There’s a big bad bank in London doing all sorts of bad things with a member of the Axis of Evil.
That’s what the head of the New York State Department of Financial Services is alleging and he’s done so by releasing some pretty ugly details about the bank, Standard Chartered. Unfortunately for Benjamin Lawsky, head of the NYSDFS, he’s become a bigger story than the actual allegations.
Why? Lawsky went after Standard Chartered without the assistance of fellow regulators like the Department of Justice, U.S. Treasury and New York Federal Reserve Bank. All of which had their own ongoing investigations related to Standard Chartered’s alleged $250 billion money laundering transactions tied to Iran. But Lawsky moved forward with his allegations without giving the others much of a heads up.
The move has some calling Lawksy a rogue regulator.
Lawsky’s allegations against the London bank make his solo attempt that much more delicate. Typically regulators act together when they go after financial institutions–especially when they’re investigating such serious issues like money laundering.
Think Barclays and Libor. In that record $450 million settlement regulators from both the U.S. and the U.K. worked together and included the Financial Services Authority, the US Commodity Futures Trading Commission and the United States Department of Justice.
Serious allegations like the ones Lawsky is throwing at Standard Chartered need to be handled with care. If Standard Chartered broke the rules the way Lawsky and his group say it did then there should have been greater fire power behind them. (You know, like the number one federal criminal investigation and enforcement agency, the DoJ.)
Instead, Lawksy went it alone and it’s starting to work against him. The New York State Department of Financial Services is a new regulator created just last year, and its first major action could be viewed as a way to make a name for itself.
What’s worse is that its fellow U.S. regulators are apparently angry with Lawsky for going rogue. Treasury and the Federal reserve were blindsided and angered by Lawsky’s move, Reuters reports. Signs of frustration are also being shown among British members of parliament who think the U.S. is unfairly targeting London’s banks.
Of course, if Standard Chartered engaged in illegal behavior (it denies the extent of the NYDFS’s claims) then none of that should matter. The problem is that the story is now becoming much more focused on all these political and regulatory riffs rather than the alleged massive wrong-doing by the British bank.
By Halah Touryalai, Forbes StaffNewscribe : get free news in real time
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