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Gangster Bankers: Too Big to Jail, by Matt Taibbi, Rolling Stone

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he deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice. Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever. Yes, they issued a fine – $1.9 billion, or about five weeks' profit – but they didn't extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.

People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often cease to amaze. But the HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­ with Wall Street. In this case, the bank literally got away with murder – well, aiding and abetting it, anyway.

Daily Beast: HSBC Report Should Result in Prosecutions, Not Just Fines, Say Critics

For at least half a decade, the storied British colonial banking power helped to wash hundreds of millions of dollars for drug mobs, including Mexico's Sinaloa drug cartel, suspected in tens of thousands of murders just in the past 10 years – people so totally evil, jokes former New York Attorney General Eliot Spitzer, that "they make the guys on Wall Street look good." The bank also moved money for organizations linked to Al Qaeda and Hezbollah, and for Russian gangsters; helped countries like Iran, the Sudan and North Korea evade sanctions; and, in between helping murderers and terrorists and rogue states, aided countless common tax cheats in hiding their cash.

"They violated every goddamn law in the book," says Jack Blum, an attorney and former Senate investigator who headed a major bribery investigation against Lockheed in the 1970s that led to the passage of the Foreign Corrupt Practices Act. "They took every imaginable form of illegal and illicit business."

That nobody from the bank went to jail or paid a dollar in individual fines is nothing new in this era of financial crisis. What is different about this settlement is that the Justice Department, for the first time, admitted why it decided to go soft on this particular kind of criminal. It was worried that anything more than a wrist slap for HSBC might undermine the world economy. "Had the U.S. authorities decided to press criminal charges," said Assistant Attorney General Lanny Breuer at a press conference to announce the settlement, "HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized."

It was the dawn of a new era. In the years just after 9/11, even being breathed on by a suspected terrorist could land you in extralegal detention for the rest of your life. But now, when you're Too Big to Jail, you can cop to laundering terrorist cash and violating the Trading With the Enemy Act, and not only will you not be prosecuted for it, but the government will go out of its way to make sure you won't lose your license. Some on the Hill put it to me this way: OK, fine, no jail time, but they can't even pull their charter? Are you kidding?

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We don't have outrage fatigue -- we just feel like it's our law makers who should be throwing the book at these people and regulating as much of the financial services industry as possible. 

I do cringe when I read this line:

"It was worried that anything more than a wrist slap for HSBC might undermine the world economy."

And by economy we mean billionaires. 

If the world confiscated the wealth of these people in secret only a few thousand people would even notice. 

As monetary base increases and rates are zirp, velocity goes towards zero.  In which case it starts to go from liquid to evaporated.  

The system and policy is so misguided that it will fall apart at some point and no one is even discussing a different system. 



Welcome to our world economy.  Can I pitch a billionaire hoarder reality show?


Oh, what happened in 1982?  In 1988 I had a former Fed as an Econ professor teaching monetary policy.  He ranted every week about what was going to happen because of bank deregulation. 

It has been a 30 year take over.  It is not rocket science.

Pretty soon they will pass legislation allowing them to bury their employees with them in pyramids.  

I want people to start asking them what happens when they die. 

Do super rich people die? I rarely see an obituary for a billionaire. 

Sam Walton is the last one I remember. 

Buffet and Soros are in 80s combinded for around 100 billion in last 25 years. 

We act like this has been this way forever but really only recent memory. 

Speaking of no other ideas allowed. 

There were (are) others of us in Econ programs that didn't worship capital markets.  Some of us thought multigenerational models of natural resource allocations leads to better lives of all beings. 

The amount of damage in the last 25 years (I realized the futility 20 years ago and quit) will take generations assuming fixable in the first place. 

They will die most likely never realizing what they did.


Two 80somethings worth $100 billion is ludicrous.

I'm not even sure how to respond. 

Matt Taibbi can generally be counted upon to get important stuff wrong in these stories.  NB, free registration is required to read FTAlphaville.

Thanks Chris. Does he get some details right?

Ha! Now that was something I not expecting. 

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