#true conservatism

The only hope [for Britain] is a Toryism which... should refuse to identify itself philosophically with that ‘Conservatism’ which has been overrun first by deserters from Whiggism and later by businessmen.

Five hundred years ago, the Catholic Church just about ruled all of Western Europe. Yes, there were princes, dukes, and kings. There was even an emperor, the Holy Roman Emperor. Like him, they all ruled, more or less, at the pleasure of the Bishop of Rome, aka the Pope.

Back then, the reasoning was simple: the Church had property in a culture with little, it had thousands of educated men and women in a culture with few, and it represented the word of an almighty God, a truer law to most Europeans than any they would ever face while they drew breath.

For these reasons Europeans were dependent on the Church. They gave what they could to maintain the Church infrastructure, the network of chapels and monasteries and cathedrals that crossed borders and languages and provided both unity and certainty, at least to those not wealthy enough to buy someone off.

With so much money to be made, it really isn't a shock that what ended that domination, and launched centuries of sectarian violence, was greed. Power struggles in the 1300's led to competing popes in competing countries. By 1500, the reunited Church was back in Rome and in the middle of a building spree, centered on building a new St. Peter's Basilica. It would be designed by the greatest architects and artists Italy had to offer, it would be better and more opulent than any church in christendom, and it would cost a staggering amount of money in any age.

To help finance this, Pope Leo X approved the selling of indulgences with the money specifically earmarked for St. Peter's. Far away from Rome, with no government oversight and more than a few ambitious men hoping to work their way up the organizational ladder, these expensive indulgences started to be sold for reasons the Pope may not have intended, and even if he did, not ones he could ever admit to (except to his confessor).

What is an indulgence? you might ask. It is a reduction in "temporal penance" for "venial sins". Basically, if you were selfish when you should have been selfless and no one came to harm, or someone came to harm and it was not your intent, an indulgence would reduce the amount of time you spent in Purgatory. That is, it would reduce that time if and only if you had already been absolved of the sin for doing so, otherwise it was worthless. You could confess and do penance, always a safe bet, or do "good acts" that make up for whatever went wrong. For each good act, you got time off for good behavior.

If that sounds like a lot of work, a lot of people in Europe in the early 1500's thought so, too. And where there's demand for instant gratification, you can be sure to find supply. Men claiming to work for the Church - some of whom actually did - began selling indulgences for just about anything. The official job title, after all, was "pardoner". No confession? No problem. A mortal sin? Buy two. Buy a hundred. Buy the most expensive ones you can find. They were selling "Get Out Of Jail Free" cards and seemed to be keeping many of the proceeds for themselves.

At this point it didn't matter whether the pardoners were misrepresenting what an indulgence was supposed to be able to do or whether the Church claimed responsibility or not, the sales were being made in its name and some of the money was going into building opulent churches. If there was a perception among the poor and the not so poor that the rich could buy their way out of Purgatory or even Hell, it was because there already was a sense that the law, be it in Heaven or on Earth, did not apply equally.

Martin Luther, among others, had seen enough. His criticism, or as he saw it, suggestions for reform, gained traction. The moral high ground had been ceded. Understandably, having much to lose by listening, the Roman Curia - aka, Church management - did their best to shut him up.

And the rest is very much history. Within a decade of Luther nailing his suggestions to the chapel in Wittenberg, the Church had lost most of its followers in the region to Lutheran services. A decade after that, an emboldened Henry VIII killed their monopoly in England, seizing their assets for himself.

Why bring all of this up, aside from it being Christmas? The Hongkong and Shanghai Banking Corporation Limited, aka, HSBC. It's come a long way from its beginnings as an enabler for colonial trade in India and China. As you can attest by seeing one of their ATM's on every other corner and one of their ads every hour on TV, they are now one of the biggest banks in the world. They are also, if we are to believe the United States Department of Justice, one of the most corrupt. 

Two weeks ago, they agreed to a deferred prosecution agreement (DPA) and a fine of just over $1.9 billion, which many have noted is a record fine for a bank. They were caught laundering money for Mexican drug cartels and enabling transactions for just about every country the United States holds sanctions against. Maybe you don't think the sanctions thing is a big deal - they are a British bank after all - but they do an enormous amount of business in the United States, taking in far more than $1.9 billion, and, oh, yes, the drug cartels, there's just no excuse for that. It is, quite literally in some cases, blood money.

So, what they heck is a DPA? It means that HSBC has to reform, restructuring its compliance department into something that understands what the word means and that will provide proper oversight of those naughty bankers who might be tempted towards sin. If HSBC gets caught not implementing the Justice list of recommendations, the firm may be prosecuted and dissolved, a sort of corporate death penalty. The reason the Justice Department went for this over what was done to Arthur Anderson Accounting following Enron is that HSBC is, essentially, too big to fail. There are too many jobs to be lost, and it would have to great an impact on the rest of what is a fragile economy.

And if you believe that, you may have a future in government oversight. The catch in the DPA - quite probably pushed by the Treasury Department - is that is requires that HSBC get caught. Again. They've already been caught three times in the last decade doing all sorts of corrupt and maybe just a little bit evil things (like predatory lending), and that's not counting waiting for the other shoe to drop in the LIBOR scandal, which has already nailed Barclay's and UBS. The idea that executives at HSBC won't find some other way of cheating their customers or funneling drug money around the globe is a joke. As long as they don't violate the terms of the DPA, they never even have to confess to wrongdoing publicly. "Mistakes were made" will be their catechism.

Iowa Senator Chuck Grassley is right: "If heads don't roll, nothing's going to change." As a barometer for public outrage, Grassley's a good one to follow. He tends to be slow to change, then out in front when he has. That makes him a "true conservative", a rare breed in Congress days. If he's out in front on this now, odds are its time may have come.

So there may end up being prosecutions of individuals - the DPA is strictly for the corporation, not its employees - but even a few token sacrifices of low-level employees to public outrage won't solve the corruption deep at the heart of this. As long as banks know the cost of doing business won't include some sort of corporate death penalty, they'll pay whatever fines they have to and sacrifice whatever vice-presidents they have to, and they'll keep on play their game.

And here's why the Obama administration's unwillingness to prosecute banks and their senior executives in the wake of these scandals is something we should all be worried about: as long as the perception lasts that there is one set of laws for banks and their executives and another set of laws for everybody else, public confidence in banks and the governments overseeing them will continue to erode. Isn't that what we've been seeing? Isn't that what we're really talking about when we talk about a "lack of consumer confidence"?

We've indulged the banks and their empty promises long enough. It's time for real reform. It's time to put the fear of God into them.