THERE are two conflicting views of American regulators’ response to the financial crisis, and to misdeeds at big banks more broadly. The first holds that Uncle Sam has gone easy on Wall Street, sparing individuals from prosecution, for the most part, and punishing institutions with nothing more serious than fines. The other contends that banks have been the victims of a capricious and unjustified shakedown, driven entirely by politics, with little opportunity for redress. A new congressional report examining one bank’s travails provides grist for both arguments. The process that led to a swingeing fine for HSBC in 2012 does indeed look arbitrary, but the government was also less severe than it might have been.
In 2012 HSBC agreed to pay American authorities $1.9 billion, admitting that it had violated sanctions against Cuba, Iran, Libya, Myanmar and Sudan, and had failed to impose tight enough safeguards to avoid handling drug money in Mexico. Some observers complained that the government should have brought criminal charges against the bank instead, even if that led to the loss of its American…Continue reading