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Snapshots of an Era of Bank Greed and No Accountability

JPMorgan Chase CEO Jamie Dimon Why does he still have his job?

I thought that, given all the pervasive bank crimes over the last several years, we wouldn’t have a time when the roof appeared to cave in on the financial industry. But I’m getting that feeling today. All of the criminality and venality and greed seems to be coming to a head.

Take JPMorgan Chase, not but a couple months ago thought to be one of the most honest and scrupulous banks around. Just today, you can read about their disclosure of professional misconduct by traders in the Chief Investment Office trying to hide their Fail Whale losses, furthering that criminal investigation; a lawsuit over the bank pushing in-house proprietary funds on their clients, acting in the interests of their own bonuses rather than out of fiduciary duty to clients; and a different class-action lawsuit over the Fail Whale trades led by six pension funds, alleging false and misleading statements. Not to mention the resistance to giving officials documents about possible manipulation of the energy markets, which is a few days old. Michael Crimmins makes an excellent case that Jamie Dimon should be fired by his board for failing to maintain internal controls when the traders in the London unit hid Fail Whale losses. And this is all just one bank, which previously had a decent reputation!

Then there are the allegations from the new Senate Permanent Subcommittee on Investigations report on HSBC, Europe’s largest bank, showing how lax controls led to money laundering for Mexican drug cartels and terrorist financing entities, which isn’t even a new problem. But seeing it so clearly spelled out in a Senate report is novel:

The report into HSBC, released ahead of a Senate hearing on Tuesday, says huge sums of Mexican drug money almost certainly passed through the bank.

Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the British bank […]

Many of HSBC’s breaches of US anti-money laundering relate to its use of bearer share accounts. Under the rules for these accounts, ownership of shares and the income they incur can be passed from person to person in secrecy.

HSBC’s US subsidiary HBUS had opened more than 2,550 accounts for bearer share corporations.

The report, from SPSCI chair Carl Levin, also faults the regulators for their failures, but at this point that’s just par for the course.

And finally you have the Libor scandal, which I’ll detail in a separate post, but banks are girding themselves for more revelations there, preparing for thousands of lawsuits from community banks and in the case of the Royal Bank of Scotland refusing to turn over information in the case.

This is ONE DAY of headline-scanning on the banking industry. It does not come at a time where big banks are collapsing. This is the normal course of events in an era of no accountability, with greed and criminality having totally infested the system.

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David Dayen

David Dayen