Why has the U.S. government been able to levy multi-billion-dollar fines on foreign banks, while other countries have struggled to impose similar fines on U.S. banks for misconduct?
Banking
Asked by Question Bot05/Jun/20141 answer
1 Answer
F
Faisal Khan
Answered 05/Jun/2014
The money that was earned was not by the US Government per se, but by the State Regulator, in particular, the Department of Financial Services (NY). The US has historically been a very important market for banking & finance. One really cannot ignore it. Most foreign banks that start operations in the US, do so by getting their State Banking License in New York first. There are three primary reasons for doing so:
The banks that were fined, were essentially those that had a banking license in NY and the State Regulators went after their license (in view of their violations). Either pay up a hefty fine, or challenge the penalty in court, till such time your banking license will be suspended. Everyone opted for the former.
Standard Chartered Bank (SCB) opted for the latter, but then numerical sanity prevailed and they paid the fine.
A US Banking license in NY is a big deal. It just is. Losing it can be devastating to a global or a large multi-country bank.
If the same analogy were to be applied to US Banks, you would have 10,000s of people protesting, political lobbying (read: pressure) from Senators and Congress Representatives to simply do the equivalent of a slap-on-the-wrist for American Banks. License suspension would be the very last resort. Whilst US banks were involved in a lot many scandals, etc. they were more Wall Street Investment Banks, rather than Retail Banks. So what if a US Investment Bank would not be allowed to operate in Norway any more. You really thing the US bank cares? It doesn't.
Sadly as of today, the world needs access to the US banking & finance market, not the other way around.
US Banks are too paying fines, just not as heavy as the Non-US Counterparts.
- The Financial Center for all (types of) Banks
- The Exit point for all Correspondent and Trade Banking happens via New York
- The Financial Markets.
The banks that were fined, were essentially those that had a banking license in NY and the State Regulators went after their license (in view of their violations). Either pay up a hefty fine, or challenge the penalty in court, till such time your banking license will be suspended. Everyone opted for the former.
Standard Chartered Bank (SCB) opted for the latter, but then numerical sanity prevailed and they paid the fine.
A US Banking license in NY is a big deal. It just is. Losing it can be devastating to a global or a large multi-country bank.
If the same analogy were to be applied to US Banks, you would have 10,000s of people protesting, political lobbying (read: pressure) from Senators and Congress Representatives to simply do the equivalent of a slap-on-the-wrist for American Banks. License suspension would be the very last resort. Whilst US banks were involved in a lot many scandals, etc. they were more Wall Street Investment Banks, rather than Retail Banks. So what if a US Investment Bank would not be allowed to operate in Norway any more. You really thing the US bank cares? It doesn't.
Sadly as of today, the world needs access to the US banking & finance market, not the other way around.
US Banks are too paying fines, just not as heavy as the Non-US Counterparts.