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Too big to jail ought to mean too big to exist. Don't dare rob a bank or run drugs across the border, or you're sure as hell going to prison. But if you're a megabank which might take down our economy, by all means feel free to break the law with a slap on the wrist.

Too Big to Jail: Big Banks Can Finance Terrorists and Walk Away Scot-Free:

HSBC receives get-out-of-jail-free card in a real-life game of Monopoly.

The New York Times reports this week that megabank HSBC has escaped criminal prosecution for money laundering that probably funded terrorists and narcotics traffickers. Why? Because regulators and prosecutors were petrified that an indictment would undermine the entire financial system. The Times quotes anonymous government sources who confessed fears about bringing formal charges because doing so would be a "death sentence" for the bank. So they let it off the hook.

That’s right, HSBC is officially above the law. Too-big-to-fail has become too-big-to-prosecute.

A year-long investigation found that the British banking giant had blown right past federal laws by laundering billions of dollars from Mexican drug trafficking and processing banned transactions on behalf of Iran, Libya, Sudan and Burma. A Wednesday Times article serves up vivid passages about the shady goings-on, including HSBC officials working closely with Saudi Arabian banks linked to terrorist organizations. According to the report, "the four-count criminal information filed in the court charged HSBC with failure to maintain an effective anti-money laundering program, to conduct due diligence on its foreign correspondent affiliates and for violating sanctions and the Trading With the Enemy Act."

In a statement, the bank said it “will acknowledge that, in the past, we have sometimes failed to meet the standards that regulators and customers expect.” HSBC apologized and promised never, ever to do it again, scout’s honor.

I’m pretty sure I know what would happen to me if I stole a loaf of bread from the corner store. But a big bank can act as financier to freaking terrorists and never worry about things like jail. Funny how a corporation is a person until it breaks the law. Read on...

As Digby wrote this week, let's Make Tim Geithner Cry:

Since I suspect that hippie punching is going to become the default Democratic strategy going forward I'm not sure if this sort of thing will actually help. But we really have no choice but to try:

Treasury Secretary Tim Geithner is advising the White House not to put Elizabeth Warren in charge of the Consumer Financial Protection Bureau -- a watchdog agency she invented!

Can you sign our urgent petition to the President?

Read on...

Sen. Bernie Sanders agrees. Statement: Sanders on Consumer Financial Protection Director Nomination:

July 22, 2010

Sen. Bernie Sanders made the following statement at a Capitol Hill press conference alongside Sen. Tom Harkin and members of the U.S. House of Representatives:

"I think most Americans believe that the Wall Street Reform bill signed into law yesterday by President Obama is a step in the right direction.

"But, I also believe most Americans feel that given that the outrageous greed, recklessness and illegal behavior on Wall Street caused the horrendous recession that we are still suffering through, it is absolutely necessary that we have a strong, smart consumer advocate who will look out for their needs as the head of the Consumer Financial Protection Bureau.

"The American people want someone who is prepared to represent them vigorously and someone who, when appropriate, is prepared to stand up to the enormously powerful CEOs on Wall Street who have fought so hard against any meaningful consumer protections.

"It's clear to me that Professor Elizabeth Warren is that person.

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Rick Sanchez seems shocked to learn that Wall Street's lobbyists out numbered the poor unpaid lobbyists working on the side of financial reform 1800 to 60. No big shock here. Rolling Stone's Matt Taibbi talked to Sanchez about that and the problems with the financial regulation reform bill that would be expected after that amount of intense lobbying on the Congress, such as not addressing to too big to fail and the derivatives market.

SANCHEZ: Now to this. You know how I feel as we have these conversations every day, and we talk about a lot of different things, you and I. But you know how I feel about conventional wisdom. As far as I'm concerned more often than not, you know, a quarter will buy you a blow pop. Conventional wisdom often will get you very little. More often than not it's more like conventional idiocy, as a matter of fact.

I want to bring in somebody who often tackles conventional wisdom as well. As you know, he works for the "Rolling Stone," Matt Taibbi. And he's writing now about this new financial reform that all of us have been reading and writing about that most have believed is the right thing to do that will salvage the situation on Wall Street and never let us have to go through what we've been through before, meaning what happened two and a half years ago.

He joins us now, and let me start -- let me start with this -- general question to you, Matt. If what they're doing is undoing the problem that led us to the meltdown itself, you know, putting back in the regulations that we needed, putting back in some of the laws we've gotten rid of, isn't that a good thing?

TAIBBI: It is, but they just didn't do enough of that. They really address add few things. There are some good things in this bill, but the really, really key thing, the big problems they left unaddressed or they did a half-measures or quarter measures, and they didn't really tackle the problems head-on.

The key things are too big to fail, they didn't really fix that problem, and they didn't really solve the derivatives issue very well.

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As Chris Hayes pointed out to Rachel Maddow, some of the most important amendments to the financial reform bill being debated now in the Senate have not come to the floor yet and Harry Reid is going to have to figure out how to get his own caucus under control before this thing gets passed. As Chris said, this is all probably going to end up being shaken out over the next few days. The only good news is that as the debate has drug on the bill has actually gotten stronger instead of weaker, which is a switch for how things normally go in the Senate. The leadership however really doesn't want some of the stronger reforms in this bill.

If anyone wants to keep up with what's going on, David Dayen, former C&L and Hullabaloo contributor and friend of the site who's now blogging over at FDL has been watching all of this like a hawk. You can read all of his latest updates on this debate over there under the FinReg tag.

It was nice to see him get some props for his work on Rachel's show. Sadly too often that is not the scenario, and the cable news shows use material they find on the blogs as their quasi-research department and don't give them credit when they're the source for a story or the reason a story is even on their radar screen. Rachel Maddow has been one of the better ones out there giving bloggers credit where credit is due. I wish I could say the same for the rest of them.

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Rick Sanchez talked to CNN's Ali Velshi and Rolling Stone's Matt Taibbi about the Senate hearings in Carl Levin's subcommittee on the Goldman Sachs fraud case brought by the SEC. Matt made this great point on why the derivatives market needs to be regulated:

TAIBBI: No, I was just saying, with the derivatives, at the very least, I think we have to have a system where all of these things are traded and cleared on regulated, open exchanges.

Imagine what the stock market would look like if nobody knew what the price of any of the stocks were? And that's kind of exactly where we are with derivatives right now.

...This stuff is all traded in the dark and the big whales in the ocean, like Goldman Sachs, are the ones that make all the money because they have more information than everybody else.

And that's a situation that we really need to correct here. And that's what this bill hopefully is going to address.

I hope so too but I'm not holding my breath. The Republicans and their buddy Ben Nelson seemed determined to slow walk this just like they did the health care bill.

Taibbi has a new article at Rolling Stone -- The Feds vs. Goldman which Sanchez mentioned during the interview.

On the day the Securities and Exchange Commission filed suit against Goldman Sachs for securities fraud, shares in the company plunged 12.8 percent, closing at $160.70. The market, it seemed, was finally passing judgment on a decade of high-stakes Wall Street scammery that left America threatening Nigeria, Indonesia and Belarus on the list of the world's most corrupt economies.

A few days later, Goldman announced its first-quarter numbers. Profits were up 91 percent, to a staggering $3.4 billion.

Compensation and bonuses soared to $5.5 billion, up from $4.7 billion in the first quarter of 2009. Battered in the press, Goldman was raking up on the bottom line. So investors once again leapt into Goldman's arms, pushing the stock as high as $166.50, not far from where it was even before news of the SEC suit broke.

Goldman isn't dead – far from it. But this new SEC suit officially places it at the center of a raging national discussion about the hopelessly f**ked state of American business ethics. As a halting, first-step attempt at financial regulatory reform makes its way toward a vote in the Senate, the government has finally thrown open the door and let a few of the rottener skeletons tumble out. Read on...

Transcript of the CNN interview below the fold.

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