Two companies, Credit Suisse Group AG (CSGN) and BNP Paribas SA (BNP) may be charged, criminally for having business dealing with banned nations. The major banks are being pursued by U.S. and state prosecutors and may be facing tax charges.
Credit Suisse has been a target since 2011 when they were investigated for possibly aiding Americans with evading their taxes. The federal probe against BNP Paribas is for violating the ban of doing business with prohibited countries. Usually in these types of cases, banks are considered too important to the legal system to prosecute and therefore the government usually brokers settlements with large financial institutions. Things may be different this time around because of comments like “a significant financial institution” will soon be charged from U.S. Attorney Preet Bharara. The former chairman of Citigroup thinks that the government is bluffing. Sanfod Weill said, “Maybe the U.S. attorney’s office is saying these things to get a resolution of the problem without it going to court and without having to do that. How does a bank stay in business if they’re charged criminally?”
Charging a bank not only puts their business in flux, but may also threaten national or global economies. This is because banks, countries, and economies are so interconnected. Even the Attorney General, Eric Holder told Congress early last year that “the size of some of these institutions becomes so large that it does become difficult for use to prosecute them.” However, this time things might be different as prosecutors seem to mean business. They have already approached the New York Fed to discuss what measures to take to take to contain a fall out, should they apply criminal charges. One option that was discussed for BNP Paribas is suspending the firm’s ability to get transfer any money through New York for their foreign clients. Whispers of such actions have already made the stock fall abroad. Things are looking grim for both bank and they should be prepared for some major changes in the near future. These kind of dealings are not tolerable and it looks as if prosecutors are finally taking real action.
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