US to sue banks for lack of due diligence

FionaK

Posted on 4/9/2011, 02:25

http://www.telegraph.co.uk/finance/newsbys...tgage-debt.html

It seems that some banks which sold toxic debt may have been aware of what they were doing - that that is not certain is something of a surprise to me because I sort of thought that was their job. But whatever.

The US is now taking legal action against these banks and, if successful, it seems that the banks will be liable to pay out a great deal of money. One of those banks is RBS which is partially owned by the UK government now: because of the bail out.

In another thread there is some discussion of what happens when a country does not bail out its banks: and the outcomes in iceland do not look much worse than what is already happening elsewhere, so far. But I am wondering about the implications of this legal move. It seems to me that this is never-ending. We spend a great deal of money supposedly to stabilise the banks and save the world: and then it turns out they owe more than already disclosed and have potentially enormous liabilities over and above what has already been met.

Clearly the banks have behaved irresponsibly and are rightly to be held to account for mis-selling. Clearly they were able to do that because of the deregulation which was pursued by the various governments, and so they have a role in all of this as well. It is more doubtful that the people of those countries which have been adversely affected should pay the price, though that is the expectation of the mainstream bodies and the financial system, so far as I can tell.

But it looks to me as if we may end up with the worst of all possible worlds: that is that we have spent all this money we haven't got to bail out the banks: and it hasn't worked. We presumably cannot find more to bail them out again if they are found liable in court. So what happens? One outcome is that they collapse anyway: so we have neither the money nor the banks we spent it to preserve. Am I missing something here?

FionaK

Posted on 22/9/2011, 17:15

There is a disturbing account in Private Eye's current issue, and the more I try to follow the threads in various stories the more it seems to me that the rich really are just laughing at the rest of us. Very soon I am going to be a full blown conspiracy theorist: I see no other outcome.

Lord Stephen Green is a former high heid yin at HSBC bank. In September he was appointed as an unpaid Trade Minister in our current government. Isn't that nice, that he would give up what was presumably a very highly paid position to work for the public good for no reward? Heart warming, I call it.

http://www.telegraph.co.uk/news/politics/7...e-Minister.html

In another part of the forest, George Osbourne, our esteemed chancellor, has just agreed a tax deal with Switzerland which guarantees there will be no prosecution of bankers for tax fraud. He is quite proud of this deal, which he says will recover quite a lot of money for the british treasury. There are those who believe the deal is a drop in the ocean, but presumably they are malcontents.

So why am I telling you this in this particular thread. Well it is because the American regulators have not done such a deal: rather they have decided to prosecute where they can and a number of wealthy americans have already been convicted of major tax evasion through HSBC in Switzerland. The bank is also being investigated and in a parallel case involving Swiss bank UBS,the bank settled criminal charges of $780 million and several of the bankers were convicted for fraud.

HSBC is one of the banks the americans are pursuing for fraud as outlined in the OP. Lord Green, it so happens, was CEO and later chairman HSBC during the time this is alleged to have happened. Indeed he chaired the particular part of HSBC named in the allegations: HSBC Bank USA Inc. But he doesn't work for the bank any more: and in the UK there are to be no criminal investigations. I suppose I should see his public service as a sort of community service, shouldn't I ?

I don't

FionaK

Posted on 19/7/2012, 12:26

It has been drawn to my attention that Lord Green was chair of the British Bankers Association: the body which set the LIBOR rate.

He has also apparently written a book in which he says that even in business our lives should be lived with integrity and that business has a social responsibility and an ethical dimension

This man is also priest.

Vninect

Posted on 21/7/2012, 20:57

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Funny that you should bring up a thread about HSBC, which I had of course forgotten about, as most people, I assume.

Thursday July 19, Jon Stewart's The Daily Show devoted a little segment to HSBC, as it turns out HSBC is involved in large scale money laundering for Mexican drug cartels, "suspected Al Qaida money men", and the Iranian government, trying to get around US sanctions.

HSBC says: "sorry guys, won't do it again." This fools everybody who has not heard the exact same promise back in 2003.

Perhaps it is very difficult to recognize money laundering. However, it is completely impossible if you don't monitor it at all, which was exactly HSBC's strategy between 2006 and 2009. More shocking stats: http://www.minyanville.com/sectors/financi...0/2012/id/42643

An excerpt:

QUOTE

17,000: The backlog of unreviewed, potentially suspicious activity alerts at HSBC’s U.S. arm as uncovered by government regulators in 2010.

200: Number of compliance staff in bank’s U.S. branch between 2006 and 2009, of which a smaller group was charged with making sure the bank was following anti-money-laundering rules. HBUS had millions of accounts, and more than 16,000 employees overall, and according to the report, kept compliance staff small as a cost-cutting measure.Members of the anti-money-laundering group told investigators that understaffing was a key problem.

85: Number of problems with the anti-money-laundering efforts at bank’s U.S. arm red-flagged by the OCC between 2005 and 2010. That was a third more than the next-closest major bank.

0: number of enforcement actions the OCC took in that time period.

3: number of years, from 2006 to 2009, for which HSBC’s U.S. branch didn’t do anymoney-laundering monitoring for transactions with HSBC banks in other countries.

15 billion: Total value of U.S. dollar bills (as in paper money) the bank accepted as part of bulk-cash transactions from foreign HSBC banks during that period, with no anti money-laundering controls.

Concerns About HBMX, the Bank’s Mexican Arm

7 Billion: U.S. dollars exported from 2007-2008 from HBMX accounts to HSBC’s U.S. accounts. At the time, both American and Mexican officials raised concerns that such a volume was only possible if it included illegal drug money.

1: Rank of HBMX in repatriation of U.S. dollars from Mexico for those years. HBMX is only the 5th largest bank in Mexico.

50,000: Number of clients in 2008 with U.S. dollar accounts at an HBMX shell operation in the Cayman Islands.

75: Estimated percentage of those accounts for which HBMX had incomplete information on the account holder.

15: Estimated percentage of such accounts for which the bank had no account holder information. (In 2009, HBMX closed 9,000 Cayman U.S. dollar accounts, but continues to allow new ones to be opened there).

Read more: http://www.minyanville.com/sectors/financi...3#ixzz21Hxi9BgA

By the way, I looked it up: The Cayman islands has 56,729 residents as of 2011.

All of this is comical. And I for one have no objection to shooting these clowns (with water pistols, of course).

FionaK

Posted on 21/7/2012, 21:16

Not only does the Cayman islands have 56,729 residents (I will take your word for that): it has more businesses registered there than it has people, according to Richard Murphy

QUOTE

The Cayman Islands, a British overseas territory in the Caribbean Sea, is the world’s worst offender. It is the only place in the world with more businesses than people – 55,000 citizens compared to around 60,000 registered businesses and trusts – and as of June 2011, there were 250 banks registered there that had assets of US$1.78 trillion, including 40 of the world’s biggest 50 banks. This makes the cluster of three small islands the world’s fourth largest financial sector.

Vninect

Posted on 21/7/2012, 22:20

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QUOTE (FionaK @ 21/7/2012, 22:16)

there were 250 banks registered there that had assets of US$1.78 trillion, including 40 of the world’s biggest 50 banks.

I take that to mean that we do not have to listen to any advice that defends interest obligations against tax avoiding populations, if you know what I mean.

If not:

CODE

IMF's imaginary world ------------------------------------ | ----------------------------------------------------------- Reality

---------------------------------------------------There is a deficit-----------------------------------------------------------
The deficit is an immediate problem ---------------------- | ------------- A deficit is to be expected during a financial crisis
The deficit is caused by tax avoidance and overspending -- | -- The deficit is caused by interest payments on illegitimate loans
The governments lied about their spending patterns ------- | The banks lied about their risk assessments which caused the crisis
The economy is saved by cutting spending and reducing debt | --- An economy is made by driving up demand so it grows out of debt
Debt servicing needs to be a nation's first priority ----- | -------- The banks have no right to interest that cripples a nation
Revenues can be increased by making people pay their tax - | ---- It are the banks who actively and massively avoid paying taxes
Banks that fail need to be saved by injecting tax money -- | ------------------------ We don't owe failing banks a living at all
Banks will use that free money to invest in the economy -- | ----- Banks and their owners accumulate the free money in big piles
There is no alternative ---------------------------------- | If we don't obey the banks, they promise to withhold all investment
Complicated economic laws -------------------------------- | ----------------------------------------- Banksters pure and simple

Edited by Vninect - 22/7/2012, 00:30

FionaK

Posted on 12/12/2012, 12:49

HSBC has reached a US settlement over the money laundering: they will pay £1.2 billion in fines and their arrangements will be monitored under a "deferred prosecution" deal which could presumably result in further action in the future:but probably won't.

http://www.guardian.co.uk/business/2012/de...oney-laundering

HSBC made £13.8 billion profit in 2011. So they are fined about 9% of one year's profit, for persistently breaking the law and making millions out of doing so. Quite wilfully. These fines are a "cost of doing business". What is not to like?

FionaK

Posted on 13/12/2012, 16:36

www.guardian.co.uk/commentisfree/20...oney-laundering

An article from someone who points up the fact that HSBC are explicitly rendered immune from criminal sanction because they are too big and too important. The author believes this is not a one off and that the rule of law is now openly suspended for the elite. I am inclined to agree and I think the piece analyses the situation in a wider context. It is disturbing to read these quotes

QUOTE

Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised.

QUOTE

Breuer was pressed on why the US authorities had agreed to a deferred prosecution deal for the bank. He dismissed accusations that prosecutors had not been hard enough and said that the Justice Department had looked at the "collateral consequences" to prosecuting the HSBC or taking away its US banking licence. Such a move could have cost thousands of jobs, he said.

www.guardian.co.uk/business/2012/de...oney-laundering

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