The Standard Chartered affair is as susceptible to multiple and conflicting interpretations as the plot of Rashomon. The only undisputed fact is that the bank paid $340 million to the New York State Department of Financial Services (the Department).1 This column will focus on two aspects of this episode, which is fading too quickly from public attention: (1) What will be the impact of continuing competition among financial regulators?, and (2) How is license revocation, as an enforcement tool, different from the tools that enforcement divisions have traditionally used?
Impact
What does the Standard Chartered episode demonstrate? Pick only one of the following possible answers:
(1) U.S. (or at least New York) regulators are seeking to damage British banking (and the preeminence of London as a banking center);2
(2) foreign banks should flee New York (where they are subject to heavy-handed and politically motivated enforcement);3
(3) the United States’ extraordinary fragmented system of financial regulation will regularly produce competition among regulators and sometimes overzealous, uncoordinated enforcement;4 or
(4) regulatory competition is desirable and worked in this case to prevent federal banking regulators (who behave more like a Chamber of Commerce than a watchdog) from once again sweeping a problem under the rug.5
