I ask you plainly: would something be done to rectify the following problems?
Say the patient has correctly identified the invasive cancer that is destroying her body, but it obvious that her surgeon is telling her she needs a psychiatrist instead and the directors of the hospital agree with the prognosis – and then she died from the cancer.
How about the town’s mayor arrested on a DUI with a 0.3 blood-alcohol reading, but the police chief issues him a ‘Get Out of Jail Free’ card because the man is, you know, the mayor – and then there was a riot where many people were arrested.
It could be that auto sales of the well-hyped new model have failed to materialize, but the CEO is complaining about the workers’ union – and then they went on strike to show their animosity.
Maybe the team’s highly paid super-star athlete has fallen into a scoring funk, but the general manager has blamed the fans and the sports-writers – then they booed the home team.
Thankfully we are not often faced with such situations.
In every walk of life – save one – society has a system of checks and balances to ensure that authority and responsibility are evenly matched. We call it social equity. In cases where this doesn’t happen, society strikes back.
But, in one crucially important aspect of our lives, not always and not even very often if at all, is there social equity. Of course, the one thoroughly dysfunctional system in our society that I refer to is our financial system, and, in particular, the international banking system.
Yet another example in the works is The Global Laundromat.
For those who have not yet heard about The Global Laundromat, here are some links to articles.
https://www.occrp.org/en/laundromat/the-russian-laundromat-exposed/
https://www.ft.com/content/425ff7ce-0e87-11e7-b030-768954394623
Now, Moldova is not a noteworthy country in terms of finance and economics. There are ~3.5 million mostly impecunious souls in this nation with the GNP somewhere near $18.5 billion. A single city in New York or even Louisiana has a larger economy.
Suffice to say that if, over a couple years, the enormous sum of $20 billion (the authorities are investigating an $80 billion possibility) were laundered through places like Baton Rouge and Albany via the likes of Bank of America, Citibank, HSBC, UBS, Credit Suisse, Deutsche Bank, Barclays, etc, that many people would know. Some of them would even investigate because that is their job. And, when the Baton Rouge Advocate posted their investigation as front-page news, the shocked populace would be screaming at the mayor and the other bank managers in town.
However, at the end of the day, this problem would go away because they all do.
It would disappear following this sequence of events:–
(1) a public statement such as we have already heard in the Global Laundromat case:
HSBC said in a statement that it was “strongly committed to fighting financial crime” and “has systems and processes in place to identify suspicious activity and report it to the appropriate government authorities”. It added: “This case highlights the need for greater information sharing between the public and private sectors, each of whom holds important information the other does not.”
In a statement that also covered Coutts and NatWest, RBS said: “We are committed to combating financial crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks.”
(2) a ‘non-admission of guilt’ agreement with the banking regulator, and
(3) a huge fine paid not by the bankers involved but for certain paid by the good people of Baton Rouge in the form of higher bank charges and mortgage rates, smaller equity-based pensions and many unemployed bank tellers and back office staff.
No banker would go to prison, and their problem, as I say, would disappear.
As I think most of us here believe this to be true, let’s consider a couple other important points that The Global Laundromat has raised.
- Only the 1% of the bank employees were even aware of this problem. If it were up to the other 99% of the staff, the public and themselves would not be paying the price, but their most senior managers — that 1% — would be prosecuted and the guilty ones incarcerated. You see; when I refer to Humongous Bank & Broker, I refer to the 1% who control and manage HB&B from the executive office. Bank crimes should be on them.
- The world has a population some 2,000 times greater than Moldova – yes, even I had to check a global map to locate this small country – and the global economy is 50,000 times greater than Moldova’s. It is also a fact that global money laundering today is immensely greater than $20 billion. It is that way because not all bank executives, accountants, lawyers, politicians, regulators, police and judges are honest people. But, imagine how much better our lives would be if they were.
Given that money today is merely a series of electronic digits, surely the world can develop a better system of checks and balances that would shut down these dirty money-cleansing laundromats. But, more than anything, we need to start by criminally prosecuting the culprits. That should be the behavioral norm in all cases of criminality.
We need to stop the world’s largest bank companies – the senior executives, not the rank-and-file — from buying support from the world’s lawmakers so that criminal prosecution — not fines — are going to happen in each and every case. As I see it, personal compensation claw-backs and prison time are proper checks and balances.
I think it’s up to us to push for social equity because it seems to be the last thing on the minds of bank executives and their boards of directors.
/Bill
