This raises the fascinating question of what is fair treatment. Specifically, is revoking the license of a bank that systematically broke a country's laws fair?
More importantly, the demand highlights the extent to which governments around the globe have been captured by the banks and how far they are willing to go to protect the banks from the consequences of their actions.
Here is the second senior government official of the UK, after the Bank of England's Mervyn King, trying to influence what US financial regulators do with a firm that first admitted to laundering $14 million (a couple of transactions that could have been a mistake) and subsequently admitted to laundering "tens of millions" (a pattern of systematically breaking the law) dollars.
I can understand why they are rushing to Standard Chartered's defense. Its CEO, Peter Sands, was the architect of the UK's bailout the banks strategy. If Standard Chartered is seen as just another cesspit bank full of bankers behaving badly, then it suggests that the bank bailout strategy was nothing more than a way to use taxpayer money to preserve his bonus.
Imagine for a second that US regulators actually decide that Standard Chartered is unfit to hold a banking license in the US.
Imagine further that as a result of losing this banking license that Standard Chartered goes out of business.
Will this devastate the global financial system? No. There are plenty of other banks that could provide the services provided by Standard Chartered.
Will this devastate the UK's financial system? No. Again, there are plenty of other banks that could step up.
Will this devastate the bonuses paid to Standard Chartered's executives? Yes. One can only imagine the clawback lawsuits from the shareholders.
Regular readers know that your humble blogger expects that Standard Chartered will ultimately pay a fine that is a fraction of the profits it made from money laundering. This fine will once again confirm that bad behavior in banking pays.
GEORGE Osborne has intervened in the escalating row over Standard Chartered with three calls to the US Treasury Secretary in which he demanded “fair treatment of British businesses” by US regulators.
The Chancellor told Tim Geitner he would not impede any investigation but that he had been “very concerned about the way” in which New York’s Benjamin Lawsky had sprung his explosive order on Monday.
The US Treasury department has responded with a letter conceding that the investigation by its Office of Foreign Assets Control (OFAC) into Standard Chartered would be both co-ordinated and quiet going forward.
In the letter dated August 8, the US Treasury promised Mr Osborne: “We will continue to coordinate with other federal and state agencies, including DFS [Mr Lawsky’s New York State Department of Financial Services], in our investigation of the bank and will have no public comment on that investigation until its conclusion.”
A Treasury source said: “The Chancellor was adamant that rules should not be broken but he was very concerned about the way this [order] came out.”...Excuse me, but regulators do not owe it to banks to warn them about an order coming out. In fact, banks should fear that regulators will disclose the order to the financial market before it discloses the order to the banks.