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Standard Chartered: Keep the Fine, Deliver The Truth

Posted by Larry Doyle on August 14, 2012 7:59 AM |

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. –Arthur Schopenhauer

L’affaire Standard Chartered Bank – Iranian Money Laundering takes center stage tomorrow with an expected meeting between senior bank executives and Benjamin Lawsky, superintendent of the New York Department of Financial Services.

Recall that Lawsky just last week unilaterally castigated the UK-based bank  for brazenly and wantonly eviscerating state and federal banking rules against dealing with Iranian entities. 

Lawsky one-upped the Federal Reserve, the U.S. Treasury and other regulators in his aggressive move  against Standard Chartered. Regulators across the pond have been quick to condemn Lawsky and have certainly expressed their disgust to their counterparts in Washington.

Standard Chartered clearly is very concerned about the possibility of having its New York banking license revoked. As such, the likelihood of a negotiated fine coordinated on behalf of all regulatory agencies would seem to be increasing. What do I think of that?

Stop the music and the drama.

I think I would speak for an overwhelming majority of the public both here in America and in the UK and tell Standard Chartered, “keep your money. There will be no fine. What there will be is a thorough independent investigation in pursuit of the truth.”

If it gets ugly, so be it. If we learn that Standard Chartered did not end run our banking rules, then good for them and they will be stronger for it. If we learn that our major regulatory agencies based in Washington were slow to move against Standard Chartered for whatever reason (perhaps in return for similar treatment by UK regulators in dealings with US-based institutions), let’s air that laundry.

The last thing I want to see is a fine. Better that Standard Chartered pays not a penny than we suffer again from not truly knowing and learning the truth. A fine only serves to suffocate the truth. The public has been suffocated enough by fines against the likes of Wachovia, HSBC, Barclays Bank, UBS, Goldman Sachs, and seemingly every other major financial institution in the world. When a bank is merely fined for dealing with a rogue nation such as Iran, that payment is nothing more than blood money. A fine does not rebuild confidence but erodes it dramatically because the public is aware that the truth remains under wraps.

What rebuilds confidence? The truth. If the truth exposes ugly practices within Standard Chartered and similarly lax oversight from regulators, then so be it. A healthy serving of embarrassment is far less important than a rebuilding of trust and confidence for our global economy. In delivering the truth, the public and our global economy will be reinvigorated by fresh air filling our collective lungs.

Tim Geithner, Ben Bernanke, Mervyn King, and others should all stand down and at long last let the truth stand up. Will it happen? I am not holding my breath — no pun intended — but the continued erosion of trust in our regulators, our financial institutions, and the markets comes with a price far greater than any fine that can be levied against Standard Chartered or any other bank.

Look for me to deliver this call for the truth on Bloomberg’s First Up with Susan Li this evening.

Related Sense on Cents Commentary
Standard Chartered Scandal: “Asian Regulators Had Lost Faith in American Regulators”
Standard Chartered Scandal: Crime Pays
Standard Chartered: Friends Like This, Who Needs Enemies 

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.




Larry Doyle

  • Peter S.

    A $340 million fine for laundering terrorist money isn’t punishment enough – let them feel the wrath of LD.

    Let’em have it with both barrels!

    • LD


      Will have to wait for tomorrow night as the segment this evening was bumped for whatever reason.

      That fine supposedly only represents the engagement with the NYS DFS. Does this mean the fed, US Treasury, OCC, and FBI may still come after Standard Chartered? I guess maybe BUT I would be shocked if that happens.

      To be perfectly frank, with this settlement and no accompanying statement that the other regulators are proceeding with their own actions, our financial regulators just sunk to ALL-TIME LOWS and have been largely rendered A TOTAL JOKE.

      This fine represents a cost of .00135% of the total volume of transactions in question. What is the average margin in the money laundering business? A LOT MORE THAN THAT. In the course of a conversation with an individual familiar with money laundering margins, I was quoted a typical spread of 15% that is. 15. That is, Standard Chartered would have booked revenue of approximately $37 billion (and be mindful the NYS DFS said that the transaction in question were AT LEAST $250 billion) and paid $340 million. That fine represents less than 1% of revenues generated assuming the 15% profit margin.

      What does that all mean?

      Crime pays and other banks would want to get into the money laundering biz.

      In all seriousness, though, this scenario begs a number of questions, including:

      1. With our financial regulators rendered a joke, what does that mean about the value of our dollar? It’s also worth far less than what we might other wise think.

      2. What about the questions of national security? What do those individuals and institutions in Iran involved in this laundering activity think of our country? Perhaps this explains their contempt and derision for our nation. If we will not stand up and defend ourselves from laundering activities in the billions, do you think they have any reason to believe we are credible on other fronts?

      3. Any surprise why Israel may feel the need to go it alone?

      4. As I asked previously, what does a banking institution need to do to have its license revoked?

      5. Who in the media and atop Capitol Hill will have the cojones to call the Fed, Treasury, Department of Justice, the OCC, and the FBI on the carpet for an explanation as to how Standard Chartered has been running a laundromat in our domestic banking system?

      I can only imagine that somebody somewhere has got a LOT of dirt and compromising pictures of many people in Washington.

      Anybody else have anything to add to this?

  • LD

    Bloomberg’s Jonathan Weil writes a great column on the Standard Chartered affair today,

    If the federal government would do a better job of overseeing large banks, rather than protecting them, there would be no opportunity or reason for someone like Lawsky to step in. Having active, competent, functional state financial regulators can only be a good thing. The country needs more.

    Standard Chartered Fought the Lawsky and the Lawsky Won

  • fred


    Are we living in an ineptocracy?

    Effective NY state financial regulators are critical.
    Anyone who is anybody on the international banking scene needs a presence in NYC.

    I’m not sure exactly why, but it would seem that effective national and international regulatory capture has not reached the NY state level YET. Insiders, lobbyists and campaign contributors seem to control everything down to the NY Fed but not beyond, (I don’t know, maybe it’s a state vs. federal thing).

    Whether the name is Lawsky, Spitzer (too bad you couldn’t keep it in your pocket), or Doyle (someday?, you gotta start somewhere) for that matter, America needs effective NY state financial regulators as a line of last defense.

    Shame on all the other financial “regulators” who are suppose to be looking out for the public interest, they’ve been exposed by Lawsky as frauds.

    • LD


      I am not so sure I could stomach the politics and politicians.

      To be frank, this move by Lawsky has all the earmarks of Andrew Cuomo on it. Cuomo has been selective in his pursuit of justice in the past. I will certainly give Cuomo and especially Lawsky credit for making this move, though.

      Will be very interesting to see how hard Schneiderman and Jepsen push on the Libor front.

      • fred

        Ah yes, lest we forget…Prince Andrew, a man still waiting for his moment.

  • jerry McBrayer

    Larry, I’m new to your site and was developing respect for it.
    I was very disturbed by viewing the NO QUARTER, material on your site. The Admiral that oversaw the Bin Laden take down did not have any complimentary things to say about this groups presentation and “Swift Boating”. Are you sponsoring this group?

    If so, you have every right to do so,but you lose my respect and I would like to be dropped from the sight. Thank you.

    • LD


      Not sure exactly what you are referring to by my sponsoring No Quarter. If you peruse Sense on Cents, you will see that I provide links to literally dozens, perhaps hundreds, of other sites. Does that mean I sponsor them? No. That means I think readers might find them to be of interest.

      As with any site, I am sure there are items at NQ and elsewhere that I might disagree with. That said, my writing pursuits were launched at NQ back in the fall 2008. As such, I am forever indebted to Larry Johnson at NQ for inviting me to share my thoughts. The writing bug I developed led to my launching Sense on Cents a few months later.

      If you choose not to follow my work here at Sense on Cents, at least now you have full information.

  • Bill

    This is an absolute disgrace. A $340 million settlement fine is no doubt less than the fees that Standard Chartered charged their Iranian client when laundering $250 Billion!!! Isn’t that fantastic that this company made money on the deal for assisting terrorism. Maybe that money helped go to Syria to murder innocent women and children. Positively disgusting!

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