Wednesday, July 30, 2014

BNP Paribas: Unfairly Targeted?

With the US government’s on-going campaign to make the global financial business more ethical and socially responsible, was the French banking giant PNB Paribas unfairly targeted? 

By: Ringo Bones 

The very “punitive” fine of 8.9 billion US dollars to be paid by the Paris based French banking giant BNP Paribas for dealing with countries and entities blacklisted by the US government seem to be over-the-top when it comes to punitive fines recently paid by financial institutions who either never disclosed the full extent of the risk of their iffy financial instruments they are peddling or their dealings with business and/or government entities blacklisted by the US government. And also, BNP Paribas’ license / permit to trade in US dollars is also suspended. But is the almost 9 billion US dollar fine of BNP Paribas rather excessive and make one think that BNP Paribas is unfairly targeted by US financial authorities? 

In monetary terms, 8.9 billion US dollars is about four times the annual profit of BNP Paribas and the very amount – according to financial pundits – seems very excessive when it comes to fines for violating sanctions that are not mutually ratified between the US Congress and the French government. Although in the eyes of every citizen closely following news events since the September 11, 2001 Terror Attacks, BNP Paribas dealing with US government blacklisted entities like Iran and Sudanese strongman Omar al Bashir – especially during the time of the Darfur Region Genocide – an 8.9 billion US dollar fine seems justifiable for such a morally reprehensible act by a large global financial institution. 

But justifiable as the 8.9 billion US dollar fine may be, financial pundits are concerned over America’s “dollar power” –i.e. the US dollar being the world’s de facto universal currency since the end of World War II and the US government's sole ability to choose or deny whatever country can trade it. Often termed as America’s strategic weapon that’s more powerful than the country’s thermonuclear weapons arsenal, America’s “dollar power” – the US government’s ability to chose and suspend which government is able to trade in US dollar funds - is widely criticized due to the fact that it is prone to abuse and has almost nonexistent appeals process that has been recently exploited by “vulture fund” managers.

1 comment:

Michelle said...

In a recent BBC report, leading financial institutions - like HSBC - has just became "risk averse" by no longer offering risky financial instruments and investments despite of their high potential for high rate of returns in investment for a given period of time. Will the French investment banking giant BNP Paribas follow suit?