Sherman McCoy, the testy, testosterone-filled 1980’s bond salesman of Tom Wolfe’s Bonfire of the Vanities, frequently calls himself a “Master of the Universe.” The Master of the Universe is a demigod above the law of us plebeians, egotistically immersed in a life of conspicuous consumption and addicted to the adrenaline-fueled machismo of making billion dollar bets.
Thankfully, McCoy is a frightful fiction—our country’s laws prevent such impertinence. “The United States maintains one of the strongest and most effective anti-money laundering and counter-terrorist financing regimes of the world,” David S. Cohen of the Treasury Department assured the nation.
So when it was discovered that HSBC knowingly laundered for ruthless drug cartels and Russian mobsters, transacted with blackballed organizations that bankrolled Hezbollah and Al-Qaeda, and helped Iran and North Korea evade sanctions, our robust regulatory agencies sounded the bank’s death knell. Right?
Given all the corporations-are-people bluster in the air—and that breathing in the same vicinity as Al-Qaeda, let alone moving billions of dollars for it, are possible grounds for placement on President Obama’s kill list and an eventual zapping-from-the-sky—didn’t our Very Tough Officials press severe criminal charges? HSBC will surely lose its banking license, right?
Not one person behind the decade-long, mind-bogglingly heinous crimes of HSBC will spend a single day in jail. Not one person at HSBC who provided one billion dollars to the terrorist-linked Al-Rajhi bank in Saudi Arabia, or who washed the blood from the hundreds of millions of dollars coming from Mexico’s Sinaloa and Colombia’s Norte del Valle drug cartels, will have to personally pay a single dollar.
Instead the Department of Justice issued a fine for $1.9 billion—about five weeks’ worth of profit.
The new normal of banking is a pattern of massive fraud encouraged—er, punished—by these impotent wrist slaps. Profits are privatized among the shareholders, and losses are subsidized by the taxpaying shmucks. Now, congressional Republicans want to do away with the Volcker Rule so that banks can gamble with their clients’ money too.
There is an epidemic of amnesia when it comes to bank regulation in Washington. Sycophantic lawmakers fawn over CEOs, jockeying for favor and a slice of an almost $500 million lobbying pie. Bending over backwards for the banks, Congress expressed little outrage regarding the HSBC settlement. And less than two weeks after the HSBC settlement came the announcement that UBS was getting away with rate-rigging LIBOR for a measly $1.5 billion.
Basically, a bunch of bankers from prestigious financial institutions like Barclays and the Royal Bank of Scotland colluded to distort the LIBOR index to misrepresent the strength of their banks and make their trades more lucrative. The problem is that LIBOR is a crucial determinant in the prices of hundreds of trillions of dollars worth of assets—any imaginable financial instrument, from college loans to credit cards to mortgages, was artificially distorted to help traders make a few extra dollars on their deals.
In an encouraging change of pace, Senator Elizabeth A. Warren exposed the farcical power of the Very Tough Officials by asking a simple question: “Tell me a little bit about the last few times you've taken the biggest financial institutions on Wall Street all the way to a trial."
The silence was telling. Eventually, Thomas J. Curry, Comptroller of the Currency, mumbled the disheartening, but illuminating, admission that “we do not have to bring people to trial.”
Petulant Congressmen stonewall attempted reforms to the banking system, shredding any legislation into a large, postmodern hodgepodge of exemptions. Warren’s brainchild, the Consumer Financial Protection Bureau, has been repeatedly stymied by Senate Republicans who refuse to confirm any of the president’s nominees for its directorship.
After watering down regulatory laws to the point of irrelevance, Republicans like Senator Marco A. Rubio have the audacity to claim “a major cause of our recent downturn was a housing crisis created by reckless government policies.”
Apparently, financial institutions engorged themselves on toxic, predatory mortgage deals at the behest of the government, when George W. Bush was still in office. Rubio and the Republicans are endorsing a sort of voodoo economics that is completely counter to the facts—maybe there’s something in the water?
There’s an appalling inequality of justice in this country. In the eyes of the government, fraudsters like HSBC and UBS are clearly exempt from the laws. Too big to fail has become too big to jail.
Student Community Center Foundation Plans For New CenterOrganizers of the proposed Student Community Center, which would house space for student gatherings at the Democracy Center at 45 Mount Auburn Street, met in Boylston Hall last night to present their plans on the center’s construction, design, and finances.