Earlier this week, it was announced that Standard Chartered, Plc and the New York Department of Financial Services (New York’s equivalent to the SEC) have reached a settlement.  As many of you know, this agency discovered that Standard Chartered, Plc was laundering money for the State of Iran in direct contradiction to US and New York banking laws.  The amount of money laundered was somewhere in excess of $250 billion, so the bank’s fees were probably at a minimum of $2.5 billion.  The fine paid to New York of $340 million was no doubt large, but it paled in comparison to the $2.5 billion of revenue it received from Iran for the illegal transactions.  From the bank’s view, the fee was large but not so big as to force it to go bankrupt and the threat of losing the coveted New York banking license, which the loss of would have regulated the bank to a minor player in the world banking arena, proved to be enough to simply reach a settlement.  The settlement also adds a feather to the cap of New York State and its current banking superintendent, Benjamin M. Lawsky and Governor Andrew M. Cuomo.

For now, only this civil penalty is being paid, no criminal charges are anticipated for any of the company’s executives.  And once again, a settlement is reached and the company did not admit any wrongdoing.   Reminds me of the effectiveness of Sarbanes-Oxley!  The speed at which this deal was struck is amazing and speaks to the efficiency and clout of New York’s Department of Financial Services, as well as being construed as a form of admission by the company.  With further investigation occurring by the federal government, the announcement outlines the weak oversight by the Securities and Exchange Commission (SEC) and Federal Reserve that $250 billion could be laundered in the US without either federal agency finding it.  This lapse shows that the SEC has yet to learn from the Bernie Madoff, Lehmann Brother’s collapse and other scandals that have recently rocked the agency.  The failure to find the problem by an agency that has the resources of the US, and yet a much smaller state agency found the issue, speaks volumes about money alone does not fix a problem.  Maybe we need to look at the same issues concerning the US economy where trillions of dollars were spent (not the least of which is a $700 billion stimulus bill) and we have very little to show for the money spent except more debt!