The HSBC Moral Hazard Paradox
Recently HSBC, the British bank, was found by the Department of Homeland Security to have laundered vast amounts of money for drug cartels, terrorist organisations, and rogue states. One would expect a steep penalty for aiding and abetting such malevolent organisations. Consider Salim Hamdan, a man whose sole crime was to drive Osama bin Laden around for $200 a month, yet nonetheless ended up in prison from 2001 to 2009 and was subjected to “coercive interrogation” and “sexual humiliation”, whatever that means. Given the billions of dollars HSBC laundered for these kinds of groups, what Hamdan got should be a picnic in comparison, right? Well it turns out, not so right, as the Justice Department decided not to prosecute.