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Latest Guilty Pleas Prove Big Bank Criminality ‘Rampant,’ But Jail Time Non-Existent

In announcing settlement, Attorney General Loretta Lynch calls the crimes ‘a brazen display of collusion’ that caused ‘pervasive harm’

By Deirdre Fulton

In the wake of Wednesday’s announcement that five global financial institutions have agreed to plead guilty to multiple crimes and pay about $5.6 billion in penalties for manipulating foreign currencies and interest rates, corporate watchdogs are reiterating the call to ‘break up the banks’ in light of their ongoing malfeasance.

As with other recent settlements, Wednesday’s news provides further evidence to those who say certain megabanks are still considered “too big to fail”—or criminal bankers to jail.

“There are two messages in today’s plea deal,” said Public Citizen president Robert Weissman in a statement on Wednesday. “First, criminality is rampant on Wall Street. Second, the era of too-big-to-jail is alive and well. Even as they beat their chests announcing how tough they are, government regulators refuse to apply to the giant banks the same rules that apply to everyone else.”

According to the Wall Street Journal:

Five global banks have agreed to pay more than $5 billion in combined penalties and will plead guilty to criminal charges to resolve a long running U.S. investigation into whether traders at the banks colluded to move foreign currency rates in directions to benefit their own positions.

Four of the banks, J.P. Morgan Chase & Co., Barclays PLC, Royal Bank of Scotland Group PLC, and Citigroup Inc., will plead guilty to conspiring to manipulate the price of U.S. dollars and euros, authorities said.

The fifth bank, UBS AG, received immunity in the antitrust case, but will plead guilty to manipulating the Libor benchmark after prosecutors said the bank violated an earlier accord meant to resolve those allegations of misconduct. UBS will also pay an additional Libor-related fine.

The New York Times adds:

The Justice Department forced four of the banks — Citigroup, JPMorgan Chase, Barclays and the Royal Bank of Scotland — to plead guilty to antitrust violations in the foreign exchange market as part of a scheme that padded the banks’ profits and enriched the traders who carried out the plot. The traders were supposed to be competitors, but much like companies that rigged the price of vitamins and automotive parts, they colluded to manipulate the largest and yet least regulated market in the financial world, where some $5 trillion changes hands every day, prosecutors said.

Underscoring the collusive nature of their contact, which often occurred in online chat rooms, one group of traders called themselves “the cartel,” an invitation-only club where stakes were so high that a newcomer was warned, “Mess this up and sleep with one eye open.”

In announcing the settlement, Attorney General Loretta Lynch called the megabanks’ crimes “a brazen display of collusion” that caused “pervasive harm.”

Lynch declared: “Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers.”

But as Weissman noted, “important questions remain about this plea deal,” including:

Will individual executives be prosecuted? And did the DOJ charge the parent companies in this case to avoid triggering potential sanctions with real and significant business consequences for the banks, including charter revocation hearings? The public deserves answers to these questions. In that information is some insight into whether the government continues to protect the megabanks—those colloquially labeled “too big to jail.”

“What becomes clear is that regulators genuinely are afraid of enforcing the law when it comes to the megabanks,” Weissman concludes. “As a result, and notwithstanding today’s announcement and others like it, these banks are not deterred from violating the law—indeed, they are literally not subject to the same standards as other banks and other companies. A democratic society cannot tolerate having banks above the law. There’s a solution to this problem: break them up.”

Earlier this month, Sen. Bernie Sanders (I-Vt.) introduced a bill to do just that—the Too Big to Fail, Too Big to Exist Act—under which regulators on the Financial Stability Oversight Council would compile a list of institutions which say they are so large that their collapse could trigger an economic crisis. The Treasury Secretary, in turn, would then have a year from the bill’s passing to break up such banks.

In a recent report, the Corporate Reform Coalition warned that regulators’ continued reluctance to crack down on megabanks leaves the U.S. vulnerable to another financial crisis.

“Avoiding another meltdown depends on the will of federal regulators to use the new powers they were granted in the Dodd-Frank Wall Street Reform and Consumer Protection Act,” said Jennifer Taub, author of the report and professor of law at Vermont Law School. “If they behave as if they are beholden to the banks, we will likely face a more severe crisis in the future.”

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  • jo6pac

    Attorney General Loretta Lynch
    I’m so thankful that this happened because just think if there were any real changes in doj? Hell there might be janitors and chauffeurs going to jail for this crime.
    Everything is on schedule, please move along.
    Thanks CT

  • http://Smilejamaicakrcl.com Bobbylon

    Just to make my liberal arts math easy. These banksters wrecked the economy to the tune of at least 5 trillion.

    5.6 billion, tax deductible, is 1%. Amortized to the cost of doing business.

    Obama made sure to alleviate his pals Lloyd and Jamie’s concerns that no matter the crime, they would never have to go to jail. Like George HW did to guys like Charles Keating in the Savings and Loan scam

    Putting Lloyd or Jamie in jail would disrupt the market. Can’t have that. Obama puts profit over Justice.

    Zero Hedge had a story this AM saying the banks were ecstatic on the terms. Obama and Lynch are laughing stocks. Hardly the incentive Pres. Peace Prize was going for.

    As Leona Helmsley said about taxes: laws are for little people.

    Kite a check, get 3 years in prison. Steal trillions, get Presidential Cufflinks

    And Hillary (D-Wal Mart) will be different, how?

  • http://Smilejamaicakrcl.com Bobbylon

    @jo6pac: Supposedly Lynch is gonna go after legal weed. Holder “puff puff passed” on that “opportunity”

  • http://firedoglake.com/ CTuttle

    Everything is on schedule, please move along.

    X’actly, jo…! 8-(

  • jo6pac

    Yes, nothing changes.

  • http://firedoglake.com/ CTuttle

    Steal trillions, get Presidential Cufflinks

    *heh* Jamie made sure he flashed’em while lobbyingtestifying on the Hill…! 😉

  • http://Smilejamaicakrcl.com Bobbylon

    I would love to askObama or Lynch: what level of illegality would be sufficient enough to actually send a banker to jail?

    https://m.youtube.com/watch?v=Re72di5phM0

  • JamesJoyce

    The Corptocracy is a moral hazard as was Slavocracy. This is a threat to the welfare of the republic. The myopic self interest of “Wall Street” has turned Smith’s “invisible hand,” into a marauding fist. Money now deemed speech has bought the American People’s servitude. Ike warned us. We are being sold out!

  • http://firedoglake.com/ CTuttle

    We are being sold out!

    We ain’t seen nothing yet, JJ…! 8-(

  • http://mosquitocloud.net/ aprescoup

    ‘I’ll Believe Corporations Are People When Texas Executes One’ – anonymous.

  • Bearpaw01

    How high is up?

    And seriously: “… one group of traders called themselves ‘the cartel’ ….”

    Were they being ironic, or just factual?

  • ThingsComeUndone

    We saw this movie before right before the great depression. I think we will have a war to distract us from the economy first before the economy collapses again. Assuming we can start a war fast enough.

  • ThingsComeUndone

    Obama’s legacy seems to be that he was willing to say all the right things to get elected and after he was elected convinced like a true Straussian that he new better than the voters he double crossed us. To bad for him by letting bankers get off he shows not a pro business environment he shows what happens when the teacher lets the bullies run the playground. Obama will be remembered like the substitue teacher who lost control of his class.

  • ThingsComeUndone

    I don’t see Obama telling off bankers like he told off protestors in Baltimore calling them looters. Sometimes the only way to get people to pay attention is with violence its sad the first African American President has so many police shooting African Americans and is doing nothing about it.

  • http://firedoglake.com/ CTuttle

    This is a no-brainer… On Wall Street, More Money Means More Ethical Problems

    They’ve been reporting much the same results, year-after-year…! *gah*

  • Bluedot

    When you get that answer, we would all like to hear it. You know, look forward.

  • Bluedot

    It is all pocket change. JPMorgan alone made over twenty billion dollars. So Jamie is having a big steak dinner while the peasants all think Morgan’s share of the 5.6 billion is very bad on them. . So if you really want to have an impact put somebody, anybody in jail. Even if you jail a lowly trader it will show the bastards this shit won’t work. Or better yet follow Bernie Sanders and break up the big banks. In the end that is the only way to stop it,or at least limit the scope.

  • http://Smilejamaicakrcl.com Bobbylon

    He will be a billionaire in under 5 years. That’s a lot of reasons to soothe his wounded ego

    Obama’s brilliance was making selling out look like buying in.

    He has never got in Boehner’s or McConnell’s grills like he hippie punched Elizabeth Warren

    He was always a Trojan Horse crypto republican. “We”wanted him to be transformational due to the incredible circumstance of electing a black man with a Muslim name 7 years after 9/11.

    Glen Ford of Black Agenda Report tried to warn us, after 8 years of Shrub we couldn’t believe that was the norm for our Presidents going forward.

    Thus 16 years of the Bushama Presidency. Neoliberalism + Neoconservatism = Neocolonialism.

    By the time TPP gets through, it won’t matter anymore. That’s what Lesser of Two Evils (TM) has gotten us. And with Grand Bargain post election 2016 it can and will get worse under Pres. Peace Prize

    But hey, Hillary (D-Wal Mart) will be our next chance to “vote transformational”. Look on the bright side

    /s

  • http://Smilejamaicakrcl.com Bobbylon

    Lloyd and Jamie could eat a live baby on Pay Per View and that would only net an extra zero tacked on to their “bill”

  • Hugh

    These settlements should really be viewed as immunity baths and political theater for us rubes. They are cheap at the price, and the price is less than what it is touted to be. The penalties are tax deductible meaning that a portion of their costs will be passed on to the rest of us. There are other scams, such as restitution programs. Such programs are routinely used to write off bad debts at par. Figure in what the banks made in their rigging and that there is no disgorgement of their illegal profits, divide by 5 (or thereabouts) and this isn’t even a blip on their screen.

  • Alice X

    That was me a few years back.

    Though I can’t claim originality.

    Another one

    A Judge in Texas in deemed Liberal if he gives a defendant a fair trial BEFORE he hangs him (or her).

  • JamesJoyce

    well said….

  • FoonTheElder

    It’s the golden age of the big corporation. Not only do they keep most of the gold, but they get the best of both worlds.

    They are a person when it is to their advantage to be a person. When it comes to crimes where it is not to their advantage to be a person, they instantly become a faceless entity.

  • http://open.salon.com/blog/bill_michtom michtom

    My letter to AG Lynch:

    Once again, AG Lynch, the DOJ has told a tale full of sound and fury and signifying very little.

    No one is indicted. Not one faces a trial. All fines are basically cost-of-doing-business expenses that will, once again, not stop these criminal enterprises from changing their felonious behavior.

    Like your grotesque settlement with HSBC for laundering money for drug cartels and terrorist-associated Saudi banks, life will go on for all these criminals.

    None of the actual felons pay any of the fines. The banks don’t lose their ability to do business and you pretend that you care about justice.

    If you really cared, you would funnel all these billions to the people in the United States that lost their homes, their mortgages and their pensions. You would stop these banks from ever doing business again and their personnel would spend significant portions of their lives in prison.

    Unfortunately, you just hold another meaningless press conference and pretend that anything will change.

    You are worse than a fraud. You, too, are part of a criminal enterprise.

  • http://open.salon.com/blog/bill_michtom michtom

    Very few people who pay any attention at all think the banks are hurting from this charade.

  • http://open.salon.com/blog/bill_michtom michtom

    Not the lesser of two evils, the more effective of two evils.

  • http://open.salon.com/blog/bill_michtom michtom

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” – Adam Smith

  • http://open.salon.com/blog/bill_michtom michtom

    “Despite the fact that HSBC admitted to laundering billions of dollars for Colombian and ]Mexican drug cartels (among others) and violating a host of important banking laws (from the Bank Secrecy Act to the Trading With the Enemy Act) [some of HSBC’s Saudi and Bangladeshi clients had terrorist ties], Breuer and his Justice Department elected not to pursue criminal prosecutions of the bank, opting instead for a”record” financial settlement of $1.9 billion, which as one analyst noted is about five weeks of income for the bank.”

    http://www.rollingstone.com/politics/news/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213