Today’s WTF! – Banks Above The Law As Crimes Goes Unpunished
One of the things I love about Naked Capitalism is the detail which which they piece varoius threads together to provide readers with a clear view of the story. Today’s piece titled “Quelle Surprise! The Geithner Doctrine Not Only Puts Banks Above The Law, It Also Serves To Excuse Their Bad Behavior” is a real hum-dinger. If you haven’t read Bill Black’s piece on the HSBC settlement, I would encourage you to do so first, but Yves does a nice job here assembling the overriding theme that our largest banks are being given a free past on a host of criminal behaviors. The combined evidence that our regulators have thrown U.S. citizens under the bus to save corrupt banks and their executives is astonishing and depressing. As Yves notes…
Our Treasury Secretary, also known as the Bailouter in Chief and “Foamy,” has a default explanation for why ordinary citizens must bend over every time banking interests are threatened. The more formal statement of this policy is the Geithner Doctrine, which is “nothing must be done that will destablize the banking system.” However, Geithner also subscribes to the Humpty Dumpty School of Language, in which words mean what he chooses them to mean, nothing more or less. So “destabilize” means “hurts the profits or reputation of” and “banking system” means “any bank that is pretty big and/or well connected”.
And from Bill Black’s wonderful account of the HSBC settlement, The Second Great Betrayal: Obama and Cameron Decide that Banks are Above the Law…
To sum it up: the regulators and Treasury opposed having HSBC admit the truth – that it violated the money-laundering statutes. They warned that such a guilty plea could cause a systemic crisis because HSBC was an SDI. When Treasury warns DOJ that a prosecution could cause a global crisis there is no chance that the AG will override Treasury’s warning on his own initiative. That is why line prosecutors urged Holder to meet personally with Geithner to urge him to withdraw his objections to the proposed prosecution, but Holder apparently declined to seek a meeting. Instead, Breuer emphasized that DOJ accepted Treasury’s warning that HSBC was too big to prosecute because doing so would cause a global systemic crisis.
Note the disingenuous statement made by the Treasury to the press. Yes, DOJ makes the “decision” whether to prosecute, but if DOJ were to prosecute in a case where Treasury had warned that the sky would fall if there were a prosecution – and the sky did fall – then the DOJ’s leaders would be the idiots who ignored Treasury and blew up the world’s economy.
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