Banks: HSBC to pay record fine
HSBC agreed to pay $1.9 billion to settle U.S. allegations that it had aided Mexican drug cartels and Middle Eastern terrorists in money laundering, said Devlin Barrett and Evan Perez in The Wall Street Journal. The London-based bank admitted to breaking several laws, but avoided outright prosecution by agreeing to the record-breaking fine. U.S. investigators began looking into suspicious HSBC cash flows in Mexico and the U.S. in 2007. A subsequent Senate report found that a Cayman Islands branch of HSBC’s Mexican affiliate “had no offices or staff but held 50,000 client accounts” and $2.1 billion. “We accept responsibility for our past mistakes,” said CEO Stuart Gulliver.
The settlement is a major victory for the government, but it “raises questions about whether certain financial institutions, having grown so large and interconnected, are too big to indict,” said Ben Protess and Jessica Silver-Greenberg in The New York Times. U.S. authorities knew that a criminal indictment or a guilty plea “would essentially be a death sentence for the bank.” By seeking a settlement instead, they showed their concern, four years after the fall of Lehman Brothers, that the collapse of a “single institution could undermine the industry.” Yet fear of prosecution is a “powerful deterrent,” and if big banks aren’t pursued, “the threat could lose its sting.”
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Jobs: Economy shrugs off Sandy
The November jobs report was a pleasant surprise for analysts “braced for some ugly numbers” owing to Hurricane Sandy, said Neil Irwin in The Washington Post. The nation added 146,000 jobs, rather than the 85,000 forecasters expected, and the unemployment rate dropped to 7.7 percent from 7.9 percent. On a more ominous note, the labor force fell by 350,000 “and the number of people saying they had a job fell by 122,000.” The report was “stronger than feared but does not materially change the outlook for the labor market,” said Ryan Wang of HSBC Securities.
Bailouts: U.S. sells last of AIG stake
The U.S. expects to pocket $22.7 billion in profit on its rescue of American International Group, said Steve Schaefer in Forbes.com. The government is selling nearly all of its remaining holdings in the insurer, closing the book on one of the most controversial bailouts of the financial crisis. The government committed more than $180 billion in 2008 to rescue AIG, which then came under fire for paying bonuses to some of its executives. “Thank you, America,” CEO Robert Benmosche said. “Let’s bring on tomorrow.”
Media: Bloomberg eyes Financial Times
Michael Bloomberg is considering a bid for the Financial Times and a half interest in The Economist, said Amy Chozick and Michael Barbaro in The New York Times. The New York City mayor and Bloomberg LP founder has spoken openly about the pluses and minuses of a major acquisition in an industry he admires as a reader “but sneers at as a businessman.” Thomson Reuters is another likely bidder. Marjorie Scardino, CEO of FT-parent Pearson, once said the paper would be sold “over my dead body.” She departs on Dec. 31.
Airlines: Relaxing the electronic-device ban
Air travelers frustrated at having to turn off their iPads and Kindles before takeoff and landing have a powerful ally in the head of the Federal Communications Commission, said Jennifer Martinez in The Hill. In a letter to the Federal Aviation Administration, FCC Chairman Julius Genachowski backed a revision of the rules, saying that tablets, e-readers, and other mobile devices “are increasingly interwoven in our daily lives.” An FAA review of its rules on electronic devices was launched in the summer, and it’s not clear when it will be completed.
