Where Are the Feds? NY Banking Superintendent: Standard Chartered a “Rogue Institution,” Made $250 Billion of Illegal Transfers With Iran

The New York Superintendent of Financial Services dropped a bombshell today, filing an order against Britain’s Standard Chartered Bank. It charges the bank with having engaged in at least $250 billion of illegal transactions with Iranian banks, including its central bank, from 2001 to 2010, and of engaging in similar schemes with Libya, Myanmar and Sudan (those investigations are in progress). It threatens SCB with the loss of its New York banking license and termination of access to dollar clearing services. The latter alone is as huge deal. You are not a real international bank unless you have dollar clearing. Sumitomo Bank looked at giving up its US banking license in 1985 when it was examining deal structures for making an investment in Goldman, and ascertained that giving up access to Fedwire would cost it over $100 million a year and considerably weaken its position in Japan. SCB is certain to be a much more active dollar player than Sumitomo was and the volume of international transactions has grown hugely since then.

SCB squealed like a stuck pig, claiming that only $14 million of transactions were out of compliance. But the bank has nowhere to go. The NY Superintendent, Benjamin Lawsky, has made his determination. The only thing open for discussion is what sort of punishment he is going to impose. The bank must

…submit to and pay for an independent, on-premises monitor of the Department’s selection to ensure compliance with rules governing the international transfer of funds.

SCB is also up for a license revocation hearing and needs to “demonstrate” why it should not be suspended from clearing dollar transactions in the interim. Having poised a sword of Damocles over the bank’s head, I would expect Lawsky to demand a lot to make this go away, ideally including some executives’ heads as proof the bank was turning over a new leaf (the filing notes that any money damages are to be determined). The flip side is Lawsky may come under pressure precisely because he has shown up the Treasury, Fed, and DoJ. This is a Spitzer-level move from an unexpected source.

Bear in mind, the facts presented are far worse than the Libor price fixing that led to the departure of Barclays’ chairman, CEO, and president. Lawsky has evidence that this scheme was devised at the senior levels of the bank, while the Barclays Libor actions took place at comparatively low levels (although it is hard to believe there was not knowledge at executive levels prior to the October 2008 conversations between the Bank of England’s Paul Tucker and Bob Diamond).

The filing is riveting reading. In very simple terms, SCB altered (“repaired”) wire transfer information so as to omit the fact that Iranian banks were involved. By way of background, “U-turns” were a permitted transaction with Iranian banks and individuals, when the recipient and sender of the wire were both non-US, non-Iranian banks (although they might represent an Iranian party). The compliance requirements were stringent; funds were to be frozen if a transfer request did not have enough information to determine whether or not it was with a sanctioned party. But that was no deterrent to SCB:

20. As early as 1995, soon after President Clinton issued two Executive Orders announcing U.S. economic sanctions against Iran, SCB’s General Counsel embraced a framework for regulatory evasion. He strategized with SCB’s regulatory compliance staff by advising that “if SCB London were to ignore OFACs regulations AND SCB NY were not involved in any way & (2) had no knowledge of SCB Londons [sic] activities & (3) could not be said to be in a position to control SCB London, then IF OFAC discovered SCBLondons [sic] breach, there is nothing they could do against SCB London, or more importantly against SCBNY.” He also instructed that a memorandum containing this plan was “highly confidential & MUST NOT be sent to the US.” (emphasis in original)

21. Years later, another SCB executive closely weighed the costs and benefits of concealing the identities of Iranian Clients. He observed that “the current process under which some SWIFT messages are manually ‘repaired’ to remove reference to Iran could (despite accepted SWIFT protocols) be perceived by OFAC [U.S. Office of Foreign Assets Control] as a measure to conceal the Iranian connection from SCB NY, and therefore evade their controls for filtering Iran-related payments. Unless transactions are repaired they face delays caused by investigations in the U.S. banking system, subjecting SCB to interest claims. He described SCB‟s repair procedures as a “process to check that a payment is, prima facie, an acceptable U-turn transaction (i.e. offshore to offshore),” and fully acknowledged that “they do not provide assurance that it does not relate to a prohibited transaction, and therefore SCB NY is exposed to the risk of a breach of sanctions.” (emphasis added).”

A footnote to this section quotes an e-mail from the general counsel to the compliance manager on precisely how the wire instructions are to be doctored.

And Deloitte Touche is depicted of being critical to this scheme:

SCB carefully planned its deception and was apparently aided by its consultant Deloitte & Touche, LLP (“D&T”), which intentionally omitted critical information in its “independent report” to regulators. This ongoing misconduct was especially egregious because – during a key period between 2004 and 2007 – SCB‟s New York branch was subject to a formal supervisory action by the Department and the Federal Reserve Bank of New York (“FRBNY”) for other regulatory compliance failures involving the Bank Secrecy Act (BSA”), anti-money laundering policies and procedures (“AML”), and OFAC regulations.

If Lawsky indeed has the goods on Deloitte, this is the sort of thing which ought to put it out of business, except all of the Big Four accounting firms have “too big” or more accurately, “too few” to fail status.

The filing recounts how eager SBC was to get the business in 2001 for acting as recipient bank for the proceeds of Iran’s dollar based oil sales, roughly $500 million a day. This required SBC to deal directly with a sanctioned bank and was seen as attractive in its own right and as providing an entre to other Iranian, as in sanctioned, banks. The Iranians emphasized they wanted the transcations processed quickly (code for they did not want to run the risk of having funds seized) and asked for SCB to pay funds in advance of receipts, up to $200 million a day! To put it mildly, this level of financial exposure would motivate SCB to make sure the arrangement was not uncovered. Even though SCB ascertained that its New York branch would have to be fully appraised of transaction/customer information to be in compliance with the law, it instead provided false details in the SWIFT data fields. And this procedure, and the fact that it was done on behalf of Iranian banks, was commemorated in SCB operating manuals. .

By 2003, SCB’s outside counsel for the US was hectoring the bank for failing to comply with the law and the spirit of OFAC; London staff shrugged it off, regarding the secrecy as necessary since they wanted to keep the business. And as SCB’s competitors heeded warnings like this and exited the Iran business, SCB happily filled the void. I strongly suggest you read the actual filing; it details the additional ruses the bank engaged in over the years, all with the supervision and approval of senior legal and business officers.

And the piece de resistance is the role played by Deloitte. In 2003, SCB was sanctioned by the New York Fed and the New York banking superintendent for serious lapses in filing suspicious activity reports and customer due diligence. As part of the settlement, SCB had to hire an independent monitor. That monitor, Deloitte, instead decided it was much better off aiding SCB in figuring out how to evade the rules:

44…In August and September 2005, D&T unlawfully gave SCB confidential historical transaction review reports that it had prepared for two other major foreign banking clients that were under investigation for OFAC violations and money laundering activities. These reports contained detailed and highly confidential information concerning foreign banks involved in illegal U.S. dollar clearing activities.

45. Having improperly gleaned insights into the regulators‟ concerns and strategies for investigating U-Turn-related misconduct, SCB asked D&T to delete from its draft “independent” report any reference to certain types of payments that could ultimately reveal SCB‟s Iranian U-Turn practices. In an email discussing D&T‟s draft, a D&T partner admitted that “we agreed” to SCB‟s request because “this is too much and too politically sensitive for both SCB and Deloitte. That is why I drafted the watered-down version.”

The filing contains even more salacious detail on the extent of the flouting of the law and the misrepresentations to regulators.

But it also appears that Lawsky has end run, as in embarrassed, the Treasury and the New York Fed. As part of its defense, SCB contends it was already cooperating with Federal regulators:

In January 2010, the Group voluntarily approached all relevant US agencies, including the DFS, and informed them that we had initiated a review of historical US dollar transactions and their compliance with US sanctions…The Group waived its attorney-client and work product privileges to ensure that all the US agencies would receive all relevant information.

The agencies in question are “DFS, the Department of Justice, the Office of Foreign Assets Control, the Federal Reserve Group of New York and the District Attorney of New York.”

Bloomberg points out that the current management team has long tenures in the bank, meaning they will deservedly be in the cross hairs. And Peter Rudegeair at Reuters tells us they’ve been horribly sanctimonious too.

The lack of action by everyone ex the lowly New York banking supervisor is mighty troubling. The evidence presented in Lawsky’s filing is compelling; he clearly has not gone off half cocked. Why has he pressed forward and announced this on his own? The Treasury Department’s Office of Terrorism and Financial Intelligence has supposedly been all over terrorist finance; the consultants to that effort typically have very high level security clearances and top level access (one colleague who worked on this effort in the Paulson Treasury could get the former ECB chief Trichet on the phone). For them not to have pursued it anywhere as aggressively as a vastly less well resourced state banking regulator, particularly when Iran is now the designated Foreign Enemy #1, does not pass the smell test.

At a minimum, this lack of sufficient inquisitiveness on behalf of the Feds would the bank snookered them by being terribly forthcoming (as in it was responding only to specific inquiries, and then as narrowly as possible). But it raises the more troubling specter that Federal regulators (oh, and the US Department of Justice) wanted to keep this all quiet so as not to lead to embarrassing headlines. Although there is nothing in the filing to point to failure to act by the New York Fed, which was presumably the lead party in the 2003 sanctions against SCB (indeed, it says specifically that SCB deceived Federal regulators), the flip side is there would be only downside to Lawsky in doing anything that would make Fed or Treasury think he was trying to make then look bad.

There was a huge furor in the UK over who among the banking regulators knew what when on the Libor scandal. If our Congresscritters are at all worth their salt, they ought to be putting Geithner and the relevant folks at the New York Fed under the hot lights. We’ll see soon enough how the Fed and Treasury play this. If they don’t launch parallel actions pronto, it will be a damning sign as to where they think their, and perhaps most importantly, Geithner’s, interests lie.

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  1. Foppe

    Are they mad? Think of the regulatory embarrassment going through with this might cause.. I’d almost wonder what Lawsky’s agenda is. Or might he be a kindred spirit of Black’s?
    Anyway, here’s to hoping that helping Iran is a worse crime than laundering hundreds of billions of dollars for the Mexican (a.o.) cartels.

    1. ohmyheck

      Ya mean this, Foppe?


      “The vital role of U.S. banks in moving billions of dollars for Mexican drug cartels–ENABLING THEIR LATEST FIVE-YEAR KILLING SPREE—has largely been “undocumented.” (my bold)
      Were their dealings undocumented? Not at all. Wachovia’s misdeeds as well as those of other prominent financial institutions have been followed closely for decades, in the United States alone by the Treasury, the DEA, the IRS, and the Justice Department.
      Money laundering by the banking industry has also been documented by foreign government agencies in the UK, Mexico, and Colombia, as well as by the United Nations Office on Drugs and Crime. The former head of that office, Antonio Maria Costa, revealed in 2008 that “inter-bank loans were funded by money that originated from the drugs trade…there were signs that SOME BANKS WERE RESCUED (my bold)that way.”

      Why don’t we go after Chinese banks while we are at it? They are quite happy to work with Iran. Oh, wait, maybe because China holds so much of US debt. We wouldn’t want to offend them, would we?

    2. Westcoastliberal

      Spot on. What’s worse, doing business with Iran and attempting to cover it up, or laundering drug cartel money?
      Do #1 and go out of business, do #2 and you pay a fine (priced in I’d assume as part of the deal).

    3. stevefraser

      First question: Did they give “Corzine Money” to Obama?…Every detail re how this will play out will be determined by that.

  2. pmr9

    I’m disappointed that Yves should go along with the Israel lobby-inspired hysteria about Iran. Until recently it was legal in the UK to do business with Iran. Why should the US be able to tell foreign banks that they can’t do business with Iran? How would the US react if for instance the UK government attempted to stop American banks from doing business with Argentina? A likely explanation for why US Treasury officials held off from pursuing SCB is that they had some indication that the UK government would object.

    1. Foppe

      That’s not the point at issue; moreover, your reading is pretty much (if indirectly) refuted by Yves’s description of Iran as “designated Foreign Enemy #1″. Point is there are laws being broken, while officials are (and have been, likely for years) looking the other way.

      1. Clive

        Yep, Foppe is right; no-one *forced* SCB to continue to operate in the US juristicion. It would have been entirely possible for them to put their long standing and presumably profitable Iranian business accounts ahead what it might (perhaps legitimately, perhaps not) think of as being nothing more than unacceptable US geo-politiking. De Beers, the diamond quasi-monopoly studiously avoided any US operations because it was, effectively, a cartel and would have been prosecuted under restrictive practices laws. You can question the morality of the decision, but to De Beers, it was just a business decision.

        That same choice was, therefore, open to SCB. But it alledgedly wanted to have its cake and eat it too. And actually, if it didn’t have access to USD clearings, it might have ended up with only limited usefulness to the Iranian regime if what it is being accused of is true. Yves’ article explains right fom the top why USD clearing is important and why having a US presence is pretty much a foundation for achieving that. So, if SCB 1) wanted to keep its nice litter earner going while 2) also maintaining US operations, it had 3) to also launder the SWIFT txns.

        It could do 2) above in isolation, but if it wanted to do 1) AND 2) it had to also do 3).

        To attempt to drag the points being made off by Yves in the summary of SCB’s woes to some anti israeli fantasy-land is just silly.

        1. jake chase

          Another example demonstrating that the Iran terrorism broohaha is just another public relations cockup which will not be allowed to interfere with business at the elite looting level. This regulator in NY apparently sees a chance to exit from behind his green metal desk and enter the world of affairs. Expect to see him soon in the role of anti-terrorism consultant to some other band of thugs. US laws are only intended to regulate people and little people at that. The idea that they should be enforced against a bank is silly. Every bank is a criminal conspiracy and cannot operate in any other way if it expects to make a decent profit.

          1. liberal

            What I really like is the idea that we can convict people for murder that occurred outside the US.

    2. R.S.S.

      So SCB was taking a principled stand against unfair US rules and regulations on a foreign entity. That argument might have some validity if the bank wasn’t slinking in the dark and trying its best to prevent anyone from seeing what it was doing. There is nothing principled about taking a stand behind a mask. It doesn’t hide anything. It only makes you show what you really are; a sanctimonious hypocrite.

      1. Clive

        Hi R.S.S.

        No no no, you misunderstand me. SCB were of course acting in the usual bank gimmie gimmie gimmie mode and hardly making a play to be the next Amnesty International. Nor did they suddenly think what a good idea the UN was and try to promote world peace or something.

        I think the point which was trying to be made was, just because SCB potentially did some favours for Iran, and Yves’ article critisied SCB’s actions (and gave two or perhaps even three cheers for the New York Superintendent of Financial Services) it didn’t make any of them pro Israel.

        And if SCB somehow ended up being pro Iran, that was just an accident. I’m sure if Israel shoved enough profit SCB’s way, they’d happily do their bidding. Who knows, they might have taken profits from both countries.

        I just didn’t get the political places which some of the comments were dragging this to.

        Cheers, Clive.

    3. Heh

      Standard Chartered has a right to pursue business with Iran. However, it also applied for (and received) a banking license in the USA. A condition of receiving the privilege of a banking license in the USA is agreement to adhere to US law (regardless of the country of domicile).

      StanChart wanted things both ways — a big business trading with Iran and a US banking license. Well, one of those had to go away, and it looks like it’s going to be the US banking license. That’s not unreasonable, as the state of NY has a sovereign right to regulate its own financial sector.

  3. Peter Pinguid Society

    “…[SCB] engaged in at least $250 billion of illegal transactions with Iranian banks, including its central bank, from 2001 to 2010, and of engaging in similar schemes with Libya, Myanmar and Sudan…”

    Excellent work by the SCB! Keep it up!

    And the Feds are doing their job exactly as they should, working for the 0.01 percent by doing nothing, while pretending to work for progressives and the 99.9 percent schmucks.

    ha ha ha, you 99.9 percent are a bunch of retard schmucks, we 0.01 percent can say anything and you believe it, we can do anything we want and get away with it, we can do business with Iranian banks and make hundreds of billions in profit while convincing you retard 99.9 percenters to save the banks and at the same time go to war with Iran.

    And while you schmucks fight the war and get killed, we’ll be making billions more in war profits!

    ha ha ha, it sure sucks to be a 99.9 percenter, but life for the 0.01 has never been better, ha ha ha

    We are the Peter Pinguid Society, we are the 0.01 percent.

      1. Accrued Disinterest

        Put a cork in in MacCruiskeen, no one, and I mean no one is to even contemplate the mention of the .09%.

        Savvy?(we know where you live)

  4. John F. Opie

    It really doesn’t matter which country is involved: this could have been Iraq under Saddam Hussein 20 years ago.

    What really matters is that the bank egregiously broke the law, with full knowledge of what it was doing, in order to make lots of money. This is at least as bad a breach of confidence as Yves documented in Econned.

    Any rogue bank should be put down like a mad dog. There is no other way of dealing with it. As for the Director complaining about the US ordering him around: if you want to have a US bank charter, you have to play by US banking rules.

    Ye gods.

    Oh, and Deloitte? Put them out of business. Seriously. Chosing to delete the facts because they were too political?

    Ye gods.

  5. ambrit

    One interesting question comes to mind: “Who was buying the
    Also, could the attempt to destroy the Euro be sen as a means of ensuring the continuance of the Dollars’ status as ‘currency of record’ as far as oil trading is concerned? A few more scandals like this one and I can see a very vocal movement building to dump the Dollar and trade oil in some sort of basket of currencies. Spread the risk as it were.

  6. Fíréan

    A few weeks ago it was HSBC laundering funds, that’s was quickly covered over by the media, supposedly just some Mexican “drug lords’ ” money and a wrist slap fine for the bank !

    And yet in the fine detail of the charges are references to both Iranian money, in contravention of USA sanctions, and terrorist supportive funds laundered through HSBC. The media reportage refer to banks by name, and seldom cross references the name’s of individuals involved in th erunning of these banks ; the exception being Barclays.

  7. LucyLulu

    Is this related to the latest bill passed by Congress last week tightening sanctions on Iran, and those who do business with Iran?

    Any companies found in violation of the sanctions would lose access to the U.S. market.


    Are the sanctions even having an effect on Iran, with so many countries not participating in the sanctions (e.g. Japan, China, India, Turkey, Pakistan, Afghanistan, Iraq, Syria, Switzerland)?

    Heck, some of our leading warmongers have defied US-Iran sanctions….. Cheney and Haliburton, Koch Bros, Romney and Bain. When there is money to be made……


    1. scraping_by

      Great link. It’s obvious the elite treat the cold war against Iran as a farce, while accusing those who say it’s a farce as enemies of the people.

      Whether the creeping war against Iran is on behalf of Israel, or Saudi Arabia and the other Sunni states, or is just more murder theatre so the first gay president (according to Newsweek) can strut manly stuff, one thing’s certain. The greater part of America is under no threat from the Persians. We’re just the moneybags and the cannon fodder.

  8. Warren Celli

    How about those accounting firms — remember back in the days of plain old Vanilla Greed for Profit Evilism when they were just a score card for deception?

    Now, in the present Pernicious Greed for Destruction days of Xtrevilism, they are the deception — here’s a handy partial score card…



    Deception is the strongest political force on the planet.

  9. Lee Adler

    NY State Accuses Bank of Years of Illegal Transactions With Iran- It’s Time To Fire The Worthless Feds

    Why does it take a state banking regulator to uncover these crimes and do something about them? As usual, US bank regulators and the worthless, do nothing US Justice Department stand silent. The Obama Administration’s refusal to enforce the law when it comes to financial crime is not just negligent and incompetent. It is contributing to the dissolution of our society and is criminal in itself. The question now is whether the “friends in high places” within the US Government will move to defang the action which New York State filed today. It has done it before. Look no farther than the mortgage servicing settlement.

    The rest at http://wallstreetexaminer.com/2012/08/06/ny-state-accuses-bank-of-10-years-of-illegal-transactions-with-iran-feds-silent-as-usual/

  10. Realist

    Quell the surprise. All international banks engage in this practice among others even worse (organized crime).

    Finance already killed the rule of law – evident in every way. Common folk are just hoping the music don’t stop as to purposely not notice there are no chairs in sight.

    Walk into any TBTF bank for a steaming pile of stench to the sky. All roads paved with blood lead to the Federal Reserve Bank in NY.

    This from someone with decades of exposure to far worse practices that taxpayers pay for.

  11. wunsacon

    Why is this coming out now, at a time of heightened focus on Iran? And could the illegal activity from 2001-2010 be “by government design”?

    When Western banks do business with public enemies (e.g., drug lords), it gives Western governments knowledge and power. Like with Gaddafi, it gives Western governments an opportunity to confiscate wealth at a time of their choosing.

  12. Unrequited Narcissist

    I doubt Benjamin Lawsky did this without the approval of his boss. So, the question becomes “What is Andrew Cuomo’s agenda?” The answer to that, I suspect, is taking up residence in the White House in January 2017. This move presumably makes him appear “serious” in foreign affairs, keeping lines of funding open for his campaigns from “pro-Israel” benefactors, while also an attempt to deflect from his inattention to financial crimes while NYAG.

    1. Jim Haygood

      Bingo. Occam’s razor strikes again.

      Sad to see all the blinkered americanos cheering Lawsky’s action because ‘it’s the law.’

      U.S. sanctions against Iran are a stupid, counterproductive law driven by the greed and envy of an alien Lobby, which can buy any U.S. politician it wants.

      Exhibit A: last week’s ‘Romney Fellates Israel’ tour.

      Hey americanos, your country’s been sold out from under you!

      1. Stephen Gardner

        Yes, we know our country no longer belongs to us. AIPAC is the most powerful force in American politics. They make the NRA look like the National Association of One-Armed Paperhangers in terms of lobby strength. But please don’t rub it in. Short of revolution there is little we can do about it. ;-)

      2. Heh

        Oh, goodness. Heaven forbid the state of New York enforce the law.

        I know this undermines your whole “Joooooz run da world” thing and all, but any casual observer will note that NY’s regulators and DAs have a history of aggressive intervention in financial malfeasance. This is the state where Eliot Spitzer made his mark, after all (prior to the whole hooker thing). Banks that want to flagrantly break the law would best be advised not to do it in NY.

  13. Jill

    This is about ginning up (more) war with Iran, not illegal banking actions supporting a “terrorist” nation. As others have pointed out, many banks have been/are currently involved in the support of terrorism. We must ask the question why this bank and why now.

    Glenn Greenwald pointed out something just like this concerning the MEK, a formerly labeled “terrorist” group supported by this govt. This is exactly what George Washington wrote about yesterday, the fluid and transparent definitions of “illegal” and “terrorism” being applied when the govt. wishes them applied.


    This isn’t the beginning of restoration of the rule of law. It’s the rule of fiat being applied for govt. purposes. I am not arguing that rules were broken and that these actions do not warrent a criminal investigation. They do. I’m saying, look at the whole picture and you will see the govt. shows a pattern of ignoring illegal transactions to terrorists whom the govt. approves. For all I know, someone at this bank pissed off the wrong person. This is about Iran, not the bank. It is about sending a message, not stopping illegal transferes of money to terrorists.

    1. MRW

      Smart, Jill. I agree.

      All this agita over a foreign bank dealing with Iranian banks. Where is the agita HERE, at home, over the damage being done to American citizens still suffering from the 2008 Crisis.

      Iran has never threatened us. Why are we standing for this stupidity? Sixteen of our intel agencies wrote in both the 2007 and 2011 NIEs that Iran is not a threat. So why are we doing this? Because a bunch of paranoid Israel-Firsters who have access to our foreign policy makers, or are the pursestrings for the election, want WWIII? And I’m supposed to find this intelligent, or at the very least, an American thing to do?

      The Israel-Firsters have wasted so much congressional time since Obama took over, robbed it from pressing issues facing the American people, making US congressmen pass laws for a foreign country. My count at Thomas.gov was over 50%. And where are we? No credible mortgage repackaging program to help people. No infrastructure spending. The healthcare bill helps insurance companies before the rest of us. Last week, Obama signed another US-ISrael law. Where are the laws to benefit the unemployed with a Jobs Guarantee program? Why hasn’t the entire FISA/payroll tax gone away until we’re back on our feet? Because the fantasies about Israel by some of its more obnoxious voluble adherents are more important to suck up to than the future of American citizens?

    2. Yves Smith Post author


      Please reread the post. You REALLY don’t get it. Or you read only the headline and have gone off half cocked.

      If this was an Administration effort, you would have seen the Treasury in front of this and part of Lawsky’s action. The Treasury runs what is informally called “terrorist finance”. Lawsky end ran and EMBARRASSED the Treasury, NY Fed, and Department of Justice.

      In fact, as a sign of the someone trying to get this under control, I see Reuters calling Lawsky a “rogue regulator.” That could come from any of SCB, the British regulators, or the US regulators. Pick your poison, but that’s a messaging push.


      And I don’t see this as escalating hostilities with Iran. Military action does that. In fact, if the Administration WERE actually behind it, which it isn’t, it could be a clever way to appease the hawks without getting closer to war. Remember, this covers PAST actions, from 2001 to 2010. No allegation that this is ongoing, although Lawsky probably has his doubts.

      1. MRW

        Yves, I read the piece. There’s a separate effort afoot to get Americans softened up for a war they don’t want by implying the Iranians are trying to destroy our currency. Yaaaas, I know. But it’s actually called “Currency Wars” and it’s full of nonsense. Showed at Sundance. Newsmax sponsoring it. I’m not implying Lawsky is behind any of that, but boogeymanning Iran which has done zip to threaten the US is de rigueur aujourd’hui. We have sanctions against Iran for what? For creating nuclear power they have a right to under the NPT? For supposedly creating nuclear weapons–you need to be enriching at 92% to be able to create a nuke, and they can’t do it–that our intel agencies say ain’t happening?

        We imposed sanctions on a country for phony stupid reasons, and now there’s face-palming and outrage over foreign banks and businesses that won’t/didn’t go along with it?

      2. Jill


        I did read and reread your post. In between this I went to try and answer my own questions about why this bank and why now. According to your post and The Guardian these transactions have been known to the Federal Govt. for quite some time. I agree with you still (and earlier) that criminal behavior is going on and should be investigated. Since this has been going on for quite some time, why is it being investigated now? I’m not the only person who wonders about this. I will just use some short paragraphs from two Guardian links to show these thoughts: “They are similar, but there is a big difference between the cases.

        Which is?

        Unlike HSBC and Barclays, Standard Chartered refutes the allegations. In a statement it says it “strongly rejects the position and portrayal of facts made by the New York state department of financial services” and points out that it has previously highlighted in its annual report how it is conducting a review of its historical compliance and that it has been discussing that review with US agencies, including the DFS, the department of justice, the Office of Foreign Assets Control, the Federal Reserve Group of New York and the district attorney of New York since January 2010.”


        “When dealing with sanctions against Iran, however, it’s worth remembering one covert bit of sanctions-busting which was undoubtedly illegal. Back in the mid-80s the US, still smarting from the humiliating siege of its embassy in Tehran, devised a scheme to break the arms embargo against Iran by shipping weapons via Israel in return for the release of some remaining hostages.

        The Brits at the time were selling weapons to Iran’s enemy, Saddam Hussein’s Iraq: immoral but at least vaguely consistent, though Baghdad didn’t pay its bills and we ended up fighting them too.

        Under President Ronald Reagan – literally so, since they worked in the White House basement – the likes of Colonel Oliver North, working in cahoots with Robert “Bud” MacFarlane, the national security adviser, evolved the Iran dodge into a money-raising scheme to fund the contra rebels against the leftwing Sandinista regime in Nicaragua. The Iran-Contra affair was secret too because Congress had explicitly banned such action.”


        I don’t pretend to understand what is going on here but it doesn’t add up. Here is one final interesting thing I found out about Standard Chartered: Q. So in July of 2001 in what locations are the 19 hijackers
        2 from September 11th?
        3 A. They are generally in two areas; Miami, Florida and
        4 Patterson, New Jersey.
        5 Q. You mentioned as one of the hijackers, the 14 hijackers who
        6 flew to the United States in the summer of 2001, an individual
        7 named Fayez Banihammad. What did Banihammad do in the United Arab
        8 Emirates before coming to the United States?
        9 A. Two days before coming to the United States he opened up a
        10 bank account at a bank called Standard Chartered Bank.
        11 Q. And that’s Chartered, C-h-a-r-t-e-r-e-d?
        12 A. That’s correct.
        13 Q. What branch of the Standard Chartered Bank did he open an
        14 account at?
        15 A. The Dubai branch.
        16 Q. On what date?
        17 A. On the 25th of June, 2001.
        18 Q. Now, you mentioned Mustafa Ahmed al-Hawsawi. What accounts
        19 did al-Hawsawi have at the Standard Chartered Bank?
        20 A. Al-Hawsawi opened up two accounts at Standard Chartered Bank,
        21 one on June 24th, that’s the day before Fayez Banihammad opened up
        22 his account, and Mustafa al-Hawsawi opened up a second account the
        23 next day, on the 25th of June. Once again that’s the same day
        24 that Banihammad opened his account at Standard Chartered Bank.
        25 Q. And the FBI was able to obtain records from all three of

        UNITED STATES OF AMERICA, . Criminal No. 1:01cr455
        vs. . Alexandria, Virginia
        . March 7, 2006
        ZACARIAS MOUSSAOUI, . 1:30 p.m.
        a/k/a Shaqil, a/k/a .
        Abu Khalid al Sahrawi, .”

        anything from cryptome.org needs independent verification. It is a leak site which takes what comes. I was going to see if this transcript is accurate.

        However, what all this says to me is the Federal govt. has clearly been aware of Standard Chartered for quite some time, in many capacities.

        As to only using military action to gin up war fever, I cannot agree with you on this. Propaganda and misinformation of all kind is needed to sign people on for the next Iraq.

        I have a different idea about this than you. I am respectfully submitting that idea.

        1. Yves Smith Post author


          With all due respect, your comments continue to be a major reading comprehension fail.

          This action has been taken not by the Federal government, but by the New York state banking regulator, in isolation. I comment at multiple points, including in the headline, as to how sus it is that Lawsky is acting alone.

          It is pretty much unheard of for a state regulator to end run Federal banking regulators like this.

          In other words, the Feds were NOT using this as an Iran warmongering opportunity, as you keep maintaining. They were pointedly standing aside. And New York State is not in the business of pursuing foreign policy.

          The state regulator, Benjamin Lawsky, is a former Southern District of NY prosecutor. This is the same background as Neil Barofsky, BTW. He was not party to the 2010 negotiations with the bank, in which it promised to clean its act up, and then moved its “oversight” to where it could not be supervised effectively. Per the order:

          Outsourcing of the entire OFAC compliance process for the New York branch to Chennai, India, with no evidence of any oversight or communication between the Chennai and the New York offices.

          Given that SCB took the position (internally) in 1995 that it could do whatever the hell it please with Iran as long as SCB NY was kept in the dark (their outside US law firm disagreed vehemently in 2003 when they became aware of what SCB was up to), this looks like an effort to continue to defy US regulators.

          In other words, the new kid on the block, Lawsky, may have an old-fahsioned belief in enforcing the law.

          1. Jill


            According to the latest from The Guardian the DOJ is taking on the investigation. “Standard Chartered Iran allegations investigated by justice department”.

            We don’t agree on this.

          2. Yves Smith Post author


            No, you have reached your conclusion and are refusing to consider evidence.

            If you read the SCB statement (linked to in this post, but I’ll provide it again: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9457891/Standard-Chartered-rejects-Iran-scheming-claims-statement-in-full.html), it says the DFS (the New York regulator), Treasury, the NY Fed, the DoJ, and the NY DA have all been “investigating”. It uses that to contend that DFS is out of line:

            The Group had previously reported that it is conducting a review of its historical compliance and is discussing that review with US agencies, including the DFS, the Department of Justice, the Office of Foreign Assets Control, the Federal Reserve Group of New York and the District Attorney of New York. The disclosure appears in our Annual Results of 2010, 2011 and, again most recently, in the 2012 Interim Results in the Risk Review section at p.21 under Regulatory Changes and Compliance.

            In January 2010, the Group voluntarily approached all relevant US agencies, including the DFS, and informed them that we had initiated a review of historical US dollar transactions and their compliance with US sanctions…

            The Group does not believe the order issued by the DFS presents a full and accurate picture of the facts. The analysis, that the Group shared with all the US agencies, demonstrates that throughout the period the Group acted to comply, and overwhelmingly did comply, with US sanctions and the regulations relating to U-turn payments.

            Since I clearly need to translate for you, this says:

            1. DFS acted alone.

            2. The other regulators bought the SCB claim that they did nothing seriously wrong.

            Let me say it again: DFS acted in isolation. He has clearly broken with all these “investigators”. This was not a joint action. Go look at the DoJ website. They have no announcement, they are not parties to this action.

            Even the Guardian article you linked to in your comment earlier clearly depicts DFS as acting alone (it calls it “the new kid on the block” and insinuates its head has chosen a foreign target as an easy way to build a reputation).

          3. Yves Smith Post author

            I’m a long standing critic of Israel and have separately said our warmongering against Iran is nuts. But none of that justifies breaking the law. SCB was not dong this out of some high minded political principle, they knew they would make big bucks servicing a client that was off limits to law-abiding players.

          4. LucyLulu

            The Telegraph has a video that spins this as a political move on the part of Cuomo/Lawsky. Apparently, Lawsky was Cuomo’s aide before his appointment to DFS. The person in the interview says this is an example of politicians taking minor errors made by banks and pouncing on them to further their own political careers.

            When Cuomo was NY AG he never went after the banks. Why the change? Are foreign banks fair game? Or as somebody further up asked, did somebody piss off the wrong person?

            And whether it is intentional or a secondary consequence, the media coverage of this will help to further the anti-Iran sentiment. Already, respected conservative leaders like Kristol and Krauthammer bemoan that the US is becoming irrelevant in the middle East. Israel has wanted to overthrow the Ayatollah, whose lifelong hobby is blustering about destroying Israel, for decades. The Israelis were smart enough to make friends with the biggest kid on the block, who happpens to be addicted to cheap oil. Prospects for avoiding war with Iran don’t look good, unfortunately.


          5. Yves Smith Post author


            Thanks for that.

            That “minor errors” characterization does not hold up it you’ve read the order. It presents a lot of documentary evidence that substantiates that this was done with full knowledge that it was not kosher, with the not kosher procedures devised by senior legal and compliance staff. There are even e-mails from execs in SBC NY saying that they know this is wrong, potentially criminal. But the UK media is circling the wagons.

          6. Calgacus

            But none of that justifies breaking the law. SCB was not dong this out of some high minded political principle, they knew they would make big bucks servicing a client that was off limits to law-abiding players.

            Basically – so what? If the law is evil enough, used for purposes evil enough and possibly contradicts higher statutory & moral laws, well then, yes. Breaking it can be justified, whether or not it is done for high motives. Obeying it would be obeying the depraved motives behind the law and its enforcement.

            Here we have profit-seeking acts aiding a randomly designated enemy state against the insane & criminal actions of a powerful terrorist state, the USA.
            I think that there is a reasonable case that the SCB’s action were morally and (going out on a limb) conceivably legally blameless.

          7. enouf


            My takeaway of the exchange between Jill and Yves was that Jill just wasn’t quite able to connect-the-final-dots clearly in her arguments (though that’s just IMHO) – while yet being correct in her presumption of the final outcome of this headlining scandal (SCB) – but then LucyLu managed to sum it all up, IMHO, when she said;

            And whether it is intentional or a secondary consequence, the media coverage of this will help to further the anti-Iran sentiment. …

            Which to me is the crux of it all – By giving the MSM another weapon to continue ‘Sounding the Trumpets of War’ for all those ignorant flag-waving bufoons, which then skews the polling … sigh.

            That said – I highly concur with your sentiment of what i commonly like to say about protestors and activists;
            They are just “Good People disobeying Bad Laws” (and Peaceably, i might add). You are aware of FIJA.org i would imagine.

            If SCB, in this case, and in its general practices falls into above category, ..and *if* their actions/inactions can be shown to save one more innocent Iranian life than otherwise would have been, I am going to start either a) doing business with them, and/or b) sending them donations.

            ScottHorton.org recently interviewed Mohammed (??? — I cannot recall his last name) who has been a PBS’s “Frontline” mideastern (Teheran) foreign correspondant for years now. (Interview was done Today it seems, so Podcast should be up by tomorrow i would imagine). They go into detail about Sanctions and Embargos throughout the mideast over the decades, and poingnantly at one point near the end focus on how the Iranian Revolutionary Guard Corp (IRGC) would be the defacto beneficiaries of any embargo/blockade of Iranian Oil exports, since a black-market would then develop (if not already existant), and all the proceeds would only benefit the IRGC (and the Ayattollah, Ahmadinejad and their cronies), …and *not* the People of the country, who would suffer the consequences of lack of Medicines for highly-curable diseases, Food, Clean water, etc etc…

            hrm, this seems relevant;


            Imposing Sanctions (and embargos) on Iran for pursuing even nuclear power technology is the stupidest thing one could do, *if* one claims these “sanctions” will help to persuade the Elite Regime to stop pursuing it, and cow-tow to the US demands – Europe is going along *only* in the hopes of avoiding the US Attacking of Iran outright.

            Conclusion; no matter which bank, which scandals are uncovered; *if* it in any way shape or form can be tied to Iran, it Shall be the used via the MSM to Beat the Drums of War, on behalf of TPTB that own our gov’t.


          8. enouf

            Calgacus, et al (and i hope peeps like LeonovaBR (welcome back!), jsmith, jake chase, ambrit, different clue, and many many others get a chance to see the URL below)

            I previously just said;

            That said – I highly concur with your sentiment of what i commonly like to say about protestors and activists;
            They are just “Good People disobeying Bad Laws” (and Peaceably, i might add). You are aware of FIJA.org i would imagine.

            To drive above point home;

            “Message to the Voting Cattle – Larken Rose”

            This video is a US-version of the video “Nachricht an das Stimmvieh”, produced by FreiwilligFrei.de, a german group of bloggers and activists. http://www.freiwilligfrei.info/ focuses on voluntarism and the philosophy of freedom.

            This tends to echo my disgust and utter contempt for the “State”, and says it in a much more concise and clear way than i ever could.


        2. Walter Wit Man

          Jill, great find re the trial transcript.

          Since the 19 hijackers were patsies/intelligence assets/fictitious people one can only conclude that “Agent James Fitzgerald” was making Standard Chartered a patsy as well.

          To further add to the odd circumstances . . . I wonder if “Agent James Fitzgerald” is the “Det. John Fitzgerald” mentioned in this comment to thisgreat thread. Notice that “Det. John Fitzgerald” was with “Det. James Wheeler” on 9/11 and they both accompanied Evan Fairbanks, the photographer, around the WTC grounds during the attack. According to the Smoking Gun link in the comment above, the government attempted to have only one witness testify at the Moussaoui trial, Det. James Wheeler.

          1. Teejay



          2. Walter Wit Man

            I searched the insultingly silly website you link to and found nothing even close to relevant to this discussion.

            The Let’s Roll Forum thread has WAAAAAAAY better information.

            For instance, that thread documents how the psy operation was likely run out of Trinity Church and Evan Fairbanks was the main guy to film the false flag attack. It’s a huge thread that takes days to read carefully. Just the one comment I link to above, over 300 comments into the thread, has waaaaay better information than your silly “debunking” sites.

            Did you read how Agents Wheeler and Fitzgerald accompanied Evan Fairbanks with his video footage? Did you read the affidavit that the two agents swore to? Did you see the multitude of links and video evidence? Did you watch the entire Evan Fairbanks video from that day? What about the other video that briefly showed Fairbanks? No other website has better evidence and discussion of this than Let’s Roll, that I’ve seen anyway.

            Why did the government pick Wheeler to be the sole witness? What are the odds that a “J. Fitzgerald” would be Wheeler’s partner that day and then another “J. Fitzgerald” would be a main witness against Moussaoui?

  14. jsmith

    The false flag of 9/11 and the ensuing long march of war crimes committed by the U.S. elite – Afghanistan, Iraq, torture, etc – signaled to the rest of the world that the U.S. was altogether seceding from the rest of humanity as concerns terms like “laws”, “justice”, “honor” and “morality”.

    Laws are now simply meaningless phrases when applied to other members of the elite no matter how heinous or egregious the crime.

    It’s still amazing to me that people can actually muster up some outrage over seeming financial infractions when we have scores and scores of actual war criminals walking around free as birds to this day.

    Just to emphasize for the slow: that means murderers, torturers, rapists, pillagers and thieves are not being prosecuted and won’t be prosecuted in the U.S. for their crimes.

    And we’re supposed to be surprised and shocked that financiers continue to engage in comparatively “bloodless” crimes?


    So, the financiers will continue to do business with the “bad guys” to the last minute until the hit-men are called in to rub out the counter-parties.

    Gee, what a f*cking surprise.

    Hmmmm, do ya think – gasp! – that the hit-men and the financiers could be part and parcel of the SAME TEAM?

    Nah, let’s just pick apart the illegality of the financial transactions for a bit before the ramped up jingoism once again washes over our senses and makes us forget the details of our analysis as the we cheer on the murder of more innocents.

    Yeah, I’m sure we’ll be talking about all of this when our service-people are dropping bombs on Tehran.

    I understand that rational people don’t want to really admit that there is no rule of law anymore for those who run things here in the U.S. but the quicker everyone gets their heads around that scary idea the quicker something will be done about it.

    1. MRW

      In the 21st C, starts here: “The false flag of 9/11.”

      Until this is cleared up, nothing honest can happen. We need to start with the vaporization of 200,000 tons of steel. 6 acres of marble, 4 million sq ft of gypsum, 43,600 windows in 3.5 seconds before building finally fell….total 8.2 seconds. What did that?

  15. Jill


    Why either or? Finacial crimes kill people. Weapons are fed to both sides of every conflict through the banks. The banking industry is integral to the war industry. Further, people losing their homes, their savings, etc. can certainly lead to death, simply a slower one than having a drone shoot a hell fire missle at you. The destruction of the rule of law in commerce and war both have terrible consequences for this and other societies.

    Personally, I am heartened when people take offense at this.

    1. jsmith

      It’s not either/or it’s that if we’re not going to even prosecute the overt murderers, rapists, pillagers, torturers and other assorted war criminals what chance in the world do you think we as a society are going to punish people who are guilty of crimes that are much more complex and difficult for the layperson to understand?

      Look, I’m not castigating Yves and the great work she does all I’m trying to say is that this rampant financial criminality is just the “softer” version of the overt crimes we’ve committed over the last 10+ years.

      Basically, I agree with your point.

      If some people need to understand that our entire financial system is a fraud in order to understand that our entire society is truly a lawless entity, then so be it.

      The waging of illegal wars and the commission of war crimes starting over 10 years ago did it for me and many others.

      Whatever path you take will get you to the same place, however, I feel that there IS a difference of degree between being a war criminal and being a financial fraudster but that’s just my opinion.

      My point is more that if it’s sickening to look it a thieves like Blankfein and Dimon, then it should be wholly unacceptable that Bush Rumsfeld and the current crop of war criminals are even walking free while the war crimes are continuing to be committed.

      1. Brian M

        Are not ALL empires like this? The last ten years? Try the last 300 years. America is built on invasion, genocide, slavery, and theft.

        1. enouf

          I would agree, however most of those people who commited those heinous acts are “dead” now – so it appears the only way to hold them (dead and buried) accountable for their atrocities (other than to perhaps dig up their graves and spit on them) would be to 1st address the false-flag op that jsmith so eloquently rails about … (since it is a game-changer for those of us living presently).

          I proffer that only ‘after’ those still alive (Bush Crime Family, etc) are held accountable can we then begin address a full historical rewrite that accurately reflects those older sins.

          Gotta start somewhere


  16. Realist

    Look at all the readers pretending that the rule of law matters at all in finance!

    Queue surprise for, “no one saw it coming.”

    Talk about a nation of suckers and money whores.


    1. enouf

      If only the proletariat would’ve done some historical research into Andrew Jackson’s rein (Note; I abhore his attack on First Nations Peoples), and the subsequent years after he decisively basically revoked/ended this country’s (4th?) National Bank’s Charter; How TPTB at the time warned him of an ensuing Depression if he followed through — Maybe, just maybe, our Proletariat and poorest would’ve never allowed themselves to be brainwashed by the Bourgeoisie class …which itself was brainwashed via trickle-down reaganomics, by being tossed a bone here and there, to apply ever stronger oppression on the lower classes.


      p.s. AFAICT, the terms proletariat/bourgeoisie i cite above seem much more apropos in describing what’s generally (to me anyways) deemed a harmless-generic meme, known as “middle-class” and “working poor” respectively, since those in the Middle/Upper-middle comprise the top 1%, …and due to their machinations, perpetuated (and still do) the myth of nothing but rainbows and bunnies for all. Acknowledging ofcourse that Gov’t/BigCorporate incest is the man behind the curtain.

  17. Jesse

    The Brits are livid at Standard Chartered being singled out, given what they know about certain US banks doing the same things and participating in the same sorts of actions, and in some of the same deals as SCB.

    This could get ugly.

    I am afraid that this sort of ‘money laundering’ for percents is more widespread in banking than one might expect.

    1. Heh

      If US banks with British banking charters committed acts illegal under UK law, the Brits *should* prosecute them.

      Of course, the “Square Mile” and “City of London Corporation” are sovereign and not subject to the direct rule of Parliament or the actual London government, so they’ll have a bit of a problem on their hands.

      Further, the British system makes America’s seem downright activist on behalf of retail bank customers. The British authorities, media and elite will defend even the worst malfeasance in their system with rabid determination (just look at the BP disaster).

      I’m glad that at least NY State is willing to do what Washington will not, and enforce the statutes on the books. Perhaps that will give the British people a wake-up call and switch them from nationalist silliness to a desire to reclaim their own country from the corruption that pervades through it. It’s a shame there’s no local regulator in Britain to give them the jolt they need.

  18. Externality

    Where Are the Feds? /i>

    Under pressure from neoconservative, Jewish, and pro-Israel groups, the Bush and Obama administrations have aggressively prosecuted companies, their lower-ranking employees, and private citizens for violating the growing web of US laws intended to help Israel and punish its myriad enemies. Most of those prosecuted, however, are people and entities most Americans have never heard of.

    * Earlier this year, the Treasury Department’s Office of Foreign Assets Control fined a cosmetics company $450,000 for violating the US-imposed sanctions regime on Iran by selling $33,299 worth of nail polish – yes, nail polish – to an Iranian wholesaler. http://www.exportlawblog.com/archives/4008

    * Employees of a satellite television provider in New York received lengthy prison sentences for helping customers watch a Lebanese television station called Al-Manar. Once viewed around the world, the US State Department ruled, in 2004, that Americans were no longer allowed to see it; under immense pressure from the US and Israel, Spain, France, Germany, and Australia banned it as well. The Israeli Defense Force took more drastic action: they have bombed Al-Manar’s studios in Lebanon at least twice.

    Employees of any company – cable companies, satellite television providers, or foreign companies that own satellites in orbit – that allows (or attempts to allow) its customers to see Al-Manar risk criminal prosecution at the hands of the US Justice Department. After satellite owners refused to allow Al-Manar to be streamed through their satellites, Al-Manar became unavailable in many countries where it remains legal to watch it. Under pressure from the Anti-Defamation League, Apple recently banned applications that allowed users to watch Al-Manar on its products via streaming video.

    * The Bush and Obama administration has aggressively enforced anti-boycott provisions of American law intended to protect Israeli companies. Not only can American companies be penalized for aiding a foreign boycott of Israel or Israeli companies, they can be penalized for answering simple questions (e.g., “is this made in Israel?”), and for not promptly reporting the inquiry to the government. http://www.boycottwatch.com/abi/bis004.htm Even inquiries made to low-ranking employees such as sales clerks and tech support workers can apparently result in fines if the employee answers them and/or fails to immediately report them to the government.

    * The Obama administration has been prosecuting Iraqi-Americans who sent food and medicine to their relatives in Iraq during 1990s. (The Clinton administration imposed a devastating sanctions regime on Iraq, which combined with its repeated bombing of Iraqi infrastructure, killed nearly 500,000 Iraqi children through hunger, disease, and water-borne illness. In 1996, Ambassador to the UN (and later Secretary of State) Madeline Albright infamously told the CBS television show “60 Minutes” that “we think the price is worth it.”)

  19. tiebie66

    Indeed, why this? Why now? Has the assault on Germany failed and another diversion is needed?

  20. Hugh

    All banks are criminal enterprises. It is only a question of which crimes a bank is committing.

    Whether it is drug cartels or a state like Iran, no value judgments here, I am only thinking in terms of targets of interest, the simplest approach is to reverse engineer the process and ask what the drug cartels or the Iranians are doing with their money. Because the world’s reserve currency is the US dollar, the main object is to move funds into the legitimate dollar world. And it doesn’t take a lot to understand that drug cartels might use Caribbean cutouts but are likely going to partner up with US banks or that for Iran the main road is going to pass through London or possibly Hong Kong.

    So I have to think that American bank regulators and intelligence agencies probably did know about a lot of this. With regard to drug money, they might simply have looked on this as recycling dollars and turned a blind eye to it. As for Iran, they might have thought it was more important to track what Iran was doing with its money, safe in the knowledge that they could stop it at any time.

    Also I can’t help but think that the Feds were aware of Lawsky’s investigation and did nothing to shut it down. I don’t think this is election year politics, or at least not directly. The Obama Administration has been making various pro-Israel gestures and if it wanted to make another, it would be sure to have its name, not Lawsky’s all over it. So I see this more as ramping up the pressure on the Iranians. Letting a state regulator carry the ball creates a certain distance between the action and the Obama Administration, especially when the action is sticking it to a British bank. And of course, we do not yet know what the ultimate cost/punishment will be.

  21. Stephen Gardner

    I’m surprised that no one is seeing the bright side of all of this: microcracks are appearing in the solidarity of the global elites. The US depends on its loyal poodle the UK and the old NATO club to keep the empire going. If the loyal poodle is beginning to break its leash how far behind can the rest of NATO be? Once the rest of the world loses its fear of Uncle Sam’s petulant responses to a lack of absolute obedience the game is over for the American Empire.

    1. Foppe

      See my first comment. Like I said, this seems dangerous. Though I don’t think the problem is that the elites are turning on each other; more likely it’s just 1 honest guy throwing a spanner into the machine to see if he can break something by causing a lot of bureaucratic infighting..

  22. tiger

    It’s sad to see that some people hate Jews so much that they’re willing to overlook crimes commited by a bank, a big 4 accounting firm and the federal agencies which were supposed to supervise. It’s even sadder in light of the fact that those same people otherwise condemn financial crimes on a regular basis.

    Never mind that making the connection from the U.S. government to the Israeli one, from the Israeli one to Israel, and then from Israel to all Jews, are all big steps and big assumptions.

    Jew hatred simply trumps eveything else for some people…

    Very mature.

    1. DeusDJ

      And just what kind of crime did they commit? Not listening to the United States? Awwww, is the big bad USA getting angry that someone isn’t listening to it?

      Allowing Iran to engage in international banking like every other civilization in the world is a crime? A bigger crime than creating offshore tax havens? Than allowing drug cartels to conduct their banking? Than giving loans to people who couldn’t afford them (through fraud in many cases) and then create financial products that helped crash the economy? Than manipulating interest (LIBOR) rates for YEARS for their personal benefit, a rate linked to all other rates?

      What a fucking joke. And now this state regulator, rather than going after banks for all of these different crimes, goes after a bank that has helped a country (who has done as many acts of terrorism as has the country they despise, Israel) from 2001-2010? A FUCKING JOKE.

      Pardon me if I think this regulator is a Jew and/or a big friend of Israel. Go fuck yourself, if you have a problem with this statement.

      1. tiger

        Again you are proving your lack of intellectual rigor by making a connection between a couple of Jewish regulators, and the Jewish people, then the Israeli people, then the Israeli state, and then the U.S. and their conflict with Iran…

        And as a matter of fact, as we learned from the wikileaks, it is the gulf oil states, and therefore probably also Big Oil, who are the most scared of Iran arming itself with nuclear weapons and the ones who have lobbied in the craziest manner on this issue – much more than Israel. And Europe can also be reached from Iran.

        But it’s ok… go on… continue with your racism… and please set out kill all of us jews. Set up websites to encourage it and go in the street with big posters saying “death to Ben Shalom Bernanke”.

        For now I hate Bernanke just as much as you do, but if you keep up the anti-Jewish rhetoric that your grandpa tought you over mashed potatoes and cola, guess who’s gonna have to become neutral in the debate?? So behave and keep people like me on your side.

        1. DeusDJ

          Oh, so if you make an accusation that the Iranians are killers, or that Iran was responsible for the latest bombing somewhere, that makes you a racist (by your standards)? I guess I’m as much a racist as you are, or actually, I’m not as bad.

        2. LucyLulu

          I don’t hate Jewish people and I don’t believe all Jewish people want war with Iran. I know a few who don’t. However, we have a lobby in DC, AIPAC, I’m sure you’ve heard of, that has been lobbying hard for pro-Israeli interests even when they have conflicted with our own interests as US citizens. Currently Israel has Netanyahu as PM. He has taken a more provocative and aggressive stance than some of his more recent predecessors, and IMO, more so than necessary.

          Israel (Netanyahu), as I see it, and many others see as well, is trying to push the US into another war. They know they can’t take on Iran without us. Even with us, Iran is nothing like Iraq. It will be long, messy, and bloody. I don’t want to go to war with Iran, for the sake of Israel, for the sake of oil, or for any other reason. Iran may or may not be developing nuclear weapons. We don’t know, or maybe we do. But they aren’t going to use them. The Iranians may be loud and chest-pounders but they aren’t stupid.

          I understand why Israel is feeling vulnerable right now, given the turmoil all around them. It seems to me that it would be smart to start acting neighborly. I say that knowing the same advice could apply to the U.S., and would if I could have my way. The U.S. and Israel are two peas in a pod, both bullies….. but Israel doesn’t have the world’s largest military.

          It isn’t about hating Jews. It’s about hating advocacy by pro-Israelis of war with Iran.

        3. Up the Ante

          Up front, I see only more confirmation with most of the comments on this topic that at least 80% of the presentations are those of personnas.

          Lawsky has thrown down the gauntlet of gauntlets to a major fraud bank, has evidence of Deloitte & Touche conspiring as a RICO-star, and what I like the most is he’s told the conspiring Feds that he couldn’t care less about the OCC’s preemption horseshit!

          And pardon the expression, all I’m seeing here is a group of unlikely personnas ‘with their panties in a wad’. lmao

          I’m hearing taps being played for Standard Chartered Bank and Deloitte & Touche, and personnas are calling it “a joke”.

          “It’s sad to see that some people hate Jews so much that they’re willing to overlook crimes commited by a bank, a big 4 accounting firm and the federal agencies which were supposed to supervise. It’s even sadder in light of the fact that those same people otherwise condemn financial crimes on a regular basis. ”

          This stuff here is simply too funny, very good,

          ” .. and go in the street with big posters saying “death to Ben Shalom Bernanke”.

          ” .. rhetoric that your grandpa tought you over mashed potatoes and cola .. ”

          Personnas only hate ‘being found out’.

          OUT YE BE.

    2. briansays

      sheldon your boy is trying to buy mitt to release the traitor pollard from prison
      don’t talk to me about prejudice
      its called treason
      who do you owe your allegiance to?
      America or a foreign nation israel
      stop insisting on a double standard for israel
      a best its hypocrisy
      at worse treason

  23. steelhead23

    Yves, might the reason for regulatory forbearance be the U.S. interest in facilitating oil transactions in dollars? Yes, I understand all the official hoopla about Iran being a state sponsor of terrorism, ad nauseum, but we are talking about serving the reserve currency status of the dollar. I believe that many, including some in government, view the dollar’s reserve currency status as an arm of U.S. power, are loathe to see that power diminished, and are willing to “look the other way” to encourage the globe to continue worshiping the almighty dollar.

    That is, I don’t think we are talking about incompetence here, we are talking about willful non-enforcement of the law and the reason the feds are so mum is because they believe Col. Jessep’s line: “You can’t handle the truth!” The “you” in this case is the American public.

    1. skippy

      Just saying… up thread.

      ambrit says:
      August 7, 2012 at 7:28 am

      One interesting question comes to mind: “Who was buying the

      Also, could the attempt to destroy the Euro be seen as a means of ensuring the continuance of the Dollars’ status as ‘currency of record’ as far as oil trading is concerned? A few more scandals like this one and I can see a very vocal movement building to dump the Dollar and trade oil in some sort of basket of currencies. Spread the risk as it were.

      skippy… As Americas military projection (mostly mental) wanes, the other tool[s will have that responsibility foisted upon them. With that observation, in a neoliberal everything monetized world, what would be the most critical tool a sovereign nation holds? M = M+[C = E] sq. ROFLAMO And as always – T – is the wild card… eh.

      PS. Did they not get the memo?


      Especially when the buffet is still so scrumptious!!!

      Capitalism – Cannibalism… I get so confused some times.

  24. skippy

    Well Standard Charter did have a nice lap around the planetary financial interview circuit after their annual report…

    Skippy…. too bad they missed the piano wire just past the finishing line… set before the race… fists punching sky… ocular sweeping the crowds adoration… twang!!!

    PS. Full decap… IDK… you really need a full field for a horse race thingy.

    1. Up the Ante

      And skippy, my Friend, Now we will see what the Schneiderman will do with Deloitte & Touche traipsing around on his turf as a RICO-star, haha ..

  25. mitchw

    Has anyone suggested that the CIA may have been working with SCB in order to ‘follow the money?’ How does this explanation contradict the facts? If I were SCB, I might be outraged by this putz in NY.

    But probably simple venality is the better explanation.

  26. MichaelC

    Here are two more things to the puzzle out:

    1. http://uk.reuters.com/article/2012/08/08/uk-standardchartered-iran-idUKBRE8750VR20120808

    ‘As part of a review the bank sought to give to regulators, Standard Chartered hired Promontory Financial Group, a Washington D.C. consulting firm run by Eugene Ludwig,[CEO of felon bank, Bankers Trust.] who served as U.S. Comptroller of the Currency from 1993-98. Promontory was hired to review Standard Chartered’s transactions tied to Iran. The bank’s review ultimately settled on the figure of less than $14 million for improper transactions.

    Review Stoller’s reporting on Promontory, the go to guys for OCC whitewashing. They consistently find ‘nothing to see here’. Their endorsement may finally be recognized as a clear signal that there is indeed rampant fraud wherever they officially fail to find it. In hindsight their endorsements have proven to be a pretty good indicator of bad actors at work.

    2. Dayen’s observation re Cuomo is indeed interesting.


    ‘What’s interesting here to me is that DFS was essentially created by Andrew Cuomo, pulling a lot of the expertise out of the New York state Attorney General’s office and putting it into an executive agency under his authority. And Lawsky has been simply more aggressive on the banking industry than the AG. In fact, DFS has become more aggressive than the federal regulators, in this case.’

    IIRC Cuomo had been hell bent on neutering Schneiderman in the poeriod leading up to the Mtge settlement. Schneiderman appears to have conceded by aligning w Obama.

    At the time the conventional wisdom was that Couomo was merely checking a potential rival for Gov. Is it possible that this is Cuomo’s opening salvo for presidential campaign 2016? He’s perfectly positioned to get in front of his presidential rivals if his calculation that the days of the banksters are over.

    Maybe the tide has finally turned.

      1. aet

        AIG was a NY State responsibility, but the US Fed barged on in anyway.

        SC is a US Federal responsibility – foreign affairs – but the State of NY barges in anyway.

        See the pattern?

        Soembody apparently doesn’t like Obama’s “lack of enthusiasm” for a bigger bloodier war in the Middle East, and wanted to get things on the boil anyhow – somebody in NY State, not in Washington, DC.

        1. aet

          Have ignorant local cops never f****d up a FBI investigation by barging on in?

          Think maybe that’s happening here?

          1. Up the Ante

            Ignorant ? Read the Order yet ?

            “A reliable and connected source says that the Fed has gone out on the broad tape claiming that Lawsky did not inform them. In fact, he met with them about three months ago, laid out his case, and the folks at the Fed said, in effect, “Go for it.” Lawsky took them at their word and now everyone is gunning for him. ”


            Apperception of patterning is occurring, I have tangled in the past with “aet”.


        2. Yves Smith Post author

          No, the unit that went bust, the parent, was regulated by the Office of Thrift Services, a Federal regulator. Only regulated insurance subs are regulated by states, and AIG has insurance subs in 19 states in the US, and a ton in foreign jurisdictions. It’s more a foreign insurer than a US insurer.

  27. source

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