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« Jon Stewart Rips HSBC: 'Bank Wankers Too Big To Jail' | Main | National Debt Headed To 200% Of GDP -- Even AFTER Fiscal Cliff Deal! »

Glenn Greenwald: 'HSBC Is The Too Big To Jail Poster Child'

Covington & Burling's Lanny Breuer sees no reason for HSBC jail time.


Somewhat long piece but worth reading in full.  Updated at the bottom.

By Glenn Greenwald

HSBC, too big to jail, is the new poster child for US two-tiered justice system

Reprinted with permission.


The US is the world's largest prison state, imprisoning more of its citizens than any nation on earth, both in absolute numbers and proportionally. It imprisons people for longer periods of time, more mercilessly, and for more trivial transgressions than any nation in the west. This sprawling penal state has been constructed over decades, by both political parties, and it punishes the poor and racial minorities at overwhelmingly disproportionate rates.

But not everyone is subjected to that system of penal harshness. It all changes radically when the nation's most powerful actors are caught breaking the law. With few exceptions, they are gifted not merely with leniency, but full-scale immunity from criminal punishment. Thus have the most egregious crimes of the last decade been fully shielded from prosecution when committed by those with the greatest political and economic power: the construction of a worldwide torture regime, spying on Americans' communications without the warrants required by criminal law by government agencies and the telecom industry, an aggressive war launched on false pretenses, and massive, systemic financial fraud in the banking and credit industry that triggered the 2008 financial crisis.

This two-tiered justice system was the subject of my last book, "With Liberty and Justice for Some", and what was most striking to me as I traced the recent history of this phenomenon is how explicit it has become. Obviously, those with money and power always enjoyed substantial advantages in the US justice system, but lip service was at least always paid to the core precept of the rule of law: that - regardless of power, position and prestige - all stand equal before the blindness of Lady Justice.

It really is the case that this principle is now not only routinely violated, as was always true, but explicitly repudiated, right out in the open. It is commonplace to hear US elites unblinkingly insisting that those who become sufficiently important and influential are - and should be - immunized from the system of criminal punishment to which everyone else is subjected.

Worse, we are constantly told that immunizing those with the greatest power is not for their good, but for our good, for our collective good: because it's better for all of us if society is free of the disruptions that come from trying to punish the most powerful, if we're free of the deprivations that we would collectively experience if we lose their extraordinary value and contributions by prosecuting them.

This rationale was popularized in 1974 when Gerald Ford explained why Richard Nixon - who built his career as a "law-and-order" politician demanding harsh punishments and unforgiving prosecutions for ordinary criminals - would never see the inside of a courtroom after being caught committing multiple felonies; his pardon was for the good not of Nixon, but of all of us. That was the same reasoning hauled out to justify immunity for officials of the National Security State who tortured and telecom giants who illegally spied on Americans (we need them to keep us safe and can't disrupt them with prosecutions), as well as the refusal to prosecute any Wall Street criminals for their fraud (prosecutions for these financial crimes would disrupt our collective economic recovery).

A new episode unveiled on Tuesday is one of the most vivid examples yet of this mentality. Over the last year, federal investigators found that one of the world's largest banks, HSBCspent years committing serious crimes, involving money laundering for terrorists; "facilitat[ing] money laundering by Mexican drug cartels"; and "mov[ing] tainted money for Saudi banks tied to terrorist groups". Those investigations uncovered substantial evidence "that senior bank officials were complicit in the illegal activity." As but one example, "an HSBC executive at one point argued that the bank should continue working with the Saudi Al Rajhi bank, which has supported Al Qaeda."

Needless to say, these are the kinds of crimes for which ordinary and powerless people are prosecuted and imprisoned with the greatest aggression possible. If you're Muslim and your conduct gets anywhere near helping a terrorist group, even by accident, you're going to prison for a long, long time. In fact, powerless, obscure, low-level employees areroutinely sentenced to long prison terms for engaging in relatively petty money laundering schemes, unrelated to terrorism, and on a scale that is a tiny fraction of what HSBC and its senior officials are alleged to have done.

But not HSBC. On Tuesday, not only did the US Justice Department announce that HSBC would not be criminally prosecuted, but outright claimed that the reason is that they are too important, too instrumental to subject them to such disruptions. In other words, shielding them from the system of criminal sanction to which the rest of us are subject is not for their good, but for our common good. We should not be angry, but grateful, for the extraordinary gift bestowed on the global banking giant:

"US authorities defended their decision not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the 'collateral consequences' of taking the bank to court. . . .

"Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s 'blatant failure' to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire.

"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.

"HSBC, Britain's biggest bank, said it was 'profoundly sorry' for what it called 'past mistakes' that allowed terrorists and narcotics traffickers to move billions around the financial system and circumvent US banking laws. . . .

"As part of the deal, HSBC has undertaken a five-year agreement with the US department of justice under which it will install an independent monitor to assess reformed internal controls. The bank's top executives will defer part of their bonuses for the whole of the five-year period, while bonuses have been clawed back from a number of former and current executives, including those in the US directly involved at the time.

"John Coffee, a professor of law at Columbia Law School in New York, said the fine was consistent with how US regulators have been treating bank infractions in recent years. 'These days they rarely sue individuals in any meaningful way when the entity will settle. This is largely a function of resource constraints, but also risk aversion, and a willingness to take the course of least resistance,' he said."

DOJ officials touted the $1.9 billion fine HSBC would pay, the largest ever for such a case. As the Guardian's Nils Pratley noted, "the sum represents about four weeks' earnings given the bank's pre-tax profits of $21.9bn last year." Unsurprisingly, "the steady upward progress of HSBC's share price since the scandal exploded in July was unaffected on Tuesday morning."

The New York Times Editors this morning announced: "It is a dark day for the rule of law." There is, said the NYT editors, "no doubt that the wrongdoing at HSBC was serious and pervasive." But the bank is simply too big, too powerful, too important to prosecute.

That's not merely a dark day for the rule of law. It's a wholesale repudiation of it. The US government is expressly saying that banking giants reside outside of - above - the rule of law, that they will not be punished when they get caught red-handed committing criminal offenses for which ordinary people are imprisoned for decades. Aside from the grotesque injustice, the signal it sends is as clear as it is destructive: you are free to commit whatever crimes you want without fear of prosecution. And obviously, if the US government would not prosecute these banks on the ground that they're too big and important, it would - yet again, or rather still - never let them fail.

But this case is the opposite of an anomaly. That the most powerful actors should be immunized from the rule of law - not merely treated better, but fully immunized - is a constant, widely affirmed precept in US justice. It's applied to powerful political and private sector actors alike. Over the past four years, the CIA and NSA have received the same gift, as have top Executive Branch officials, as has the telecom industry, as has most of the banking industry. This is how I described it in "With Liberty and Justice for Some":

"To hear our politicians and our press tell it, the conclusion is inescapable: we're far better off when political and financial elites - and they alone - are shielded from criminal accountability.

"It has become a virtual consensus among the elites that their members are so indispensable to the running of American society that vesting them with immunity from prosecution - even for the most egregious crimes - is not only in their interest but in our interest, too. Prosecutions, courtrooms, and prisons, it's hinted - and sometimes even explicitly stated - are for the rabble, like the street-side drug peddlers we occasionally glimpse from our car windows, not for the political and financial leaders who manage our nation and fuel our prosperity.

"It is simply too disruptive, distracting, and unjust, we are told, to subject them to the burden of legal consequences."

That is precisely the rationale explicitly invoked by DOJ officials to justify their decision to protect HSBC from criminal accountability. These are the same officials who previously immunized Bush-era torturers and warrantless eavesdroppers, telecom giants, and Wall Street executives, even as they continue to persecute whistleblowers at record rates and prosecute ordinary citizens - particularly poor and minorities - with extreme harshness even for trivial offenses. The administration that now offers the excuse that HSBC is too big to prosecute is the same one that quite consciously refused to attempt to break up these banks in the aftermath of the "too-big-to-fail" crisis of 2008, as former TARP overseer Neil Barofsky, among others, has spent years arguing.

And, of course, these HSBC-protectors in the Obama DOJ are the same officials responsible for maintaining and expanding what NYT Editorial Page editor Andrew Rosenthal has accurately described as "essentially a separate justice system for Muslims," one in which "the principle of due process is twisted and selectively applied, if it is applied at all." What has been created is not so much a "two-tiered justice system" as a multi-tiered one, entirely dependent on the identity of the alleged offender rather than the crimes of which they are accused.

Having different "justice systems" for citizens based on their status, wealth, power and prestige is exactly what the US founders argued most strenuously had to be avoided (even as they themselves maintained exactly such a system). But here we have in undeniable clarity not merely proof of exactly how this system functions, but also the rotted and fundamentally corrupt precept on which it's based: that some actors are simply too important and too powerful to punish criminally. As the Nobel Prize-winning economist Joseph Stiglitz warned in 2010, exempting the largest banks from criminal prosecution has meant that lawlessness and "venality" is now "at a higher level" in the US even than that which prevailed in the pervasively corrupt and lawless privatizing era in Russia.

Having the US government act specially to protect the most powerful factions, particularly banks, was a major impetus that sent people into the streets protesting both as part of the early Tea Party movement as well as the Occupy movement. As well as it should: it is truly difficult to imagine corruption and lawlessness more extreme than having the government explicitly place the most powerful factions above the rule of law even as it continues to subject everyone else to disgracefully harsh "justice". If this HSBC gift makes more manifest this radical corruption, then it will at least have achieved some good.


By coincidence, on the very same day that the DOJ announced that HSBC would not be indicted for its multiple money-laundering felonies, the New York Times published a story featuring the harrowing story of an African-American single mother of three who was sentenced to life imprisonment at the age of 27 for a minor drug offense:

"Stephanie George and Judge Roger Vinson had quite different opinions about the lockbox seized by the police from her home in Pensacola. She insisted she had no idea that a former boyfriend had hidden it in her attic. Judge Vinson considered the lockbox, containing a half-kilogram of cocaine, to be evidence of her guilt.

"But the defendant and the judge fully agreed about the fairness of the sentence he imposed in federal court.

"'Even though you have been involved in drugs and drug dealing,' Judge Vinson told Ms. George, 'your role has basically been as a girlfriend and bag holder and money holder but not actively involved in the drug dealing, so certainly in my judgment it does not warrant a life sentence.'

"Yet the judge had no other option on that morning 15 years ago. As her stunned family watched, Ms. George, then 27, who had never been accused of violence, was led from the courtroom to serve a sentence of life without parole.

"'I remember my mom crying out and asking the Lord why,' said Ms. George, now 42, in an interview at the Federal Correctional Institution in Tallahassee. 'Sometimes I still can't believe myself it could happen in America.'"

As the NYT notes - and read her whole story to get the full flavor of it - this is commonplace for the poor and for minorities in the US justice system. Contrast that deeply oppressive, merciless punishment system with the full-scale immunity bestowed on HSBC - along with virtually every powerful and rich lawbreaking faction in America over the last decade - and that is the living, breathing two-tiered US justice system. How this glaringly disparate, and explicitly status-based, treatment under the criminal law does not produce serious social unrest is mystifying.


Read more columns from Glenn Greenwald here...




Bloomberg Asks Lanny Breuer: Why Are No HSBC Execs Going To Prison?



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Reader Comments (20)

Same old same old with Obama you get ZERO prosecutions of his crony friends.

Money-Laundering Bank Was Big Obama Donor


Greenwald's pretty good he had a great piece about obamacare

Americans Were Had: Big Pharma Super-Sleaze in Action

If you don't think Obamacare is a sleazy crony deal, read on. The key author of the legislation just took a job with Big Pharma. By Glenn Greenwald


Via EconomicPolicyJournal


Will Liz Fowler determine the drugs you can have?


Report: Sebelius Awarding Healthcare Exchanges to Friends


Health Insurers Will Be Charged to Use New Exchanges

WASHINGTON — The Obama administration said Friday that it would charge insurance companies for the privilege of selling health insurance to millions of Americans in new online markets run by the federal government.

The cost of these “user fees” can be passed on to consumers.


Dec 12, 2012 at 3:38 PM | Unregistered CommenterLadyLiberty
Although it is common knowledge among most observers, the author fails to mention (for obvious reasons) that in virtually every country in the world, Jews comprise about 95% of the criminals involved in banking and financial swindles of every description. Russia now appears to be one of the few countries left in the world where members of that select group of criminals are prosecuted and sent to prison.
Dec 12, 2012 at 7:17 PM | Unregistered Commentercarroll price
Yes Carroll, Let's blame it all on the Jews, because, you know, there just needs to be someone to hang out to dry. While we are busy blaming the Jews for our misery, let's just forget that there were plenty of Wasps, Catholics, Hindus, and other representatives of other cultural backrounds that have completely fucked us over because they loved the sight of a really big stack of pennies more than their own souls, or their fellow man.
Dec 12, 2012 at 7:26 PM | Unregistered CommenterSKINFLINT

Skinflint did the heavy lifting. You should take another look at your numbers. I'm so tired of this crap from idiots like yourself. Fraud does not discriminate by religion or ethnicity. Tell me, Carroll, the race and religion of the following:

Tim Geithner -- WASP

Henry Paulson - Christian Scientist

John Mack - Lebanese Christian

Jon Corzine - Catholic

Raj & Raj - Hindu
Dec 12, 2012 at 8:05 PM | Registered CommenterDailyBail
I’m not blaming everything on Jews. I simply stated a few suppressed facts that most informed individuals are aware of, even if they are afraid to publicly admit it. And no, I don’t live in misery. Mainly because I stayed clear of debt and other financial schemes designed to lure unwary individuals into a life of slavery to shysters who own the Federal Reserve and run Wall Street.
Dec 12, 2012 at 8:13 PM | Unregistered Commentercarroll price
Look, I'm not going to let this thread devolve into a debate about which race of people is more corrupt than the next. Thousands of years of human history have shown a propensity for greed and fraud in all people.
Dec 13, 2012 at 12:23 PM | Registered CommenterDailyBail

Wow. It only took 4 years, but the MSM is finally catching on to the inherent injustice of TBTF and that TBTF implies Too Big To Jail. This ABC piece by Brian Ross was brief and mediocre, but it got everything about Too Big To Jail exactly right. Even Glen Greenwald would approve.

4 years. It's taken them that long. Will anything come of it? We'll see.
Dec 13, 2012 at 1:37 PM | Unregistered CommenterDr. Pitchfork

Happy Holidays.

CBS also did a pretty good report:

Dec 13, 2012 at 2:04 PM | Registered CommenterDailyBail
Thanks for the holiday wishes, DB. BTW, the "Dr" is official, now. (woo hoo!)
Dec 13, 2012 at 3:21 PM | Unregistered CommenterDr. Pitchfork
Finally!!! Great news. So what's next as far as teaching.
Dec 13, 2012 at 4:04 PM | Registered CommenterDailyBail
Congrats Dr. Dr. Pitchfork!

Happy Holidays and glad to hear from you.
Dec 13, 2012 at 5:13 PM | Unregistered Commenterjohn
Well done, Dr. Pitchfork, and Merry Christmas.

So..... What's next for the good doctor?
Dec 13, 2012 at 5:57 PM | Unregistered CommenterCheyenne
Hollywood is probably a gift to us to show us in outrageous examples of economic reality all over the country. As card-carrying Leftists, virtually everyone in Hollywood supports the “correct causes” but, on the other hand, they also make a boatload of money thanks to Capitalism. The Hollywood rage against Michigan is a case study in class hypocrisy

Read more: http://godfatherpolitics.com/8517/hollywood-gives-unions-lip-service-after-plundering-michigan-pensions/#ixzz2EzgRZ4kl

Dec 13, 2012 at 10:38 PM | Unregistered CommenterBackgammon

Great link. Hadn't seen that.
Dec 17, 2012 at 11:10 AM | Registered CommenterDailyBail
The United States of America no longer exists and hasn't for at least 150 years or better. Where exactly does liberty fall? In between the highest prison population of the entire globe, a land where the police are allowed to commit arson so they can murder an alleged criminal without giving them even a slight chance of due process and who will not be held accountable for committing aggravated murder of an American citizen. Or is it between a place that consumes 50% of the worlds resources and yet can't provide adequate education and health care to all of it's citizens? Maybe it lies under the money laundering scumbags who have admitted playing their part in funneling terrorist monies through their vaults. Where for their typical usury fee people involved with the killing of US soldiers and civilians worldwide can launder their blood cash into clean legit dough! I want to puke just thinking about it. $1.9 billion dollar fine for a mother fucking $1 trillion dollars of money laundering for some of the most violent and repugnant criminals on the face of this shitty planet! That's right, the entirety of the human race is worth less than nothing when it allows blue blooded scumbag pukes to suffer nothing for committing felonies of the highest order. There is no law in the USA, it's just as lawless as the western frontier was. You know, 200,000 heads rolled in France when the people finally stuck back at the aristocracy. All lopped off by a single guillotine and all within the time-span of just under a year. Sounds like they were pissed off... When will the American debt slave get pissed off?
Feb 18, 2013 at 2:01 PM | Unregistered CommenterMike

You left out having a "president" who's declared the right to murder any citizen, anywhere, anytime, for any reason. And real slaves object to their servitude. Other than that, good rant.
Feb 18, 2013 at 2:40 PM | Unregistered CommenterCheyenne
Is Anybody Listening? HSBC Continues to Launder Money for Terrorist Groups Says Whistleblower


Everett Stern didn't realize that becoming a whistleblower would change his life. Not only did he lose his job and career at HSBC, and become blacklisted from the banking industry, he now sleeps with a gun by his bed after receiving death threats on a regular basis. He can barely afford a ticket to New York City to speak at a press conference this Thursday Aug. 29, at noon on the steps of the New York Public Library. But he isn't worried. According to the former bank employee, he will stop at nothing to expose HSBC's continued actions of laundering money for terrorists groups. Although the bank paid a $1.9 Billion penalty in 2012, Stern claims he has evidence that HSBC continued to launder money during his tenure after they admitted that they had stopped in 2010.

"The public needs to know that money is still being funneled through HSBC to directly buy guns and bullets to kill our soldiers. Fines are not acceptable. I want a criminal indictment of HSBC executives," he asserts. "And if I die because of this, my life will have been worthwhile."

A noble cause doesn't mean people will listen to you. During his employment with HSBC as an AML (Anti-Money Laundering officer), Stern found discrepancies and brought them to the attention of his supervisors. Through an Internet search, Stern found a Saudi fruit company was sending millions to a high-ranking figure in the Yemeni wing of the Muslim Brotherhood. Stern also uncovered that HSBC was allowing millions of dollars to be moved from the Karaiba chain of supermarkets in Africa to a firm called Tajco, a company that had been singled out by the US Treasury Department as major financiers of the Lebanese Shiite group, Hezbollah. Stern's supervisors, however, told him to not make waves and keep "clearing the quota of 72 alerts per week."

Stern then took his evidence further, notifying appropriate government agencies such as the FBI, CIA and SEC, about violations of US money laundering laws. All efforts fell on deaf ears -- the excuse being that prosecuting the Too Big To Fail bank would precipitate a financial collapse. Frustrated with the lack of action, Mr. Stern recently decided to take the case public, approaching various media outlets, in addition to Occupy Wall Street. By doing so, he has given up a multi-million dollar whistleblower award.

"This is not a Democrat or Republican issue," he said. "Banks financing drug cartels and terrorists affects every single American. I went to Occupy not because I am a major supporter of the movement. I went because they care enough to hit the streets, carry signs and send a message that I also believe in."

The OWS Alternative Banking Working Group, working in conjunction with Stern for tomorrow's protest, agrees. "Everett Stern is able to give us a mountain of information and point us in the right direction to apply effective pressure," says Cathy O'Neil, the Alternative Banking lead organizer. "In turn, we are able to give him an army of supporters and a populist megaphone with a proven ability to get the public's attention."
Sep 14, 2013 at 6:53 PM | Unregistered Commenterjohn
Aberdeen unseats HSBC as top India fund as crisis takes toll


For years, Aberdeen Asset Management laboured in India in the shadow of HSBC's star stock-picker Sanjiv Duggal. The rupee crisis has changed that.

A lower-risk investment approach by Aberdeen has trumped Duggal's riskier strategy, which had paid off handsomely for years, in a dramatic change of fortunes for the two largest India funds geared to foreign investors.

The Aberdeen Global-Indian Equity Fund overtook the HSBC's GIF Indian Equity fund last year in the league of assets under management and the gap between the two has been widening.

At $4 billion, the Aberdeen fund is now double the size of the $2 billion HSBC fund, data from industry tracker Lipper, a Thomson Reuters company, shows.

HSBC "has lost huge market share," said Dhruva Raj Chatterji, a senior investment consultant at fund research firm Morningstar. Duggal had been overweight on cyclicals and rate sensitive stocks and underweight on defensive plays such as consumer and healthcare shares, he said.

Note: I really want to know what Glen Greenwald and Mr. Snowden might be able to disclose about IN-Q-TEL and the telecom/renewables industry.
Sep 14, 2013 at 6:57 PM | Unregistered Commenterjohn
Brief history of HSBC. http://mondediplo.com/2010/02/04hsbc. Lets not forget what Cheyenne had posted before. That the new head of the FBI is a former board member of said bank.
Sep 14, 2013 at 9:26 PM | Unregistered CommenterSKINFLINT
21 large was a lot of bucks back in the day.http://www.nanking.com/
Sep 15, 2013 at 12:03 AM | Unregistered CommenterSKINFLINT

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