“Relentless Wal Street Crime Spree”: Fines Are Not Adequate Deterrents To Corporate Misbehavior
When future historians look back at our era, they will doubtless be puzzled about how we allowed it to come to pass that faceless corporations were granted all the freedoms and protections of real people, but faced none of the consequences that real people face for criminal behavior. This puzzle is related to the problem I wrote about earlier this morning, in which social problems for normal people are solved with fines and jail time, but social problems caused by corporate “citizens” are given market solutions and self-regulation instead.
The latest case in point comes as six major banks guilty of manipulating currency markets were given the laughably small fine of $4.3 billion, and not a single one of the actual perpetrators is coming close to facing jail time.
On Wednesday, six massive international banks agreed to pay $4.3 billion to settle allegations from regulators in the United States, the United Kingdom, and Switzerland that their traders tried to manipulate the $5.3-trillion-a-day foreign-currency exchange market. But Wall Street watchdogs say the banks got off with a slap on the wrist.
From 2008 through 2013, traders at JPMorgan Chase, Bank of America, Citigroup, HSBC, the Royal Bank of Scotland, and UBS colluded to coordinate the buying and selling of 10 major currencies to manipulate prices in their favor….
In the real world, the crime spree being perpetrated by global corporations, particularly those in the financial sector, will never abate until the criminals perpetrating them are actually thrown in jail.
But critics say the banks, which were not forced to admit wrongdoing, deserved a much harsher punishment. “The global too-big-to-fail banks are again allowed to evade responsibility and accountability by using shareholders’ money to pay big fines, which will generate headlines but do little if anything to stop the relentless Wall Street crime spree,” Dennis Kelleher, the president of Better Markets, a financial reform advocacy shop, responded in a statement.
David Weidner, who covers Wall Street for MarketWatch, agrees. The settlements “appear to be just another cost-of-doing-business budget line for the banks,” he wrote. What’s more, financial reformers say, none of the employees involved in the rate-fixing will face criminal charges. “It’s corrupt, as usual,” says one House staffer. Regulators should “send crooks to jail.”
Fines are utterly inadequate to deter this sort of behavior. We understand this implicitly when it comes to check kiters and liquor store robbers. If you’re convicted of those things you go to jail. But if you collude to debase another country’s entire currency for your own profit, your company pays a small fine.
That’s going to look very weird and very corrupt in about 100 years. Or else it won’t–in which good luck to us all.
By: David Atkins, Political Animal, The Washington Monthly, November 15, 2014
“The Corporate Predator State”: This Isn’t The Free Market, It’s A Rigged Market
Bipartisan agreement in Washington usually means citizens should hold on to their wallets or get ready for another threat to peace. In today’s politics, the bipartisan center usually applauds when entrenched interests and big money speak. Beneath all the partisan bickering, bipartisan majorities are solid for a trade policy run by and for multinationals, a health-care system serving insurance and drug companies, an energy policy for Big Oil and King Coal, and finance favoring banks that are too big to fail.
Economist James Galbraith calls this the “predator state,” one in which large corporate interests rig the rules to protect their subsidies, tax dodges and monopolies. This isn’t the free market; it’s a rigged market.
Wall Street is a classic example. The attorney general announces that some banks are too big to prosecute. Despite what the FBI called an “epidemic of fraud,” not one head of a big bank has gone to jail or paid a major personal fine. Bloomberg News estimated that the subsidy they are provided by being too big to fail adds up to an estimated $83 billion a year.
Corporate welfare is, of course, offensive to progressives. The Nation and other media expose the endless outrages — drug companies getting Congress to ban Medicare negotiating bulk discounts on prices, Big Oil protecting billions in subsidies, multinationals hoarding a couple of trillion dollars abroad to avoid paying taxes, and much more.
But true conservatives are — or should be — offended by corporate welfare as well. Conservative economists Raghuram Rajan and Luigi Zingales argue that it is time to “save capitalism from the capitalists,” urging conservatives to support strong measures to break up monopolies, cartels and the predatory use of political power to distort competition.
Here is where left and right meet, not in a bipartisan big-money fix, but in an odd bedfellows campaign to clean out Washington.
For that to happen, small businesses and community banks will have to develop an independent voice in our politics. Today, they are too often abused as cover for multinational corporations and banks. The Chamber of Commerce exemplifies the scam. It pretends to represent the interests of millions of small businesses, but its issue and electoral campaigns are defined and paid for by big-money interests working to keep the game rigged.
An authentic small-business lobby has finally started to emerge, as William Greider reports in the most recent issue of the Nation. The American Sustainable Business Council, along with the Main Street Alliance and the Small Business Majority, are enlisting small business owners to speak for themselves — and challenging the corporate financed propaganda groups such as the Chamber and the National Federation of Independent Business. Their positions often align with those of progressives. They loathe the big banks and multinationals that work to undermine competition.
Greider reports on the antipathy these small business owners have for the big guys. Camille Moran, president and chief executive of Caramor Industries and Four Seasons Christmas Tree Farm in Natchitoches, La., rails against the “Wall Street wheelers and dealers.” They knew, she argues, that they “ would get no sympathy saying that ending the high-income Bush tax cuts would hurt them, so instead they pretend it would hurt Main Street small business and employment. Don’t fall for it. . . . That’s a trillion dollars less we would have for education, roads, security, small business assistance and all of the other things that actually help our communities.”
ReShonda Young, operations manager of Alpha Express, a family-owned delivery service in Waterloo, Iowa: “We’re not afraid to compete with the biggest delivery companies out here, but it needs to be a fair fight, not one in which big corporations use loopholes to avoid their taxes, stick our business with the tab.”
Polls show these aren’t isolated views. The ASBC, the Main Street Alliance and the Small Business Majority sponsored a poll by Lake Research of small business owners. Ninety percent believe “big corporations use loopholes to avoid taxes that small businesses have to pay,” and three-fourths said their own businesses suffer because of it.
The ASBC and its allies have the potential to become what Jamie Raskin, a Maryland state senator, dubbed a “Chamber of Progress,” a small-business voice that is willing to take on the big guys that tilt the playing field.
The possibilities are endless. Wall Street argues for rolling back financial regulation on the grounds that it hurts community and small banks. What if community and small bankers joined the call of conservative Dallas Federal Reserve President Richard Fisher to break up the big banks?
Multinational executives have just launched the “LIFT America” Coalition to push for a territorial tax system that would exempt from U.S. taxes all profits reported abroad. ASBC and its allies could rally small businesses to demand closing down overseas tax havens and imposing a minimum tax on profits sitting abroad, so that they didn’t face a higher tax burden that their global competitors.
In today’s Washington, powerful corporate interests stymie progress on areas vital to our future. Can a right/left, small-business/worker odd bedfellows alliance emerge to counter the predatory interests? We can only hope so.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 26, 2013
“The Sentiment Is Swinging”: Unanimous Senate Vote Bolsters Movement To Break Up Big Banks
It’s nearly impossible to get 99 U.S. senators to agree on anything.
But this past weekend, 99 senators agreed to send a non-binding message that the $83 billion subsidy “too big to fail” banks get from the government needs to end. The measure was co-sponsored by senators Sherrod Brown (D-OH) and David Vitter (R-LA).
The implicit subsidy first came to light in February when a Bloomberg News report found that “recurrent bailouts of the largest financial institutions have given [big banks] a unique advantage: They get a break on their borrowing costs, because creditors expect taxpayers to support them whenever they get into trouble.”
Shortly thereafter, Attorney General Eric Holder made the shocking admission that the Justice Department exercises restraint in prosecuting big banks for fear of shocking the global financial system.
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” Holder said, during testimony to the Senate Banking Committee.
Now all of the Senate’s Republicans have joined with senators Brown and Elizabeth Warren (D-MA) — who have long warned of the big banks’ continued ability to wreck havoc on the economy — to call for an end to the implicit subsidy.
“I’m glad that Republicans and Democrats can agree: ‘Too big to fail’ needs to end, and these big-bank subsidies make no sense,” Senator Warren said.
Bank lobbyists have denied that the subsidy exists. But as a Bloomberg editorial notes, they’ve rejected any steps that would prevent the government from having to serve as their backstop in case of a crisis.
“If big banks don’t get a subsidy on their debt, it’s hard to understand why they’re so adamantly opposed to measures, such as increased capital requirements, that would put a limit on their borrowing,” the editors noted. “Large banks commonly borrow $25 or more for each $1 in equity — or capital — they get from their shareholders, compared with less than 50 cents per $1 of equity for the average U.S. corporation.”
Financial reform following the financial crisis was weakened by bank lobbying. As Senator Dick Durbin (D-IL) noted at the time, the “banks own the place.” And by “the place,” he meant Congress.
This vote shows the sentiment is swinging against the banks. Whether senators are willing to vote against them when actual legislation is on the line still remains to be seen.
By: Jason Sattler, The National Memo, March 25, 2013
Letting The Banks Off The Hook: Top Bank Regulator Is Back To Its Old Tricks
Judging by last week’s performance, it sure looks as though the country’s top bank regulator is back to its old tricks.
Though, to be honest, calling the Office of the Comptroller of the Currency a “regulator” is almost laughable. The Environmental Protection Agency is a regulator. The O.C.C. is a coddler, a protector, an outright enabler of the institutions it oversees.
Back during the subprime bubble, for instance, it was so eager to please its “clients” — yes, that’s how O.C.C. executives used to describe the banks — that it steamrolled anyone who tried to stop lending abuses. States and cities around the country would pass laws requiring consumer-friendly measures such as mandatory counseling for subprime borrowers, or the listing of the fees the banks were going to charge for the loan. The O.C.C. would then use its power to either block or roll back the legislation.
It relied on the doctrine of pre-emption, which holds, in essence, that federal rules pre-empt state laws. More than 20 times, states and municipalities passed laws aimed at making subprime loans less predatory; every time, the O.C.C. ruled that national banks were exempt. Which, of course, rendered the new laws moot.
You’d think the financial crisis would have knocked some sense into the agency, exposing the awful consequences of its regulatory negligence. But you would be wrong. Like the banks themselves, the O.C.C. seems to have forgotten that the financial crisis ever took place.
It has consistently defended the Too Big to Fail banks. It opposes lowering hidden interchange fees for debit cards, even though such a move is mandated by law, because the banks don’t want to take the financial hit. Its foot-dragging in implementing the new Dodd-Frank laws stands in sharp contrast to, say, the Commodity Futures Trading Commission, which is working diligently to create a regulatory framework for derivatives, despite Republican opposition. Like the banks, it views the new Consumer Financial Protection Bureau as the enemy.
And, as we learned last week, it is doing its darndest to make sure the banks escape the foreclosure crisis — a crisis they created with their sloppy, callous and often illegal practices — with no serious consequences. There is really no other way to explain the “settlement” it announced last week with 14 of the biggest mortgage servicers (which includes all the big banks).
The proposed terms call on servicers to have a single point of contact for homeowners with troubled mortgages. They would have to stop the odious practice of secretly beginning foreclosure proceedings while supposedly working on a mortgage modification. They would have to hire consultants to do spot-checks to see if people were foreclosed on improperly. (Gee, I wonder how that’s going to turn out?)
If you’re thinking: that’s what they should have done in the first place, you’re right. If you’re wondering what the consequences will be if the banks don’t abide by the terms, the answer is: there aren’t any. And although the O.C.C. says that it might add a financial penalty, I’ll believe it when I see it. While John Walsh, the acting comptroller, called the terms “tough,” they’re anything but.
No, the real reason the O.C.C. raced to come up with its weak settlement proposal is that last month, a document surfaced that contained a rather different set of terms with the banks. These were settlement ideas being batted around by the states’ attorneys general, who have been investigating the foreclosure crisis since late October. The document suggested that the attorneys general were not only trying to fix the foreclosure process but also wanted to penalize the banks for their illegal actions.
Their ideas included all the terms (and then some) included in the O.C.C. proposal, though with more specificity. Unlike the O.C.C., the attorneys general had devised a way to actually enforce their settlement, by deputizing the new consumer bureau, which opens in July. And they wanted to impose a stiff fine — possibly $20 billion — which would be used to modify mortgages. In other words, the attorneys general were trying to help homeowners rather than banks.
By jumping out in front of the attorneys general, the O.C.C. has made the likelihood of a 50-state master settlement much less likely. Any such settlement needs bipartisan support; now, thanks to the O.C.C., there’s a good chance that Republican attorneys general will walk away. The banks will be able to say that they’ve already settled with the federal government, so why should they have to settle a second time? If they wind up being sued by the states, the federal settlement will help them in court.
“It’s a vintage O.C.C. move,” said Prentiss Cox, a law professor at the University of Minnesota who was formerly an assistant attorney general. “It is clearly an attempt to undercut the A.G.’s”
Old habits die hard in Washington. The O.C.C.’s historical reliance on pre-emption should have died after the financial crisis. Instead, it’s merely been disguised to look like a settlement.
By: Joe Nocera, Op-Ed Columnist, The New York Times, April 18, 2011
Share This Blog
mykeystrokes.com- “The Unrelenting Hostility Of Washington’s Courtier Press”: The Media’s Crusade Of Scandals Against Hillary Clinton
- “Endorsing This Philistine”: The Christian Right Has Surrendered To Trump
- “Cop Killers Serve No Cause”: It’s Getting To The Point Where No Lives Matter
- “We’re Not Post-Racial Yet”: The Demons Of Our Racist Past Still Haunt Us
- “Ghosts Of History”: Why America Recoils From Donald Trump
mykeystrokes.com 