HSBC’s record $1.9 billion payment to settle a U.S.
investigation into money laundering that involved Mexican drug cartels
and nations such as Iran is a new setback for the reputation of banks
after a series of headline-grabbing scandals.
The industry’s image
was already badly tarnished because of the role U.S., European and
other banks played in the U.S. mortgage meltdown that sparked the global
financial crisis and recession. Here’s a look at some of the low points
for banking and bankers since then.
— Swiss bank UBS blames a
rogue trader at its London office for a $2.3 billion loss that is
Britain’s biggest-ever fraud at a bank. Kweku Adoboli, the 32 year old
trader, is sentenced to seven years in prison. Britain’s financial
regulator fines UBS after finding its internal controls were inadequate
and allowed Adoboli, a relatively inexperienced trader, to make vast and
risky bets. The case has echoes of Societe Generale trader Jerome
Kerviel who hid 5 billion euros of losses. Kerviel said SocGen turned a
blind eye to his colossal positions in late 2007 and early 2008 as long
as they made money for the bank.
— Wells Fargo Bank agrees to pay
at least $175 million to settle U.S. Department of Justice accusations
that it discriminated against qualified African-American and Hispanic
borrowers from 2004 through 2009. The department said the bank’s
discriminatory lending practices resulted in more than 34,000
African-American and Hispanic borrowers in 36 states and the District of
Columbia paying higher rates for loans solely because of the color of
their skin.
— JPMorgan Chase announces a loss of $2 billion from a
trade that was meant to protect the bank if the global economy sharply
deteriorated. Later, losses from the bad trade swell to nearly $6
billion and shave much more from the company’s stock market value. The
episode heightens concerns that the biggest banks still pose risks to
the U.S. financial system, less than four years after the financial
crisis.
— Barclays agrees to pay more than $450 million to U.S.
and British regulators to settle charges that it attempted to manipulate
a global benchmark interest rate known as LIBOR. The rate indirectly
affect the costs of hundreds of trillions of dollars in loans that
people pay when they get loans to go to college, purchase a car or buy a
house. Numerous other banks are under investigation for similar
violations.
— An independent review finds Kabul Bank spirited some
$861 million out of war-torn Afghanistan in a massive fraud based on
fake loans to 19 individuals and companies. A bailout of the bank costs
the equivalent of 5 percent of Afghanistan’s gross domestic product,
making it one of world’s largest banking failures ever.
— HSBC,
Europe’s largest bank, says it’s paying $1.9 billion in penalties to
settle a U.S. money laundering probe. The investigation into HSBC
focused on the transfer of billions of dollars on behalf of nations such
as Iran and the transfer of money from Mexican drug cartels. The bank
said its anti-laundering measures were inadequate and said it was
"profoundly sorry."
Copyright 2012 The Associated Press.