The New York Times Butchers the Story of How Treasury Got NPR to Censor My Criticism of It

By William K. Black

We have further proof about how thin-skinned Treasury Secretary Geithner was, but we have it in the form of a weird May 29, 2013 story by Ben Protess in the New York Times.  The story is in part about me, though it doesn’t mention me, because it is a story that notes that Treasury was able to convince NPR to remove from its December 13, 2013 broadcast a statement I made criticizing Geithner – an action that NPR took and noted, but without naming me as the source of the criticism.  The weird part of the NYT story is that while it confirms the accuracy of the statement I made about Geithner it asserts that the statement by the unidentified “academic” criticizing Geithner was false. 

I want to stress that this is not a scandalous cover up of some incredible, secret fact that I revealed in my NPR interview.  The criticism I made of Geithner has been made publicly in thousands of blog posts and articles.  There is a consensus that Geithner holds the position that I ascribed to him.  To my knowledge, Geithner has never disputed that he opposed prosecuting HSBC and Standard Chartered for their massive felonies, fearing that it would cause their failure and could lead to a global financial crisis.  But the fact that my December 13, 2012 statement of Geithner’s position was accurate, had been made by many experts, had been publicly reported in major publications – particularly Protess’ December 10, 2012 article in the NYT – and was not denied by Geithner was not sufficient to keep Geithner’s aides from intervening with NPR to get my accurate statement about Geithner’s position and my criticism of that position censored.  Protess reported in his May 29, 2013 article that Geithner’s aides successfully intervened with NPR to censor my criticism of Geithner.

NPR edited the interview to remove my criticism of Geithner at the request of Geithner’s aides.  NPR should not have done that, but it did not prevent the general public from hearing my criticism.  I explained that Protess made the same point about Geithner’s position that I made in the NPR interview in a column published in the NYT three days before NPR interviewed me.  This makes Protess’ statements in his May 29, 2013 article (prompted by the release of Treasury documents that further support the accuracy of my, and Protess’, statement about Geithner and confirm that Treasury convinced NPR to censor my criticism of Geithner out of their broadcast and the transcript of the broadcast) all the more strange.   

“The agency also contacted and persuaded a news organization to withdraw a report that wrongly blamed Treasury for not indicting HSBC, the documents indicate. (It’s the job of the Justice Department to decide criminal charges, Treasury explained.)

When Treasury joined the Justice Department in announcing the case in December, a media outlet ran an overnight article in which a professor speculated that Mr. Geithner had not criminally prosecuted HSBC to avoid putting it out of business.

By dawn that day, Treasury officials e-mailed one another about the article. Shortly after, National Public Radio retracted the quote and issued a statement saying that Treasury had not been involved in the decision not to indict HSBC.”

Documents Show Obama Officials in Tension Over British Banks

Here’s the statement that NPR ran about removing my criticism of Geithner from their program.

Clarification: In an early radio version of this story, a former regulator was quoted speculating that Treasury Secretary Timothy Geithner did not want to put HSBC out of business. We should have made it clear that it is the Justice Department, not the Treasury Department, that made the decision to defer prosecution of HSBC.

The discerning reader will realize several things immediately.  First, I was not “speculating” about Geithner not wanting to put HSBC out of business.  Geithner had long made it plain that he did not want to put any systemically dangerous institution (SDI) out of business lest it cause a global financial crisis.  Second, I did not say that Geithner “made the decision to defer prosecution of HSBC.”  Third, the NYT mischaracterized NPR’s “Clarification.”  It is preposterous to claim “that Treasury had not been involved in the decision not to indict HSBC.”

We all know that DOJ “made the decision.”  That does not mean that Treasury is not “involved” in the decision-making.  Lanny Breuer (then head of the Criminal Division) gave public speeches emphasizing that in making the decision about indicting major firms (or even their senior officers) he was largely concerned by the economic impact that the failure of the firm could have.  (The NPR report makes this point.)  Had HSBC been convicted of the crimes DOJ charged it committed it would have been bankrupted.  One of the documents revealed by Public Citizens’ FOIA request to Treasury revealed that HSBC annually allowed $60 trillion in wire transfers through the U.S. (a trillion is a thousand billion) to be conducted without the required reviews to detect money laundering.  HSBC also conveniently ignored reviewing $15 billion in bulk cash transfers over three years.  These kind of massive failures are not accidents.  On just one portion of its illegal transactions HSBC failed to file over 7,000 required criminal referrals.  HSBC was a massive criminal enterprise.  Indeed, to our knowledge it is the second largest financial criminal enterprise in world history.  The only criminal enterprise we know to be greater is the LIBOR cartel – and HSBC is being investigated by several nations as an alleged co-conspirator in that fraud as well.  The scope of HSBC’s money laundering was so vast that it could not possibly survive a prosecution for its crimes.

Geithner made clear that Treasury was appalled by the prospect that any SDI would fail because it could cause a global crisis.  Anyone who has worked for DOJ or a financial regulatory agency knows that Treasury expresses its views to DOJ on such cases.  I have worked for both DOJ and a financial regulatory agency and I am a white-collar criminologist and attorney.  I know that only DOJ can make the formal decision whether to prosecute and that the Treasury seeks to influence that decision in cases it believes pose a risk to the financial system.

Here’s a thought exercise:  the Treasury Secretary claims that indicting an SDI will cause it to fail and warns that the failure could cause a global financial crisis.  The Attorney General ignores the Treasury Secretary, indicts the bank, and the world is thrown in a second Great Depression.  Guess what happens to the Attorney General?  Don’t worry; it’s a purely hypothetical question because no AG is going to take the risk.  The Attorney General, of course, will make the formal decision not to prosecute, but there’s nothing left for the AG to “decide” when Treasury is warning that the SDIs are IEDs that will blow up the global economy if anyone breathes on them through any prosecution.

Anyone familiar with my work, a group that includes Treasury and DOJ’s senior officials and NPR and the NYT’s financial reporters knows that I have been critical of both Geithner and Holder and Breuer’s embrace of “too big to prosecute” – particularly as it is applied to the SDI’s controlling officers.  They also know that I would never have claimed that Geithner could make the formal decision not to prosecute HSBC.  Protess is not gullible enough to believe that the members of Geithner’s staff who succeeded in getting NPR to remove my accurate criticism of Geithner’s support for the “too big to prosecute” doctrine would accurately characterize my criticism of Geithner in remarks that they had succeeded in censoring.  I did not “wrongly blame” Geithner – I was accurate in my criticism of him.

The affair gets weirder still for Protess knows I was accurate (or, more precisely, he would know it if he actually listened to what I actually said on NPR about Geithner, or even if he accurately read NPR’s clarification rather than the Treasury censors’ mischaracterizations of both).  The reason Protess would know I was accurate is that I was referencing Protess December 10, 2012 article in my criticism of Geithner.

My comments to NPR and the “Clarification” occurred on December 13, 2012.  One of the stories supporting my comment ran in the NYT on December 10, 2012 – under Protess’ byline (with Jessica Silver-Greenberg).

December 10, 2012, 4:10 pm

HSBC to Pay $1.92 Billion to Settle Charges of Money Laundering


It is important to realize that their December 10, 2013 story on the HSBC settlement was not critical of Holder, Breuer, and Geithner.  The story’s first judgmental statement about the settlement is made in the third paragraph.   I find the reporters’ conclusion preposterous:  “the settlement with HSBC is a major victory for the government.”  Please see my recent column regarding DOJ’s propagandists claiming that crushing defeats for justice represent triumphs.  I find it astonishing that the media treats DOJ’s and Treasury’s “Beltway Bob’s” as credible. 

The first paragraph of their story makes the central point I made in criticizing Geithner and DOJ.

“State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.”

Here is NPR’s “Clarification” of my statement that they censored out of the report at the request of Geithner’s aides: In an early radio version of this story, a former regulator was quoted speculating that Treasury Secretary Timothy Geithner did not want to put HSBC out of business.”  It’s interesting that accurately noting a report in the NYT now constitutes “speculating.”  Does anything think that DOJ decides without Treasury input what events would “destabilize the global financial system?” 

The December 10 story stated that Treasury had been involved in the discussions and that Treasury remained concerned that indicting HSBC could destabilize the global financial system.

“Four years after the failure of Lehman Brothers nearly toppled the financial system, regulators are still wary that a single institution could undermine the recovery of the industry and the economy.

But the threat of criminal prosecution acts as a powerful deterrent. If authorities signal such actions are remote for big banks, the threat could lose its sting.

Behind the scenes, authorities debated for months the advantages and perils of a criminal indictment against HSBC.

Some prosecutors at the Justice Department’s criminal division and the Manhattan district attorney’s office wanted the bank to plead guilty to violations of the federal Bank Secrecy Act, according to the officials with direct knowledge of the matter, who spoke on the condition of anonymity. The law requires financial institutions to report any cash transaction of $10,000 or more and to bring any dubious activity to the attention of regulators.

Given the extent of the evidence against HSBC, some prosecutors saw the charge as a healthy compromise between a settlement and a harsher money-laundering indictment. While the charge would most likely tarnish the bank’s reputation, some officials argued that it would not set off a series of devastating consequences.

A money-laundering indictment, or a guilty plea over such charges, would essentially be a death sentence for the bank. Such actions could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said.

Despite the Justice Department’s proposed compromise, Treasury Department officials and bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency pointed to potential issues with the aggressive stance, according to the officials briefed on the matter. When approached by the Justice Department for their thoughts, the regulators cautioned about the effect on the broader economy.”

So, Treasury was involved in the policy debates.  It “cautioned” against any indictment of HSBC.  It viewed any indictment of HSBC as a “death sentence” for HSBC and countered the argument of some prosecutors that such a death sentence “would not set off a series of devastating consequences.”

Geithner was crafty, so after having his staff argue, successfully, over the course of months, that DOJ should not indict HSBC because doing so would cause the financial skies to fall, he refused to put this in writing.  Geithner knew he had won the fight and didn’t want to leave his fingerprints on the charter of freedom for felons – the “too big to prosecute” doctrine.

“The Justice Department asked Treasury for our view about the potential implications of prosecuting a large financial institution,” David S. Cohen, the Treasury’s under secretary for terrorism and financial intelligence, said in a statement. “We did not believe we were in a position to offer any meaningful assessment. The decision of how the Justice Department exercises its prosecutorial discretion is solely theirs and Treasury had no role.”

I will do Protess and his colleague the honor of believing that they did not fall for this cynical, self-serving, and silly claim that “Treasury had no role” in the decision because Treasury lacks the competence to make “any meaningful assessment” of the impact of HSBC suffering a catastrophic failure.  I will note two obvious categories of questions (neither of which the reporters appear to have asked).  First, if Treasury is incapable of making “any meaningful assessment” of the risks that the failure of an SDI like HSBC pose to the global financial system – who is capable of making those assessments and did DOJ obtain their assessment?  Second, why didn’t DOJ prosecute HSBC’s senior officers who led the massive frauds and became wealthy due to the frauds?  Why did DOJ not even recover the wealth the senior officers gained by leading the second largest criminal enterprise in world history?

The December NYT story refutes Treasury’s claim that it had no involvement in the decision not to prosecute HSBC.  It documents that they played a large role over an extended period.  I was not “speculating” about Treasury’s involvement and their hostility to any prosecution of HSBC – I was citing facts I learned in part from the NYT.

The newest story by Protess in the NYT about Treasury’s convincing NPR to suppress my accurate criticisms of Geithner should prompt the NYT and NPR to review their coverage.  NPR was conned by Treasury’s lawyers, who emphasized the formalistic truism that DOJ makes the formal decision whether to prosecute.  I never said anything to the contrary that needed to be “clarified” or “retracted.”  What I said, and was censored out of the broadcast at the instigation of Geithner’s aides, was not only accurate but far more important than the formalistic truism.  I explained that Geithner’s views on the fragility of the SDIs led DOJ (or gave it the excuse) to make decisions that produced the disgraceful “too big to prosecute doctrine” that repudiates the rule of law and enshrines crony capitalism.  I also explained to the NPR reporter that there was no legitimate rationale for not prosecuting HSBC’s senior officers who directed its criminal enterprises.  I invite the NYT and NPR to explore these issues in interviews with me.  They are important issues and the recent disclosure of documents from Geithner’s aides confirms the accuracy of my criticism and a sad chapter in Treasury’s successful efforts to censor its critics.

10 responses to “The New York Times Butchers the Story of How Treasury Got NPR to Censor My Criticism of It

  1. If this sees the light of day, it will be buried on page 26 below the fold, such is the fate of mea culpas by TBTC (the Too Big To Care) and the story will be rife with enough ambiguities to float the battleship Missouri (or flood the state of Missouri). This is what happens in the Land of Exception(s) to those whom the title SERIOUS does not adhere. As long as the news is captured by corporate interests, the public will get only what crumbs fall from the feasting table, if the doGs (think hubris) don’t get there first.

  2. Sunflowerbio

    With watch dogs like Eric Holder and Lenny Brewer on the job, with Tim Geithner holding the chain and President Obama feeding them raw pablum, it’s no wonder that the SDI’s are quaking in their boots. Just wait until Obama nominates Geithner to head the Federal Reserve. Then the proverbial doo will hit the fan.

  3. There’s a story in the New Yorker about the Koch’s successfully nixing the scheduled broadcast on NPR of a documentary about them also.

    Although, to be fair, I should think being targeted by the Kochs would intimidate almost anybody, let alone a vulnerable broadcaster. But being intimidated by Geithner?????

  4. Hasn’t Neil Barofsky said to the same effect when he was SIG (Special Inspector General) of TARP? I read Barofsky’s recent book ‘Bailout’ when it came out, loaned it to Mom, so I don’t have the material in front of me to quote from it. Anyone know? And what about Sheil Bair, former FDIC Chair. Has she said something to that effect as well? My point, there are many “whistleblowers” as it were, that could confirm everything Black has/is saying here with enough standing to fully substantiate the factual premise.

  5. Fascism Anyone?

    6. Controlled Mass Media

    Sometimes the media is directly controlled by the government, but in other cases, the media is indirectly controlled by government regulation, or through sympathetic media spokespeople and executives. Censorship, especially in wartime, is very common.

    When will wake up?

  6. confirm that Treasury convinced NPR to censor my criticism of Geithner out of their broadcast and the transcript of the broadcast) all the more strange.

    No. Not strange. Egregious.

  7. I know someone who was active inside the Mexican cartel for years. He told me that the cartels have owned HSBC for years and years, just as they own the M casino in Vegas.

  8. Weird is right.
    When Protess article describes the atmosphere between Treasury and New York regulator, Benjamin M. Lawsky as
    …..The tension reflected a culture clash between Mr. Lawsky’s aggressive approach and the more staid (sedate/prim) philosophy common at the Treasury Department.
    Ha! What a joke.
    These two banks were openly providing drug lords with the ability to launder their illegal funds. For their part the drug lords could go get long prison terms. On legal plane and moral one Lawsky was right. The banks were abetting drug trafficker’s and that is a felony offense in most US states. A bank fine is a staid approach but it is also a sign of how low the standards are for crimes by financial community. I thought crime was not suppose to pay. But banks can commit any financial crime they want and just use their bank profits to pay any fines when they are caught.

  9. This is incredibly bad (the NYT piece, not Bill’s). I can’t imagine that this sort of obvious contradiction made it past NYT’s copy-editors:

    The Justice Department has explained that it follows guidelines requiring prosecutors to weigh indictments of businesses with “collateral consequences” like job losses and, in the case of big banks, a threat to the economy. And in a recent letter to Congress, the department explained that it has “contacted relevant government agencies to discuss such issues,” including federal regulators

    One has to assume that Treasury would be considered a “relevant government agency,” and thus was contacted by Justice regarding possible prosecution. Especially since, as the NYT puts it a few paragraphs later, “…Treasury joined the Justice Department in announcing the case in December…”

    But then, in blatant contradiction to what we have just been told, we get this:

    …National Public Radio retracted the quote and issued a statement saying that Treasury had not been involved in the decision not to indict HSBC.

    Uh…well, Treasury was obviously involved in the descision(s) made as to what to do about HSBC, which decisions did include not pursuing criminal charges. Of course, Justice is the agency that makes the final call on whether or not to file criminal charges, but that doesn’t mean that no one else is “involved” in the decision. Indeed, the article makes it plain that Justice sought out involvment from appropriate agencies and regulators.

    One has to wonder WTF is going through some of these journo’s minds as they are composing this claptrap. I can understand having an off day and maybe wording things poorly or screwing up the occassional fact, but doesn’t the NYT have copy-editors/fact-checkers to make sure they don’t publish such outright embarassing content?

    NYT=Not Yet Truth (?)