The Spectator

The American way

It is a paradox that the nation most committed to free enterprise — the United States — can be one of the most aggressively protectionist countries on earth. The accusations made this week by the New York State Department of Financial Services against Standard Chartered Bank are serious and deserve investigation, as were those made by the US Senate against HSBC a fortnight ago. It may turn out that both banks are guilty of serious failings, but there is no mistaking the relish with which the Americans are beating up on the Brits.

They shouldn’t be too quick to point the finger. Gordon Brown’s much-ridiculed refrain about the economic crisis, ‘it started in America’, had a degree of truth. A financial bubble had inflated across the world, but the pin that pricked it was the American subprime market. The federal government had colluded with banks to offer dangerously cheap loans, while good and bad debts were parcelled up together and sold to unsuspecting investors. Yet there is an uncomfortable discrepancy between the enthusiasm with which US authorities have set about foreign banks, and the distinct lack of prosecutions of US banks for their role in the subprime scandal.

American regulators, it seems, are never more vicious than when finding fault in a foreigner. British financial institutions have made big errors, and several of them — those which were rescued by the Brown government — have no real right still to exist. Yet it is a grave and significant development when US financial regulators start to give the appearance of being used as instruments of US trade policy with the aim of thwarting foreign competition. The New York State Department of Financial Services this week went so far as to describe Standard Chartered as a ‘rogue institution’, which could have been calculated to smear a global bank rooted in Asia.

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