HSBC faces hearing for money-laundering lapses
An HSBC Bank branch is seen at 550 Fashion Avenue on August 1, 2011 in New York City.
Jeremy Hobson: It's going to be a busy day on Capitol Hill. The Fed Chairman Ben Bernanke will be testifying about the economy and the possibility of new monetary stimulus. And a congressional watchdog panel will be grilling executives from the British bank HSBC about -- get this -- money laundering, drugs and terrorist financing.
Marketplace's Stephen Beard is with us from London to explain. Good morning.
Stephen Beard: Hello Jeremy.
Hobson: What's this all about?
Beard: As you say, money laundering on an epic scale, according to the Senate. The most damaging charge is that HSBC allowed $7 billion to pass from Mexico into the U.S., and the Senate investigators said that that sum could only have come from the drugs trade. The investigators also say suspicious funds passed through HSBC from Syria, the Cayman Islands, Iran, and Saudi Arabia.
Hobson: And what's HSBC saying about this?
Beard: It says, "Sorry." It acknowledges what it calls "these mistakes" and will promise at today's hearing not to do it again. This is following the interest rate rigging scandal, yet another legacy of the whole "greed is good" culture which engulfed many big banks during the boom.
But as analyst James Bourbon told the BBC today, the regulators -- both here and in the U.S. -- were also partly to blame. They fell down on the job.
James Bourbon: Had they been there waving a finger, saying, "Guys, where's the paperwork? We want to know what's going on." Nothing would have been committed. The harsh reality is everybody said, "Oh, it's rather smart; we've got a very fast growing banking sector. It's paying all the bills; let's keep it going. That was a major error.
And the Senate report concludes that the U.S. bank regulator -- the Office of the Comptroller of the Currency -- failed to properly monitor HSBC.
Hobson: Marketplace's Stephen Beard in London, thanks.
Beard: OK Jeremy.