Why Pick on BNP Paribas?

To many Europeans, the $8.9 billion fine imposed by the US on the French financial-services company BNP Paribas for violating American sanctions against Cuba, Iran, and Sudan seems excessive. Three factors explain, if not justify, the size of the penalty.

CAMBRIDGE – To Europeans with whom I speak, the $8.9 billion fine imposed on the French financial-services company BNP Paribas for violating American sanctions against Cuba, Iran, and Sudan seems excessive. Yes, BNP did something seriously wrong. But $8.9 billion? Isn’t that extremely disproportionate for an otherwise highly responsible bank? French President François Hollande asked US President Barack Obama to intervene to have the fine reduced, as did the European Union’s commissioner for the internal market and services, Michel Barnier.

The fine is indeed much higher than those levied before. Hefty fines for currency-trading violations are not new (HSBC, for example, was hit with a $1.9 billion fine in 2012); but a fine close to $10 billion is.

Three factors, not all of which are being discussed, seem to explain the size of the penalty. First, BNP’s infraction was part of a pattern of deliberate and repeated behavior. Second, the settlement came at a time when the American authorities faced heavy criticism for being soft on big banks during and after the 2008 financial crisis. Finally, and more speculatively, the United States’ effort to make finance a more efficacious foreign-policy tool could have affected its treatment of BNP.

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