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.

Arts and Entertainment
Sydney and Melbourne are locked in a row over giant milk crates
art
News
Kenny Ireland, pictured in 2010.
peopleActor, from House of Cards and Benidorm, was 68
News
A scene from the video shows students mock rioting
newsEnd-of-year leaver's YouTube film features staging of a playground gun massacre
Travel
travel
PROMOTED VIDEO
Voices
A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
News
i100This Instagram photo does not prove Russian army is in Ukraine
News
Morrissey pictured in 2013
people
Sport
sportVan Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Environment
View from the Llanberis Track to the mountain lake Llyn
Du’r Arddu
environmentA large chunk of Mount Snowdon, in north Wales, is up for sale
Life and Style
Martha Stewart wrote an opinion column for Time magazine this week titled “Why I Love My Drone”
lifeLifestyle guru Martha Stewart reveals she has flying robot... to take photos of her farm
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
filmReview: Sometimes the immersive experience was so good it blurred the line between fiction and reality
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
i100
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
News
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Environment
Tyred out: should fair weather cyclists have a separate slow lane?
environmentFormer Labour minister demands 'pootling lanes' for women cyclists
News
people
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

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup
Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices