimes or National Public Radio. Every other source, as a previous poster noted, is 'balls'.

[JBreeze]

Sorry; I'm not buying this.

.... .

Andrew - Do you think this is some sort of payback for the Wachovia scandal, in which Wachovia laundered ~ $350 billion of Mexican drug money? I think the investigation started in London.

http://www.nakedcapitalism.com/2011/...aundering.html

(In the grand scheme of money laundering, Wachovia got away with a slap on the wrist, and Mark Rich had to "make donations" to get a presidential pardon).

[Andrew Craig-Bennett]

Andrew - Do you think this is some sort of payback for the Wachovia scandal, in which Wachovia laundered ~ $350 billion of Mexican drug money? I think the investigation started in London.

http://www.nakedcapitalism.com/2011/...aundering.html

(In the grand scheme of money laundering, Wachovia got away with a slap on the wrist, and Mark Rich had to "make donations" to get a presidential pardon).

Well, I do think that there is a huge difference in "style of regulation" between New York on the one hand and both Washington and London on the other. New York likes high profile criminal cases, with lots of media coverage; Washington and London both prefer the informal "tap on the shoulder" approach.

(Incidentally, the tap on the shoulder works fast- we saw it working just the other day with Barclays where the Chairman resigned with the intention that the Chief Exec should stay - 24 hours later that had changed with both going - the Bank of England had "let it be known" that Bob Diamond "no longer enjoyed their confidence". )

I also think that New York does see itself as in competition with London for the title of "world financial centre".

Now, there is another issue here as well - the use of New York clearing for US$ transactions has meant that the State Department has really been able to lean on Iran, but this comes at a price - the status of the Dollar as the world's money is put at risk.

There was a threat to the US$ from the Euro but that one is on the back burner for now.

I've noticed China being very willing to propose the RMB as an international currency and indeed some transactions between China and Iran no longer use US$.

Using control of financial centres in furtherance of diplomatic aims - indeed war aims - can be counter productive.

Famously, George Washington kept his current account with Barings, in London, throughout the War of Independence and afterwards...

[purri]

^and therein lie a series of conundrums.

[Peerie Maa]

Plenty here for the cynics among us.

From http://www.reuters.com/article/2012/...87C04O20120814

If settlement talks fail, Lawsky would undoubtedly have the case tried before a departmental administrative law judge to ensure that the bank cannot cite a lack of due process if it appeals a license revocation, Coffee said. An administrative judge's decision could then be appealed to higher-ups in the banking department.
The burden of proof for the banking regulator is relatively light because it only has to show that Standard Chartered was contributing to a lack of safety and soundness in the banking system -- a standard that can be satisfied with a lapse as simple as bad record-keeping.
For Standard Chartered, on the other hand, the burden of proof would be high if it tried to appeal any decision against it. Under Article 78 of New York's civil practice laws, a defendant has to prove that a regulator's findings were "arbitrary and capricious," a standard that regulatory cases involving zoning violations, rescission of medical benefits and license revocations rarely reach, lawyers said.

I like to see a bit more even-handedness in the law.

and from http://www.guardian.co.uk/business/2...?newsfeed=true

Most New Yorkers expect to see the name of Lawsky, who is said to have a ferocious work ethic, on a ballot paper in the not-too-distant future.

So, who are likely to be his political patrons? Is he working for more than one master?

[Andrew Craig-Bennett]

When you get it from the New York Times you are, most likely, getting as good an account of what has been going on as is available. Remember the New York Times is the paper the The Gaurdian turned to when it was unsuccessful at lighting a fire under Murdoch and the phone tappers at the Sun. If it wasn't for the New York Times Andy Colson would still be bringing Murdoch's messages to 10 Downing Street.
You can be sure the story will be carried by the NYT if Standard Chartered is exonerated.

To clarify, I'm not doubting the New York Times; I'm doubting Benjamin M. Lawsky, head of New York State’s Department of Financial Services.

[Cuyahoga Chuck]

As you have noted I have been and am still askance at the pace of British prosecutions when those in the dock are high profile people. The New York Times did a splendid feature on Tom Watson MP and how he took on the Murdoch machine, suffered many blows from it and has come out still standing.
So far we have 8 or 9 highly placed Murdochians charged (yawn) after endless hearings where the same evidence is sifted over and over. If Murdoch's people had been subjected to the US legal system somebody from News Corp would have devulged and Brooks, Colson and many others would be ready for parole by now.

http://www.nytimes.com/2012/08/11/wo...pagewanted=all

This little guy should get a handshake from the queen for what he has done to benefit her relm.

[Andrew Craig-Bennett]

Chuck, I have news for you - OJ Simpson isn't British.

Standard Chartered say they are hoping to negotiate a settlement with the regulator over some US$ 14M of improper transactions.

The truth probably lies between US$14M and US$260Bn.

Anyway, I made a few bob, so far, and I think I will stick with it.

A personal footnote - three years ago the company I work for in London was accused of fraudulent tax avoidance and given a tax demand for £105M.

Three years later we are still talking and we are down to a demand for £2.7M and I still expect the outcome to be "zero apart from legal and accountancy fees"

[Andrew Craig-Bennett]

Nice shakedown, Lawsky.

US$ 340M for a week's work - and, obviously, if the allegations were true, he would never have settled for the figure that he did settle for.

The truth is, nobody in the USA cared a damn about trading with Iran until the Israelis got all exited about The Bomb. US oilcos were loading a Kharg Island not so long ago and probably using Standard Chartered for their Bills of Lading...

Standard Chartered, who hardly operate in the States, missed the signals and got clobbered for technical breaches.

Lawsky will parlay this into a polical career.

Standard Chartered have now learned the true cost of doing business in America - even if you are a bank whose only business in America is US$ clearing.

Their share price is back where it ought to be and I have made a few quid by backing the good guys.

Honestly, is this sort of thing really good for the USA?

[Kaa]

Honestly, is this sort of thing really good for the USA?

Standard operating procedure for an empire in late-stage decline :-)

Also, didn't you get the memo? Bankers are evil and must pay for the privilege of not being hung from the nearest lamppost.

Kaa

[Andrew Craig-Bennett]

Thanks, Kaa. Just so.

I have no doubt that Mr Lawsky is a popular fellow in Israel at the moment, but the long term damage that he has done to New York will outlast his temporary popularity.

[purri]

^best served cold no doubt.

[JBreeze]

Interesting article - from Huffpo no less:

" ...This tale of regulatory complicity feels like all the stories we read about the police shaking down the mafia so they can be cut in to the rackets.

Wall Street has become a place where real financial fraudsters go unpunished while inflated cases like this get the attention especially when a demonized "evil doer" like Iran is said to be involved. Real crimes like the way sanctions hurt ordinary Iranians go unreported."

http://www.huffingtonpost.com/danny-...b_1807661.html

Congrats ACB on making a timely investment and a rational analysis of the Standard Chartered situation!

[Gerarddm]

I'd like to know what Matt Taibbi thinks about this case. Can another Rolling Stone article be not too far off?