Sen. Levin: New York regulator showed 'backbone' in bank settlement

By Peter Schroeder - 08/15/12 12:18 PM ET

One of Wall Street's toughest critics on Capitol Hill is delighted to see a N.Y. state regulator has the "backbone" to directly pressure a bank to settle charges of money laundering to aid Iran.

Sen. Carl Levin (D-Mich.) said Tuesday he was heartened to see New York's Department of Financial Services take a tough stance with the British bank Standard Chartered. The standoff ended Tuesday when the regulator announced it had reached a $340-million settlement with the institution, just days after it publicly accused the bank of helping Iran launder $250 billion.

"The agency … showed that holding a bank accountable for past misconduct doesn’t need to take years of negotiation over the size of the penalty; it simply requires a regulator with backbone to act," Levin said in a statement. "New York’s regulatory action sends a strong message that the United States will not tolerate foreign banks giving rogue nations like Iran hidden access to the U.S. financial system."

Nine days ago, the regulator blasted the bank in a lengthy public report, calling it a "rogue institution" that violated U.S. money-laundering laws by helping Iran avoid U.S. sanctions in tens of thousands of transactions through its New York branch, and suggested it could revoke the bank's charter to operate in New York.

The bank's actions "left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity," according to the regulator.

Standard Chartered said Monday it rejected the regulator's depiction of its business, just hours before reaching a settlement agreement. Federal regulators are still examining the bank's actions in independent investigations.

Levin has been one of Wall Street's harshest critics since the financial crisis, and as head of the Senate Permanent Subcommittee on Investigation, helped author a lengthy report dissecting bad behavior leading up to the meltdown.

His praise for the New York regulator comes just days after he was expressing his disappointment over the Justice Department's decision not to pursue criminal charges against Goldman Sachs for misbehavior detailed in the report. The lengthy document blamed a wide group of individuals and entities for contributing to the meltdown, but also singled out Goldman for marketing risky investments to investors while betting heavily against them.

On Thursday, the department said it had no "viable basis" to bring criminal charges against the bank or its employees "based on the law and evidence as they exist at this time."

Levin maintained Friday that the bank's actions were "deceptive and immoral," even if "weak laws or weak enforcement" meant no criminal charges would be forthcoming.