Wednesday, June 4, 2014


Now don't get me wrong.  I'm as good red-blooded American as the next guy which means I hate all things French.  Especially French banks.  Especially because I was in the banking business.  Especially since it involves BNP-Paribas who before they merged were pains in the ass in their own right.  I once had a colleague refer to our good friends as Le Banque de Paris et de Tres Bas which of course did little for our relationship but was an accurate reflection of his personal views.  We became fast friends.

The story is true, but when it comes to all things French, I of course jest.  It is a magnificent country with terrific people and spectacular cities.  I fondly remember spending a week in the Ritz in Paris one Friday night but as they say, that's another story.  The problem is/was with the French banks one was never certain where the bank ended and the government began and that holds true today.  One could be in a syndicate with the exact same level of interest only to be blindsided when the political decision of the State overruled the interests of the bank--even for those brief periods when the banks were truly private and investor owned.  Maddening.  So, when BNP-Paribas gets grabbed by the shorts for violation of U. S. law which was clearly delineated and understood many of us old guys just sit back and smile, especially when the bank tries to explain their actions away as being "under the advice of counsel" as was revealed today.  Trying to be too smart by half makes it even better.

These so called "trading with the enemy" claims are serious stuff and should not be taken lightly.  Despite one's difference of opinion…and in these matters there can be legitimate differences…operating in a foreign jurisdiction does make one subject to the laws of that jurisdiction and even when those laws are in conflict with the policies of one's home country, they must be followed, be they American or French.  The French have always had a propylene with us in these matters or to be more accurate the unfortunate relationship of what they consider to be the world's most arrogant nation (they may, in some cases have a point) possessing the currency of international settlement which in recent years has been occasionally used as a bludgeon in support of American policy.  They are not alone.  The Chinese hate it and are actively attempting to build an alternative in the Yuan.  The Russians despise it, but who in their right mind would depend upon the Rouble for international settlement.  In the end it's tough nouggies fellas; deal with it.

Now left to themselves, I suspect that that is exactly what BNP would have done but we have Libya and Iran involved  and those two supplied a goodly amount of oil to France in the past.  They also supplied a goodly amount of dollars to the French oil company as well.  With all this going on it is inconceivable that our two rogues didn't lean on the French government for a little banking help in the face of those difficult Americans and it is further inconceivable that the Elysee did not lean on BNP.  OK, we caught 'em.  We'll give em a fair trial and hang 'em.  Now of course what usually happens is that the two governments sit down and work out a deal that works for both side and ends the problem…behind the scenes of course.  That's what usually happens; but not here.

In the midst of all of this comes the publicity seeking, little jerk of a New York Attorney General, Benjamin Lawsky who, in the spirit of the post going back to Tom Dewey, wants to leverage the fact that all this took place in the State of New York allowing him to bash those lousy Froggies, make headlines and some day become Governor.  He wants to shut down the dollar-clearing ability of SocGen for some period just to show them they can't mess with New York.  Now where the hell he got the idea that he was in any way involved with the foreign policy of the United State I have no idea, but the better question is why are these morons in this administration allowing him to get away with it?  This isn't a banking dispute; this is a foreign policy dispute with France.  All Lawsky will accomplish is to make things very difficult for American interests operating in France and, indeed, in the entire EU.

Forgive the vent, but in so many ways this administration is turning into one of the most inept on record and in the financial area, among the most damaging to American financial interests.  And for no good reason.  If I may be so bold, in the coming years we are probably going to need the support of various countries Over There in trying to make sense of the cross-border regulatory mess we have created for ourselves.  Having France kinda on your side or at least in the role of an honest broker is a lot better than the petulant brat it can be.  That's what the creation of policy is all about, not supplying Lawsky with political jollies.  It also gets me out of the role of being on BNP-Paribas's side.  God, what a revolting development that is.

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