WHEN: TODAY, WEDNESDAY, August 8, 2012
WHERE: CNBC’S “SQUAWK ON THE STREET”
Following is the unofficial transcript of breaking news from CNBC’s Steve Liesman. Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000107949&play=1
All references must be sourced to CNBC.
STEVE LIESMAN: SOME FEDERAL AND STATE REGULATORS ARE QUIETLY BUT SHARPLY CRITICIZING NEW YORK STATE'S BANKING REGULATOR BENJAMIN LAWSKY'S DECISION TO GO PUBLIC AND TAKE ACTION AGAINST BRITAIN'S STANDARD CHARTERED BANK OVER THOSE ALLEGATIONS OF LAUNDERING IRANIAN FUNDS.
MOST IMPORTANT, SOURCES AT TWO DIFFERENT AGENCIES TELLING CNBC THAT LAWSKY MAY HAVE OVERSTATED THE CASE AGAINST STANDARD AND LAWSKY'S ACTIONS COULD ACTUALLY DIMINISH THE ULTIMATE FINE PAID BY THE BANK.
A PERSON AT AN AGENCY INVOLVED IN THE INVESTIGATION TOLD CNBC THE OFFICE WAS GIVEN VERY LITTLE NOTICE THAT LAWSKY WOULD GO PUBLIC AND TAKE ACTION AND SAID THAT THAT OFFICE WAS "VERY SURPRISED."
ANOTHER REGULATOR SAID LAWSKY HAD "HIJACKED" A PAINSTAKING, MULTI-YEAR INVESTIGATION INVOLVING SEVERAL AGENCIES. LAWSKY’S OFFICE WAS APPARENTLY GIVEN THE EVIDENCE AS PART OF THAT INTERAGENCY COOPERATION.
CNBC HAS LEARNED THAT THE TREASURY'S OFFICE OF FOREIGN ASSETS CONTROL, THE NEW YORK FEDERAL RESERVE AND THE MANHATTAN DISTRICT ATTORNEY WERE AMONG THOSE INVOLVED IN THIS INVESTIGATION.
LAWSKY'S OFFICE DID NOT RESPOND TO A REQUEST FOR COMMENT.
ONE OFFICIAL DESCRIBED LAWSKY'S ORDER, WHICH THREATENS TO PULL STANDARD'S NEW YORK BANKING LICENSE , AS OVERLY COLORFUL. WHILE THE OFFICIAL SAID THE INTERNAL INVESTIGATION HAD TURNED UP SERIOUS ISSUES, THEY ARE APPARENTLY MORE COMPLEX THAN HAS BEEN PORTRAYED.
SPECIFICALLY, THERE IS A MAJOR QUESTION OVER SO-CALLED U-TURN TRANSACTIONS. THESE DID NOT END OR ORIGINATE IN IRAN, BUT WERE CLEARED THROUGH STANDARD'S NEW YORK BRANCH.
THE COMPLEXITY IS THAT UNTIL RECENTLY SUCH TRANSACTIONS WERE LEGAL.
ANOTHER OFFICIAL SAID THAT SETTLEMENTS WITH BANKS, WHICH MOSTLY INVOLVE BEHIND THE SCENES NEGOTIATIONS, HAVE YIELDED $1.8 BILLION IN FINES RECENTLY. THESE INCLUDE SETTLMENTS WITH ING AND CREDIT SUISSE AMONG OTHERS.
GOING PUBLIC BEFORE A SETTLEMENT IS REACHED, THE PERSON SAID, ESPECIALLY WITH CHARGES THAT ARE DIFFICULT TO PROVE IN COURT, COULD DIMINISH THE GOVERNMENT'S LEVERAGE IN NEGOTIATIONS. SO THAT’S WHERE WE ARE CARL A LITTLE BIT OF INTERNAL BICKERING OVER THIS ISSUE LAWSKY COMING FORWARD AND WHETHER OR NOT THE CHARGES ARE AS COLORFUL AS LAWSKY HAS LAID THEM OUT.
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