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Worship of the Financial Sector Reaches New Heights

8:00 am in Banksters by masaccio

The Worship of the Bull God Apis, by a follower of Filippino Lippi, National Gallery of Art

The utterly incompetent prosecutors at the Department of Justice politely decline to indict HBSC or any of its present or former employees. Because, you know, things like this just happen and besides some of the responsible people don’t live here, and some of them got fired and others lost their bonuses, which is punishment enough. And anyway, we can’t indict unless we find evidence that someone specifically intended to aid money laundering. Or, as the simpering Lanny Breuer puts it:

“As bad as HSBC’s conduct was, this is not a case where the HSBC people intended — intended — to create money laundering,” he said. “They did not have the controls in place that they needed.”

One of the relevant statutes, 18 USC §1956, can be found here. In short, it’s a crime

“…knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, [to] conduct or attempt to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity [and]

(B) knowing that the transaction is designed in whole or in part—
(i) to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity; [grammatical changes to make readable.]

As used in this section—
(1) the term “knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity” means that the person knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law, regardless of whether or not such activity is specified in paragraph (7);

(f) There is extraterritorial jurisdiction over the conduct prohibited by this section if—
(1) the conduct is by a United States citizen or, in the case of a non-United States citizen, the conduct occurs in part in the United States; and
(2) the transaction or series of related transactions involves funds or monetary instruments of a value exceeding $10,000.

Here’s an example of what HBSC and its employees did, taken from the Statement of Facts attached to the Deferred Prosecution Agreement (thanks, USA Today).

… [D]rug traffickers were depositing hundreds of thousands of dollars in bulk U.S. currency each day into HSBC Mexico accounts. In order to efficiently move this volume of cash through the teller windows at HSBC Mexico branches, drug traffickers designed specially shaped boxes that fit the precise dimensions of the teller windows. The drug traffickers would send numerous boxes filled with cash through the teller windows for deposit into HSBC Mexico accounts. After the cash was deposited in the accounts, peso brokers then wire transferred the U.S. dollars to various exporters located in New York City and other locations throughout the United States to purchase goods for Colombian businesses. The U.S. exporters then sent the goods directly to the businesses in Colombia.

HBSC admits that this is true in the Deferred Prosecution Agreement. Indicting the people who did this is apparently asking too much of these incompetent prosecutors. Here’s a clip of Lanny Breuer explaining (at about the 1:15 minute mark) that this agreement that no one is criminally liable is really a triumph of the prosecutorial art.

The reporters who go to press conferences like Breuer’s don’t know enough to ask Breuer and his crowd of incompetents which part of the statute they can’t prove. And why they can’t extradite and try anyone in any other country who was involved. The Statement of Facts is full of similar stories and identifies the kinds of people subject to indictment. And I bet the junior criminals would rat out their superiors in a heartbeat.

Breuer hides his bank love behind a statement of facts drafted to make it look like the only problems with this criminal money laundering business were mere negligent administrative screw-ups, and that’s nothing, now is it, Lanny? The clown prosecutors can’t imagine that a bunch of people thought they could make a huge pile of money laundering cash for drug cartels, terrorists and other scum of the earth. Now that they have slapped HSBC on the wrist, Lanny and his posse of lawyers who passed the bar on their third try can get back to work prosecuting pot smokers.

Knowing that his legal rationalizations are stupidly false, Breuer seeks the refuge of neoliberal apparatchiks: think of the jobs! Indicting this nest of rattlesnakes would lead to shutting down its US operations, costing jobs and disrupting the economy. That isn’t true either. Remember Riggs Bank? When it got caught doing a lot of the same stuff, it got clobbered, and shut down the criminal operation. The rest was absorbed into another bank. Why shouldn’t that happen to HSBC? Why shouldn’t we shut down their US operations?

The Obama administration regularly sacrifices the rule of law in adoration ceremonies to the Baals of the Financial Sector. The smoke rises to the heights proving their devotion, as the bag boys rush into the sacristy with some of that blessed money.

Goldman Sachs Profits Down, Compensation Up, Investors Flee

11:44 am in Corporate Corruption by masaccio

Wall Street Warnings, photo by Duncan Hull

Goldman Sachs released its income and expense data for the second quarter of 2012. Revenues are up 4% from the first quarter, but down 17% over the same period last year, and for the first six months of 2012, they are down 13% over the same period last year. Net earnings (profits) are down 55% over the first quarter. For the first half of 2012, net earnings are down 12% over the same period last year.

Compensation is a different story. For the first six months, compensation is 44% of revenues (p.4), compared with 42.4% for all of 2011. P.55 That includes a reduction of 9% over the first quarter. In contrast, dividends to common stock were $.46 for the quarter, amounting to approximately $230 million. Shareholders get 3.5% of the revenues and insiders get 44%? Really? Whose money is at risk, again?

That’s modern capitalism for you, lousy results don’t lead to lousy rewards for the insiders. Greedy bankers taking all the money, who could have imagined?

This story fits right in with Jennifer Ablan’s title in a Reuters piece: Banks Behave Badly redux: Is It Killing Confidence? She gives a quick rundown of the various crimes and frauds of the financial sector, and describes investor withdrawals from equity mutual funds and pretty much anything smacking of risk. She gives regulators a passing smack, not as hard as they deserve, but no doubt investors noticed that no one from Wall Street has gone to jail, or even been investigated, for the massive criminal corruption that led to the Great Crash.

She misses several components, though. We all know that big investors get an edge. Gretchen Morgenson confirms that the big investor funds get a heads up on changes in opinions of major analysts, the people whose views can have a big impact on the prices of the securities they follow. The major banks are repeatedly caught doing business with money-launderers, Ponzi Schemers, check-kiters and even terrorist organizations. The scandal today is HSBC, but there are plenty of others.

But the biggest problem is the arrogance of Wall Street and its corporate counterparts: they really believe that all those CEO Worship stories they get from an adoring media. Look at this picture of a preening Jamie Dimon, giving it his best gazing into the future of Randian Glory for the business paparazzi. And that isn’t all, we non-Wall-Streeters, otherwise known as “muppets”, need to revere them, praise them, and never, never hurt their feelings by using ugly descriptions like pirates, or thugs, or, even worse, by insisting on regulating them like the thieves and liars that they are.