Receiving Wide Coverage ...
Substandard Charter: Well, this is a bit of a doozy. New York regulators have accused Standard Chartered of leaving "the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes" after discovering the British bank allegedly used its New York unit to launder at least $250 billion for the Iranian government. Among other things, the bank is being accused of "wire-stripping," or removing codes from money so Iranian transfers could not be identified. The FT says regulators are also alleging Standard Chartered engaged in "similar schemes" with Libya, Myanmar and Sudan.
Financial transactions with Iran have been highly restricted by the U.S. government since 1979, and the controls were beefed up in 1995, the Journal reports. Both the Federal Bureau of Investigation and the Justice Department are currently investigating the allegations. The bank is set to appear at a hearing next Monday to demonstrate why its license to operate in New York should not be revoked.
Standard Chartered denied most (but not exactly all) of the alleged wrongdoing, stating only about $14 million of its transactions with the Iranians failed to comply with current regulations. But, according to the regulatory order issued by New York State Department of Financial Services, there's plenty of evidence to suggest the problem runs much deeper.
In addition to unearthing a manual teaching employees how to mask the bank's rising number of illegal transactions, regulators also obtained a 2006 memo in which a London bank official, upon being warned by the chief executive in the Americas of the catastrophic risk associated with the dealings, replied: "You [bleeding] Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians." (He used a more colorful adjective than "bleeding"; you get the idea.)
Money-laundering with "rogue nations" appears to be all the rage these days. Just last month, Congress came down on another British bank, HSBC, for its dealings with drug cartels in Mexico and suspected terrorists in Saudi Arabia.
No Mortgage for You: The latest quarterly survey of bank loan officers from the Federal Reserve finds consumer demand for home loans is up, which, while and encouraging economic sign, is also kind of meaningless, since the same survey finds banks are still being stringent when it comes to awarding mortgages. Small business lending also remains stagnant. Banks, however, have loosened standards on credit cards, auto and commercial real estate loans.
Wall Street Journal
Citigroup is launching an investment-banking joint venture in China that will allow the bank to underwrite equity and debt securities in an attempt to take advantage of the country's capital markets. The bank also plans to offer a branded credit card in China "very soon."
The Securities and Exchange Commission will be tightening rules regarding the use of stock market software systems, following Knight Capital's disastrous computer glitch that cost the brokerage firm $440 million in trading losses. Sources close to the matter confirm the SEC plans to, as previously speculated, require firms to disclose system failures and fully test coding changes before new software is put to public use. The SEC may also introduce new computer security requirements and new responsibilities for supervisors of technology systems.