Receiving Wide Coverage ...
Laundry Bills: The whispers were out there last week, now it's official: HSBC has admitted it ignored signs of money laundering for years and agreed to pay a record $1.9 billion in a settlement with U.S. authorities. (Wall Street Journal, Financial Times, New York Times.) Fellow British bank Standard Chartered agreed to a $327 million settlement for violating U.S. sanctions against Iran, Libya and other nations (Journal, New York Times), bringing its total fines in this matter to $667 million. Crain's New York Business says the latest StanChart settlement vindicates Benjamin Lawsky, the New York financial regulator who was accused of going rogue when he went after the bank this past summer. The FT's "Lex" column finds the penalties paid by HSBC and StanChart unimpressive — a "rap on the knuckles." The paper's Business Blog says the settlements show "that what used to be regarded as these banks' biggest virtues — their exposure to emerging markets and new growth economies — are also weaknesses. … In emerging markets, retail banking and money transfer often have higher margins and growth ratings, but carry regulatory risks. HSBC got caught by not overseeing its Mexican operations rigorously." (Citigroup stakeholders, take note.) The Journal offers a mini-profile of Stuart Levey, HSBC's chief legal officer, who led the settlement talks with the U.S. And the Times reports on the bank's hiring of a former U.S. Treasury official to direct financial crime compliance, a newly created role.
Google: If you noticed your twenty-something employees were unusually productive yesterday, it may have been because Gmail was down for about 20 minutes yesterday. (Wired, ZDNet, TechCrunch, Slate.) This traumatic disruption to critical infrastructure appears to have received more coverage than the revelation that Google avoided $2 billion of taxes worldwide last year by shifting nearly $10 billion of revenues to a Bermuda shell company. Facebook was down for a while, too.
Post-Crisis Milestone: The government plans to sell its remaining shares in AIG, more than four years after taking over the insurance giant in the throes of the financial crisis. New York Times, Washington Post.
Trans-Atlantic Cleanup Crew: The Journal and the Times catch up with the FT's scoop 24-plus hours ago on the cooperative plan from U.S. and U.K. authorities to resolve failing global institutions. Meanwhile, the FT's "Lex" column says the plan poses several problems. Among them: requiring bondholders to "bail in" a faltering bank by accepting equity could raise the cost of bank debt, and discourage some fixed-income investors that cannot hold shares from purchasing financial-sector bonds. More broadly, there's no guarantee other countries' regulators will embrace the same approach, and until the full regulatory picture is settled, uncertainty raises costs and discourages banks from lending.
Wall Street Journal
Citing an anonymouse, the Journal reports that the SEC is "examining" (a carefully chosen word) stock trades by Douglas Bergeron, the CEO of point-of-sale terminal maker VeriFone. Meanwhile, the Manhattan U.S. attorney's office is "investigating" (no mincing words there) insider sales by Bergeron and executives from six other public companies (including ATM operator Cardtronics) whose uncanny timing under preset trading plans was highlighted in a Journal article a few weeks ago.
An editorial scolds Senate Majority Leader Harry Reid and community bankers for seeking to extend the TAG program, which the writers say "represents far too much taxpayer exposure."
The old school wants a piece of the new school. Lord Rothschild, scion of a British banking dynasty, has bought a stake in Zopa, a peer-to-peer lending platform in the U.K. "We are witnessing the growth of the non-banking lending market," he tells the FT. "Following the 2008 crisis many of the banks remain under capitalized. … In these circumstances alternative forms of credit will be developed on a significant scale." This follows former Morgan Stanley honcho John Mack taking a seat on the board of U.S. peer-to-peer site LendingClub.
Foreign Policy: Here's an eye-opener. Worldwide, the amount of money that migrant workers send home to poor countries is "triple the development aid budgets of the rich donor countries. … Remittances have morphed from an afterthought to a key component in strategies for transforming poor countries into successful 'emerging market' economies." Short of liberalizing immigration policy (a tall order given unemployment, protectionism and xenophobia), the article concludes that the best thing wealthy countries can do for the developing ones is to promote competition and lower prices in the remittance business. "The cost of sending the cash is startlingly high — as much as 30 percent in some remittance 'corridors.' … Paring the average fee from around eight percent by a single percentage point would mean an extra $3 billion for recipient countries." (From the U.S., costs range from half a point to north of 20%, depending on the sending institution and the recipient country, according to this chart from the World Bank.)