Suppose you cheated on your income tax to the tune of $250. What sort of punishment would you expect?
You’d likely have to pay the full amount, plus a fine, and that would be the end of it.
Now, imagine you funded a big marijuana grow-op to the tune of $250,000. If you were caught, it would almost certainly mean jail time.
OK, suppose you illegally funnel up to $250 billion from foreign accounts likely tied to terrorism, arms sales and drug trafficking, or from countries that are under economic sanction.
Well, if you’re in the U.S., you may get to quietly hammer out a settlement behind the scenes, with a minimum of fuss and few repercussions.
That is how the U.S. Treasury Department has been dealing with banks caught handling funds from sanctioned countries such as Cuba and Iran. At least three banks have been targeted by officials since a controversial law that allowed banks to mask the identity of foreign sources was repealed in 2008.
There is rarely any public shaming. Just a co-operative approach by regulators and a negotiated concession by the bank.
Well, Benjamin Lawsky doesn’t do quiet.
Earlier this week, Lawsky, head of the recently created New York State Department of Financial Services, shocked his federal counterparts by launching a fiery attack against the London-based bank Standard Chartered.
According to Wednesday’s National Post, Lawsky released damning internal communications and details of the bank’s alleged defiance of U.S. sanctions against Iran.
“In his order, Lawsky said Standard Chartered’s dealings exposed the U.S. banking system to terrorists, drug traffickers and corrupt states,” the Post reported.
Federal officials were angered by the move. They were also embarrassed, as it shed light on their usual low-key approach.
It’s sad, but hardly surprising, that U.S. officials and politicians still seem to be pussy-footing around reckless banking practices.
In June, the U.S. public witnessed one of the most pathetic displays of political impotence in the face of irresponsible investing since the global financial collapse of 2008.
Jamie Dimon, CEO of JPMorgan Chase, was virtually coddled by senators in an appearance before a U.S. senate committee. Dimon was answering for a reported $2 billion trading loss, yet he was the only person in the room to actually place any share of the blame on his shoulders.
The final tally for the JPMorgan loss later mushroomed to almost $6 billion.
Dimon and his fellow high financiers have learned nothing from the past four years. Rather, they exert enormous energy convincing politicians not to make waves. They lobby heavily against legislative reform measures, then complain that the resulting half-measures aren’t working.
It’s no wonder many people think they belong in jail.
New York’s Benjamin Lawsky may be a bit of a blowhard, a loose cannon. But surely there is a place for more of that sort of bravado.