Two things increased our ire this month, and it doesn’t take a very close look to see that they are intimately related. It also doesn’t take a very close look to see the cancer that each exposes in a society once based on equality before the law.
The first thing came from Frontline, the PBS investigative report series, and their episode called “The Untouchables” in which they examined why no Wall Street executives have been prosecuted for fraud in the 2008 financial crisis. They interviewed several people who described the fraud and criminality they witnessed, followed by government prosecutors unable to find anyone who witnessed fraud or criminality. They interviewed attorneys who had prosecuted and won civil cases against these banksters, followed by government prosecutors saying it was impossible to prosecute and win a case against these same banksters. They interviewed Lanny Breuer, the assistant Attorney General, who said the reason they hadn’t prosecuted was it would destabilize the banking system. They then interviewed Ted Kaufman, a Senator who rightly pointed out that, for an attorney, the effects on the banking system should play no role in the decision to prosecute a crime.
The second thing concerned HSBC, the largest bank in Europe. The situation was almost identical if you change the names of the companies and the crimes they committed. (Don’t worry, you won’t have to change the names of the “prosecuting” authorities.) In December 2012, HSBC reached a settlement with the US government on charges of laundering money for terrorists, drug cartels, and international pariah states. This wasn’t some “gotcha”, one-time thing that overzealous regulators seized on to make a point. It was a pattern of intentional behavior, repeated regularly over a period of many years, involving amounts in the trillions of dollars. For us little people “providing material support to terrorists” is a serious crime. Federal sentencing guidelines mandate 17 to 21 years per offense plus heavy fines, but HSBC settled for 1.9 billion dollars. A record, yes, but that’s less than 10% of their profit in 2011. And no one faces prison! Why? Lanny Breuer, assistant Attorney General, said that if they prosecuted HSBC it would certainly lose its license to do business in the US, costing thousands of jobs and destabilizing the entire global banking system. In the banking meltdown, HSBC was “too big to fail”. This settlement proved they’d become “too big to jail”.
Our Founders didn’t overthrow a king just to install privilege for a lucky few. Our country’s cornerstone isn’t our military, religions, businesses, or natural beauty… it’s our law. Justice. Unless we all stand equal before the law, justice is meaningless. It’s obvious that the US has two justice systems now… a lenient and passive one for the well connected and a harsh and aggressive one for everyone else. That means instead of “justice for all” we have justice for none, and this month that was enough to make us Furious.
If you’d like to look deeper at these crumbling shards of a once-great justice system, here are some links…
- The Frontline documentary “The Untouchables” is complete in itself, and is the usual interesting and insightful material you can expect from Frontline.
- Update 2/25/2013- Frontline has added several updates to their original story. Here are a few…
- There aren’t any criminal cases, but here are the top 10 civil cases against the banks.
- 4 reasons why the S&P fraud lawsuit may be a game-changer
- Senators Sherrod Brown and Chuck Grassley wrote a letter to the DOJ asking some pertinent questions about their prosecutorial philosophy toward the banks. They requested a response by Feb 8. No word yet, though.
The HSBC issue is a little more complex. Here are links to news articles summarizing the story, as well as other links to detailed aspects of the issue…
- HSBC will pay $1.9 billion for money laundering– USA Today– British banking giant HSBC agreed to pay a record $1.92 billion settlement Tuesday after a broad investigation by U.S. federal and state authorities
- HSBC’s record $1.9bn fine preferable to prosecution, US authorities insist– The Guardian– Officials defend decision not to prosecute in money-laundering case despite HSBC’s ‘blatant failure’ to implement controls
- HSBC money laundering report: Key findings– BBC News– Failure after failure at HSBC led to the London-based bank being used as a conduit for “drug kingpins and rogue nations”, a 300-page report compiled for a US Senate committee and has found.
- HSBC Announces Settlements With Authorities– Press release from HSBC on the whole unfortunate misunderstanding
- HSBC Deferred Prosecution Agreement– Here’s the details of the crimes HSBC agrees they committed.
- The definition of a “two-tiered justice system” – Salon.com– Ordinary people who commit petty, nonviolent crimes rot for decades in inhumane prisons. High political leaders who commit serious felonies receive full-scale immunity
- The two-tiered justice system: an illustration– Salon.com- The lack of prosecutions after the financial collapse reveals the full-scale immunity vested in elites
- Obama Prosecuting Fewer Financial Crimes Than Under Reagan or Either Bush– Washington’s Blog– Ronald Reagan, George W. Bush, George H.W. Bush, and Clinton Each Prosecuted Financial Crime More Aggressively than Obama
- United States Federal Sentencing Guidelines– Wikipedia– Full outline of Federal Sentencing Guidelines
- Terrorist Material Support: An Overview of 18 U.S.C. 2339A and 2339B Congressional Research Service–
UPDATE 2/20/2013– In the February issue of Rolling Stone, Matt Taibbi wrote a very long, very detailed, very excellent article on HSBC and its illegalities. Unfortunately, he still wasn’t able to write about any trials that had taken place because of them.
