This oversight overrated? Bank on it
My bank made an $8.9 billion error. Fortunately, it wasn’t in my account. But it still may affect me, minimally, peripherally, eventually.
The error’s consequences will ripple down to my little Carson City branch from the parent company, a worldwide banking behemoth. While we’re analyzing this, locally, nationally and internationally, let’s also look at the United States government’s reaction to the error, which accounts for the penalty involved. Let’s look at how government is protecting me from the bad guys but not necessarily from said government.
“I’m from the federal government, and I’m here to help,” an old satirical line keeps reverberating in my mind. Right. Now for the details.
My bank is Bank of the West, which has a host of friendly folks on the payroll out at the corner of North Carson Street and Nye Lane. It’s a unit in a subsidiary of BNP Paribas SA, the world’s fourth-largest banking group according to analyses by Bloomberg and Forbes of the business press. BNP Paribas, a Paris/London financial octopus, was dinged billions this week for doing business with the bad guys.
The bad guys, according to “good guys” ostensibly working for me in my government, are clients in countries sanctioned (read blacklisted) by the United States. The countries are Sudan, Cuba, Iran. Fair enough, though the penalty was as much for BNP Paribas continuing the practice after the U.S. began investigating, according to reports. The penalty for the error, by the way, was a negotiated settlement.
Way down the financial food chain, meanwhile, small banking customers will feel a mini-impact. Why? Money is fungible and The Wall Street Journal reports the banking giant will slash shareholders’ dividends while borrowing billions of euros by issuing bonds. This hike in debt capitalization will boost the cost of business for reasons too numerous to recount. Who foots the bill when cost of business rises? Customers, of course.
Even if nothing I can see happens at my little bank, something I can’t see is likely to infringe on it because some dudes in Europe cut corners, gamed U.S. law and dragged their feet after the probe began.
My mild yet real irritation isn’t just with the world’s fourth largest bank. I could have or still can take my business elsewhere. But where do I go? Have the people protecting me from the bad guys in blacklisted countries done enough about bankers in this nation who helped destroy wealth in the recent recession here? Oh, right; we don’t send white collar fudgers to jail. We just take away some of the fudge.
So thanks to government overseers who don’t mind indirectly hiking the cost of banking on all of us. Such oversight is under-whelming.