“Well, that was quick and effective,” said the New York Daily News in an editorial. Just last week, a little-known New York state financial regulator, Benjamin Lawsky, accused the London-based bank Standard Chartered of laundering $250 billion for Iran. His action infuriated Federal Reserve and Justice Department officials, who accused him of leapfrogging—and possibly endangering—their own investigations. But this week, Lawsky extracted a $340 million settlement from the bank. So, despite being labeled a “rogue regulator” by some in the financial press, “Lawsky did the job.” What a vindication, said Kevin Roose in NYMag.com. Lawsky, who’s been on the job for only a year, was unfairly cast as an overzealous “cowboy in the world of Wall Street crime-busting.” This impressive victory is proof that he’s not simply “an attention-seeking arriviste.”
Don’t be so sure, said The Wall Street Journal. Lawsky is hardly “some kind of superhero.” Settlement or no, the bank continues to contest his allegations, and other regulators suspect that $249 billion of the $250 billion in transactions in question “were legal at the time they occurred.” The bank had been cooperating with the feds when Lawsky jumped the queue to “get a big publicity score” and further his future political career. He left Standard Chartered no choice but to settle, said Hester Peirce in RealClearMarkets.com. Otherwise, its New York branch, which does close to $200 billion in transactions every day, would be immediately closed. With that much at stake, settling seemed far better than pleading innocence “before an agency that had already determined the bank’s guilt.” This affair simply proves that matters involving complex issues of foreign policy and national security should be treated by federal regulators with the “requisite experience.”
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