Tuesday, 7 August 2012

What are the real reasons behind US authorities vs. Standard Chartered?

The US authorities have recently hit on HSBC and Barclays with hefty fines for breaching anti money laundering laws and massive settlement payouts for alleged Libor rigging. But this week the spotlight turns to Standard Chartered which has been beaten up by strong language and accusations from US officials. Share price was tumbling today.

You may think that this is just a coincidence or perhaps you are a bit suspicious like me and think that possibly there is something else behind these fines. If I know something about regulators and politicians is that behind every action they take there is always a broader intention, a priority. Regulators focus their limited resources in certain priorities as we all do. Priorities are decided regularly at the top level and these top officials expect results. According to the results, these couple of years it seems that UK banks were a priority. The question then is, why UK banks? Following an easy logic the answer would be that US authorities are attempting to destroy the financial powerhouse that is the City of London and bring all that business (and revenue) to New York.

Perhaps too simple to be true and perhaps I am making too many assumptions some may argue. But don’t be fooled. Politicians and regulators are very simple and  unsophisticated men trying to appease normal folks, so do not expect over-engineered intentions or actions in whatever they do. 99% of the time it will be a simple action to obtain a simple and visible (especially visible to voters) result. In this case, it may be a hike in revenue to pay for crazy Obamanomics spending or possibly to improve the general economy indicators ahead of next year’s presidential election.

Whatever the motive is, I betcha  stopping the Iranian regime to move funds across the world is the facade and the least of their worries.

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