The Bankers Grab The Prosecutors By The Cojones,
The Coward Who Could Have Saved Greece,
The Economist’s Nightmare
And A Shameless Promo For Myself
J Iddhis Bing
And so, like the revolving mechanisms of an old mantelpiece clock, each playing his part without a clue how the whole mechanism works, we tumble into yet another new year. The clock is dragging now, or even going backward – it was in a hurry to get to the moment, we all were. Am I hallucinating? It’s way past midnight, empty bottles of champagne are scattered around the floor, the last of the party are passed out on the sofa but we begin again, full of resolution that this time things will be different. The old music, however, continues to play. Appropriate that Satisfaction played just before, Gimme Shelter a few seconds after twelve. Everyone knows those tunes by heart. The bankers pushed everything to the limit, and then barged out of the party like gangsters. Where were they going? No one knew. The doors slammed and a friend quipped that they were on “a stampede to Mammogeddon.” Someone is tugging on our sleeve and telling us it’s time to go home. But we’re lost, the streets are a maze and we have no idea where the subway is.
A belated welcome to 2014 to everyone! Where were we?
Could we live in a world in a world without banks? Heretical idea. A few years ago the legendary French footballer Eric Cantona – he who once said that a striker’s goal ought to be as unpredictable as a poem by Rimbaud – suggested a solution to our problem: everyone should just withdraw their money from the banks. What came next, he didn’t say. And in any case, compliant governments would race to the rescue by printing more money and delivering it in dump trucks to HQ at high speed. And yet…
The game will still go on for a while, even if economists tell us it can’t. They have their own night-thoughts, and I’ll get to that in a minute. Meanwhile the small countries are pulverized, raped and then strangled. Business as usual. For a few details on that, see my columns on Greece and the fundraiser on Indiegogo . François Fleury is old school. You know the joke about photography. What’s the first thing you need if you want to be a real photographer? A pair of good shoes. Fleury spent months walking in and around the Congolese gold mines, and as good as his photographs are, it’s this quote from a Congolese miner that comes to mind now: “We are cursed because of our gold. All we do is suffer. There’s no benefit to us.”
Shall we check in to see how our banker brethren are doing? On Wednesday December 4th the European Union leveled penalties of €1.7bn on seven banks in the Libor-Euribor-Yen rate fix. The banks named were Barclays, UBS, the Royal Bank of Scotland, Deutsche Bank, Société Générale and two American banks, Citigroup and JP Morgan. Morgan plans to fight the charges. According to their regulatory filings, they’ve set aside $23 billion for just such occasions. They’re just being prudent and planning ahead for future litigation.
A week or so later in the U.S., the Justice Department stepped forward to announce that they had “reached settlement” in a different case, reaching settlement being a fancy way of saying, No Trial. Everyone wants to avoid going to trial; not only does it cost millions in legal fees but all sorts of unpleasant things come to light when prosecutors start asking questions. And yet there’s something very strange about this “settlement.”
Lanny Breuer is now Assistant Attorney General, and he made the announcement in the HSBC case, going into detail about the laundering of Mexican and Colombian drug money. Lanny Breuer… the name rings a bell. Longtime Clinton insider, one could even call him one of Bill’s Merry Pranksters. How’d he get to be Assistant AG in charge of criminal activities? But let’s stay with the case.
English HSBC, frequently referred to as a “banking giant” and “venerable,” has confessed to accepting billions of dollars of deposits from Colombian and Mexican drug cartels, in addition to moving money for Iran and for Saudi banks tied to terrorist groups, which, as you’ve already guessed, violates a few minor inconveniences like the Bank Secrecy Act and Trading With the Enemy Act.
The Justice Department heralded the $1.9 billion settlement as a record. One analyst put pencil to paper and calculated that the sum equals five weeks income for the bank.
How did they do it? Breuer stated that drug dealers would “deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows.” No one noticed. Maybe all the tellers at that Mexico City branch should be fired.
There will be no prosecutions. But Breuer countered that, “As a result of the government’s investigation, HSBC has . . . “clawed back” deferred compensation bonuses given to some of its most senior U.S. anti-money laundering and compliance officers, and agreed to partially defer bonus compensation for its most senior officials during the five-year period of the deferred prosecution agreement.”
It gets better. America’s very own Pravda, the New York Times, reported that “Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.” HSBC has already cleaned house: most of its senior management has been replaced. Or rather, they ran out the back door at high speed, hoping no one ever remembers their names.
Matt Taibbi in his column argues that, while thousands languish in jail on minor drug charges, this settlement reveals just how hollow America’s massive War Against Selected Illicit Substances really is. It reveals something else as well: the telepathy that exists between the banks and governments, or to put it a little more picturesquely, in the case of man vs. dog, it’s clear who’s holding the leash. We’ve all watched Morgan CEO Jamie Dimon get the kid-glove treatment from Congress. But here the government had the banks within their grasp on the most serious charges, ones that relate not only to drugs and trading with the enemy but which, if pursued, might lead to the cash nexus of terrorism, the illegal weapons industry… and they backed off, out of the justifiable fear that a criminal indictment would be the kiss of death for HSBC, with ripple effects throughout the economy. All of which may be true, despite the fact that HSBC was warned time and again. (See 2010’s congressional finding that HSBC has $60 trillion in suspicious transactions and 17,000 dubious accounts.) Instead the bank gave up five week’s income, “clawed back” large bonuses and shuffled the board room. That’s what they call a “crisis” in the banking industry.
People will draw their own conclusions but it’s important not to hand the drum to the populists so they can bash away about “powerful interests.” A sane monetary system can absorb the failure of a major player. “Chaos” is not the end of the world. What if HSBC had its charter revoked in the US? Did the crisis of 2008 happen because Bear Stearns went under or because the entire system was larcenous and out of control? Does one more bank or less make a difference? Beware the ripple effect. The Justice Department believes in it and so does the Queen. Chaos, if that’s the word, is reserved for those of us down here on the ground.
One is left to wonder what all this has to do with Hillary Clinton’s chances in 2016.
In the next Chronique I’ll take a close look at the incredible exchange between the IMF and the finance ministers of Greece and Germany, a chess move that not only continued the ongoing torture in Greece but which almost no one has written about. It’s an eye-opening episode that reveals the human reality behind the politics and to be perfectly shameless about it, I’ll post the story here on Ground Report as soon as I have 700 in the kitty on Indiegogo, the crowdfunding site. Over 7,000 people read my last piece on the banks, for which I’m grateful and not a little amazed. Even so the fiction that the internet is free can be a real heartbreaker at times. If each of my readers kicked in 1 big fat dollar, I’d be writing this column from Athens. So go to Indiegogo, toss in a fiver and you can read the inside story about the finance ministers here in a few day’s time. Let’s just call this an experiment in interactive livelihood.
For now I leave you with this, courtesy of an economist who not only has a heart but writes coherently about the world. (I leave him unnamed.) After a long exegesis on the state of things, he broke down and told me what goes on his head after the lights go out: “I honestly think the revolutions on a grand scale will be sparked this spring and the summer will be a hot one.” He crunched the numbers, analyzed the ratio of debt to GDP and when he laid his head on the pillow, that’s what he saw. Maybe we all do, maybe the bankers do, too, maybe they’re thinking, “Why the hell doesn’t anyone stop us?” when they turn out the lights.
See you then.
J Iddhis Bing