The New York Times Butchers the Story of How Treasury Got NPR to Censor My Criticism of It
by William K. Black, New Economic Perspectives
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.”
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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).