A Cost of Doing Business

This OP-ED appeared originally in CommPRO.biz

Back in July the American operations of Britain’s largest bank, HSBC, were found to be riddled with nasty stuff like laundering cash for Mexican Drug Lords, hiding funds from the IRS in far off India for wealthy Americans, providing US currency to a Middle Eastern bank said to be a source of terrorist funding, and generally thumbing their nose at American laws and regulators.

HSBC is by no means the only banking institution taking this stance toward our laws. Several European and American banks have pretty much followed the same path. We’ve hauled them up in front of Congressional Committees. In the case of HSBC their top compliance officer fell on his sword and resigned during a Senate hearing. So there is no question they are sorry. The question may be, sorry for what, sorry they got caught?

This whole business came up again last week when HSBC announced that they added another $800 million -bringing the total to $1.5 billion- to funds set aside for the fines they expect to pay. HSBC CEO Stuart Gulliver is reported to have told those on a media conference call last week (2012.11.05): “We deeply regret what took place in the United States and Mexico; a number of people have left the bank and have had clawbacks against their compensation.” Really?

While that makes great press, you don’t have to be an international banker to see that a couple billion in fines is pocket change in comparison to the money to be made flaunting our laws. Or put it up against the quarterly pre-tax profit HSBC announced the same day, $5 billion, and that was below analysts’ expectations. What was the impact of all this bad news? More fines? Only $5 billion? One bad day on the London Market; HSBC’s shares fell 1.3%. Big deal. Big nothing for them, these fines are no more than a cost of doing business. 

It’s going to take more than fines to deal with these out-of-control, profit mad international and American banks. This kind of behavior reflects the corporate culture emanating from the top. Until those who head these organizations are called to task, nothing will change. Criminal charges against the CEOs and other top executives, however, will put a stop to these practices. After all, if they choose to defy our laws, fund drug lords, terrorists, tax dodgers and other low life types, they should face the same levels of punishment as the scum they are funding. 

Ethical bankers who work to serve their customers and communities make up the majority of our banking sector. They shouldn’t have to compete with banks that do not follow that model. Banking is too important to be left to those looking for a fast buck anywhere they can find it. There are lots of good people toiling at HSBC and all the other banks big and small. In a few cases their leaders have deserted and betrayed them. It’s time to call those leaders to task. It’s time to return ethics to the forefront; to return ethics to the Board Room. A goal that leads to a more profitable enterprise at the end of the day. And a much nicer day along the way.