Feds Fume Over NY Attack on British Bank

Treasury Department, Fed pretty peeved over the move
By Mark Russell,  Newser Staff
Posted Aug 8, 2012 8:33 AM CDT
Feds Fume Over NY Attack on British Bank
The head of the newly formed Department of Financial Services Benjamin Lawsky is behind the surprisingly aggressive allegations against Standard Chartered Bank.   (wmhttv)

Standard Chartered wasn't the only one caught off-guard by Monday's accusations from the New York Department of Financial Services that the bank had gone "rogue" and helped Iran hide $250 million in transactions. The Treasury Department and Federal Reserve were just as stunned by the charges, along with the breadth of details released. And the Treasury says the move, of which it essentially had no advance warning, undermines its own talks with Standard Chartered about the transactions, reports Reuters. It also flies in the face of the usual approach to such cases: quiet negotiation, minimal public humiliation.

Standard Chartered said it has been talking with regulators for two years about the Iran issue, claiming the Iran transactions were "technical" mistakes and added up to less than $14 million. It notes that such matters are usually handled "through a coordinated approach by such agencies," so it was therefore blindsided by New York's move, "given that discussions with the agencies were ongoing." But with a staff of 1,500 and a budget of $235 million, the 18-month-old DFS and its aggressive boss Benjamin Lawsky could very well keep on rocking the financial industry, reports the New York Post. But feds worry Standard Chartered could paint DFS' claims as coming from an overly eager new regulator. (More New York Department of Financial Services stories.)

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