1. HSBC's Dirty Laundry
Alas, our 'Kitty Genovese financial system' keeps rolling along.
In yet another striking example of Wall Street barely blinking in the face of illegal behavior, a non-response made infamous in the wake of Genovese's stabbing death over four decades ago, HSBC (HBC) was condemned in a U.S. Senate report Monday for enabling money laundering by dangerous nations and criminal customers."The culture at HSBC was pervasively polluted for a long time," said Senator Carl Levin, chairman of the U.S. Senate Permanent Subcommittee on Investigations. In one frightening, yet typical, example from the report, HSBC helped Mexican foreign-exchange dealer Casa de Cambio Puebla launder millions of dollars of drug proceeds between 2005 and 2007. Despite red flags being raised inside the bank over the "growing flood" of greenbacks being shuttled between the exchange house and HSBC, the bank's brass carried on the lucrative business until the Mexican attorney general halted the dealings in November 2007. Hilariously, one banker kidded himself that the mountains of cash moving back and forth were the result of Mexican landscapers in America sending money back home to their families, according to the report. Yeah right. And all those massive transactions stemming from Iran were really Persian rug dealers seeking to put their profits in Vanguard index funds, not HSBC bankers assisting their clients in circumventing U.S. sanctions. Oh, and as for HSBC's repeated dealings with Saudi-based terrorist backers like Al Rajhi Bank, well, even with our vivid imagination we can't think of an excuse for those. "We deeply regret and apologize for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public," HSBC Bank USA President Irene Dorner told the Senate Subcommittee Tuesday. Spare us. Whether it be Barclays (BCS) widespread Libor collusion or JPMorgan's (JPM) recent revelation that a small number of its employees may have tried to hide its multi-billion dollar "London Whale" losses, it remains clear that Wall Street's code of secrecy remains solidly and dangerously in place. Like the guilty bystanders in the Genovese tragedy, traders and bankers would still rather turn a blind eye towards obvious wrongdoing in the workplace than blow the whistle on it. Or even worse, engage in it. And until they find the courage to come forward in the face of conspiracy, metaphorically speaking, they will continue to get away with murder. -- Written by Gregg Greenberg in New York.
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