British-based Standard Chartered PLC, which agreed yesterday to a settlement with the state of New York that cost the bank $340 million, is seeking a speedy, collective resolution to outstanding investigations being conducted by four other agencies: the U.S. Treasury Department, the U.S. Justice Department, the Federal Reserve and the Manhattan District Attorney's office. A spokesman for the bank's law firm is cited by Reuters:

Negotiations are going on between the other agencies, and we are talking to them. It is safe to assume there will now be a collective agreement.

Well, maybe not so safe. A Federal Reserve spokeswoman is cited in the Wall Street Journal saying that the Fed "continues to work with other agencies on a comprehensive resolution." The Treasury and Justice departments are cited in the Journal as saying only that their investigations are continuing. The Manhattan DA comes through with the money quote:

Banks that violate international sanctions aren't just breaking the law, they are enabling the financing of terrorist regimes and undermining our collective safety and security.

The Justice Department and the DA likely are looking at possible criminal charges, something the bank dearly would like to avoid. There is nothing worse for business than having several executives sent up the river for money laundering with a government-identified terrorist regime.

Paying hefty fines and admitting some guilt is a far better option. It's clean, decisive and ephemeral. A long investigation and a public trial that drags on for months is far more costly.

The WSJ cites a London banking analyst:

Putting this issue behind them will be welcomed by shareholders. Regulators, however aggressive, hold the whip hand now and removing tail risk for this [$340 million] figure - which is below market expectations - is a clear positive for the bank.

It's like the words in the Rolling Stones song:

When the shit hits the fan
I'm sittin' on a can
When the whip comes down

Paul Ausick


Filed under: 24/7 Wall St. Wire, Financial Stocks, Law

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bill

If these terrorists are so bad how come when someone gets caught selling counterfiet goods he is a terrible person and gets prosecuted. When a banker finances his business its not a serious crime and only gets fined?Time for the seller of counterfiet goods to gety a banking license so he can go on about his business without the fear of prison.

August 15 2012 at 12:35 PM Report abuse rate up rate down Reply