Ed’s Daily Notes for May 6th   Leave a comment

Bloomberg: Holder Signals Criminal Charges Coming Against Some Banks

I have read more than a few stories about this lately:

U.S. Attorney General Eric Holder said his department is readying criminal cases against banks that show financial institutions aren’t too big to prosecute.

Holder, in a video message posted today on the department’s website, said improved coordination with regulators is creating a relationship that “will prove key in the coming weeks and months” as prosecutors pursue charges. The government is nearing decisions on whether to charge Credit Suisse Group AG (CSGN) and BNP Paribas SA, (BNP) people familiar with those probes said. Holder didn’t specify any banks.

“I am personally monitoring the status of these ongoing investigations,” he said, speaking generally. “I am resolved to seeing them through, and in doing so, I intend to reaffirm the principle that no individual or entity that does harm to our economy is ever above the law.”

And what are these banks accused of doing that harms the economy?

The Justice Department is weighing charges against Credit Suisse, the largest of 14 Swiss banks under criminal investigation in a U.S. crackdown on offshore tax evasion, according to people familiar with the matter who requested anonymity because they aren’t authorized to discuss it publicly.

…BNP Paribas has been the subject of a federal probe into possible violations of sanctions barring business with prohibited countries. BNP Paribas said last week that it may need to pay more than the $1.1 billion it had already set aside for the case. The probe focuses on dealings tied to Iran, Sudan and Cuba, a person with knowledge of the matter said earlier this year.

I can buy the tax evasion argument as a “harm to our economy”, but dealing with boycotted countries is a stretch.

But where are the prosecutions for the TBTF banks that collapsed our economy? Oh wait, the government would have a tough time proving that one, since the TBTF banks were behaving not only legally, but with the active encouragement of the U.S. government…

No, this is just a PR stunt in an election year. Don’t be surprised if these banks quietly pay fines after the election.

Financial Times: A futile war on drugs that wastes money and wrecks lives

While I have disagreed with famed investor George Soros’s political views in the past, he gets this one right:

The war on drugs has been a $1tn failure. For more than four decades, governments around the world have pumped huge sums of money into ineffective and repressive anti-drug efforts. These have come at the expense of programmes that actually work such as needle exchanges and substitution therapy. This is not just a waste of money, it is counterproductive.

The London School of Economics has just completed perhaps the most thorough account of the war on drugs done to date. The conclusion, backed by five Nobel Prize-winning economists: it has done more harm than good.

Read the entire editorial, especially the parts about Colombia and Mexico.


Posted May 6, 2014 by edmcgon in News, Politics

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