US watchdogs lay siege to Europe’s banks

Benjamin Lawsky has huge powers over foreign banks that outweigh even his jurisdiction against many US banks

Benjamin Lawsky has worked hard to earn his moniker in France these days: L’homme qui fait trembler les banques, the man who makes the banks tremble.

The head of the fledgling Department of Financial Services in New York has certainly shaken BNP to its core.

The record fine of nearly $9bn (£5.3bn) imposed on the sanctions-busting bank – confirmed last night with accompanying restrictions on clearing dollar transactions – was so tough that it has led to squeals on this side of the Atlantic that Mr Lawsky and his regulatory ilk in the US are acting with an eye to patriotic, rather than legal, duties.

It is not a new claim against the man widely compared with Eliot Spitzer, the former New York governor who pursued Wall Street’s titans remorselessly before being laid low by a prostitutes scandal.

In fact it was back in 2012, during Mr Lawsky’s run-in with Standard Chartered, that such complaints first arose. The case is most widely remembered for Standard Chartered’s now-departed finance chief, Richard Meddings, supposedly having raged against “fucking Americans” telling the rest of the world how to behave. The bank furiously denies any such quote, but the words carried within them a widely held feeling in London, and now in Paris, that New York and Washington are protectionist bully boys looking to shore up Wall Street.

But the statistics do not entirely bear that out. Take JPMorgan Chase, the posterboy for all-American financial savvy during the financial crisis. US watchdogs fined it $1.7bn in January over the Madoff affair; $13bn in November 2013 over toxic mortgage-backed securities; and $920m last September for the London Whale scandal (although part of that fine went to UK regulators). It also paid part of a shared $25bn settlement in February 2012 for unfairly foreclosing on Americans’ homes.

Bank of America, too, paid $11.6bn and $9.5bn in US fines over duff mortgage assets it sold the state-owned Fannie Mae and Freddie Mac, plus $8.5bn to investors sold duff mortgage-backed securities.

Of the Europeans, meanwhile, fines ranging from $1bn to $2.6bn have been levied by the US on Credit Suisse, HSBC, Rabobank and a few others. They were mainly for money laundering, sanctions busting and Libor fixing.

Big fines, of course, but when set against some of those on US banks, even BNP’s does not seem too outrageous.

The banking analyst Chris Skinner argues in his blog: “The difference in the fines is not the scale but the rule. American authorities are punishing overseas banks for breaching US rules on trading whilst fining their own banks for screwing their customers and the government.”

The issue with Mr Lawsky, as the Columbia Law School professor John C Coffee Jr points out, is that he has huge powers over foreign banks that outweigh even his jurisdiction against many US banks. Pretty much all overseas banks operate through his state.

He also tends to muscle in on other investigations to get a cut for New York. So it was that he scraped $715m from the $2.6bn Credit Suisse paid federal authorities over tax evasion. As James Cox, professor of law at Duke University, says: “Somebody else has already tackled the company, is taking them down, and he climbs on top of the heap.”

Whether he’s putting his own team to work, or climbing on others’ backs, the result for banks on both sides of the Atlantic will be the same: more fines. Mr Skinner predicts another five or six major new areas including ripping off customers, insider trading and general mis-selling of financial products.

And that all means hundreds of millions more dollars in fines for Mr Lawsky and his fellow watchdogs.

Life and Style
life
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
News
Joan Rivers has reportedly been hospitalised after she stopped breathing during surgery
people81-year-old 'stopped breathing' during vocal chord surgery
Life and Style
Chen Mao recovers in BK Hospital, Seoul
health
PROMOTED VIDEO
Life and Style
One in six drivers cannot identify a single one of the main components found under the bonnet of an average car
motoringOne in six drivers can't carry out basic under-bonnet checks
News
news
Environment
Fungi pose the biggest threat globally and in the UK, where they threaten the country’s wheat and potato harvests
environmentCrop pests are 'grave threat to global food security'
News
i100
Voices
Pupils educated at schools like Eton (pictured) are far more likely to succeed in politics and the judiciary, the report found
voices
Arts and Entertainment
Simon Cowell is less than impressed with the Strictly/X Factor scheduling clash
tvSimon Cowell blasts BBC for breaking 'gentlemen's agreement' in scheduling war
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Shady character: Jon Hamm as sports agent JB Bernstein in Million Dollar Arm
filmReview: Jon Hamm finally finds the right role on the big screen in Million Dollar Arm
News
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
people
News
Brad Pitt and Angelina Jolie reportedly married in secret on Saturday
peopleSpokesperson for couple confirms they tied the knot on Saturday after almost a decade together
Sport
footballAnd Liverpool are happy despite drawing European champions
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Head of Marketing (Online & Offline, Media, Digital, Strategy)

£85000 - £100000 per annum: Ashdown Group: Head of Marketing - Slough, Berkshi...

Database Developer (SSIS, TSQL, Microsoft SQL) London Finance

£35000 - £55000 per annum: Harrington Starr: A Global global asset management ...

Web Developer/UI Developer (HTML5, CSS3,Jquery) London

£55000 - £65000 per annum: Harrington Starr: A Global Financial Service Organi...

JavaScript Developer (C++ / C# / HTML, Java Angular.js) London

£50000 - £60000 per annum: Harrington Starr: A world leading business intellig...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone