NY Times Absurdly Calls $340 Million Standard Chartered Settlement A Win For the State

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How jaded is this? The New York Times calls the Standard Chartered settlement of charges against it by the New York State Department of Financial Services a big win for the state. They didn’t exactly say why.

Was it because Standard Charter agreed to pay New York $340 million? DFS head Benjamin Lawsky had threatened to take the bank’s license, charging that it had carried out $250 billion in illegal transactions with Iran over a 10 year period, and more importantly, engaged in a complex scheme to cover  up and hide the transactions from government officials.

If  bank officials were willfully covering up illegal transactions, how is a $340 million payment a victory for the state? Is it just about the money? Or is it because the State is able to say that Standard Charter agrees with the charges? Wow. Some punishment.

This is absurd. It seems clear that by settling for the amount that it did and agreeing to the Mr. Lawsky’s statement that they did engage in the behavior charged, that Standard Chartered is admitting guilt.

Here again, bankers commit crimes and get off scot-free. We will never, ever fix our financial system and economy  if no one is ever held personally accountable. That lack of accountability will have two results. First, because unethical, or immoral, or outright criminal activity is never punished, the situation will deteriorate over time. Second, as a result of that there will be another crash. It is only a matter of timing.

Here’s Mr. Lawsky’s statement.

“The New York State Department of Financial Services (“DFS”) and Standard Chartered Bank (“Bank”) have reached an agreement to settle the matters raised in the DFS Order dated August 6, 2012. The parties have agreed that the conduct at issue involved transactions of at least $250 billion.

“The settlement also includes the following terms:

· The Bank shall pay a civil penalty of $340 million to the New York State Department of Financial Services.

· The Bank shall install a monitor for a term of at least two years who will report directly to DFS and who will evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures. In addition, DFS examiners shall be placed on site at the Bank.

· The Bank shall permanently install personnel within its New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank.

“The hearing scheduled for August 15, 2012 is adjourned.

“We will continue to work with our federal and state partners on this matter.”

In the end it seems it’s always about the money, and never about crime, punishment, and the dawn of correction.

Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also provide analysis and charts for David Stockman's Contra Corner which I developed for Mr. Stockman. I’ve had a wide variety of finance related jobs in the past 44 years, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

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