In HSBC’s settlement with the U.S. Government, the bank has
to pay $1.9 billion—about half a quarter’s profit—but avoids criminal charges.
The New York Times quotes government officials who said they were hesitant to
indict the bank because formal charges could mean bankruptcy, which in turn
could roil the financial system itself owing to the bank being too big to fail.
That is to say, one of the advantages of being TBTF is apparently that of
effective immunity from criminal charges.
Of course, the prospect of bankruptcy could have been a red
herring. Even if the bank would have gone bankrupt under the weight of criminal
guilt and penalties, particular employees could still have been charged with
having laundered money on behalf of Mexican drug lords and the Iranian government.
Indeed, if criminal guilt cannot apply to an association rather than its
members, it makes particular sense to prosecute human rather than artificial
persons. According to Jimmy Gurulé,
a former assistant U.S. Attorney General and former Undersecretary for
Enforcement for the U.S. Treasury Department, the message sent by the dearth of
prosecutions is, “if you want to engage in money laundering, make sure you're
doing it within the context of your employment at a bank. And don't go small.
Do it on a very large scale, and you won't get prosecuted." It is as
though Max Weber’s ideal of bureaucracy, wherein the particular identity of an
office’s occupant is not relevant, were translated into a “How to Beat the Rap
by Doing Your Dirty Work at Work.” This may be a variant on “How to Win Friends
and Influence People,” at least in banking circles that are above criminal law.
In fact, the lack
of prosecutions against particular bankers at the bank is “essentially telling
the executives in these institutions crime pays," Neil Barofsky, former
Special Inspector General for the Troubled Asset Relief Program, told CNN.
"Go ahead, do whatever you want to do, enjoy your profits, and the worst
thing that happens, well, you have some fines that really make up a couple of
weeks of profits that you lose." Of course, the fines come out of the
banks rather than necessarily from what the bankers take home. In short, the
message in the settlement may be that crime pays after all.
Source:
Mark Gongloff, “Obama
Administration Essentially Admits That Some Banks Are Too Big To Jail, Which Is
Troubling,” The Huffington Post, December 11, 2012.
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