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“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

November 19, 2014 Posted by | Big Banks, Corporations, Wall Street | , , , , , , | Leave a comment

The Cheaters and Their Banks: Taking The Battle To The Banks

The Obama administration is rightly keeping the pressure on tax cheats and the bank executives who help them by stashing their money in secret accounts overseas. Now we would like to see the Internal Revenue Service and the Justice Department take the battle to the banks themselves. That’s the only way of getting them to drop this lucrative and illegal business.

The Justice Department has charged five bankers with helping wealthy Americans conceal their assets from American authorities. A former employee of Switzerland’s UBS who now works for rival Credit Suisse was arrested in January and accused of helping 100 to 150 Americans hide as much as $500 million from tax authorities.

A few weeks later, three former employees and one current banker at Credit Suisse were indicted for helping 17 Americans conceal assets in accounts at the bank and then helping them move the stash to other banks in Switzerland, Hong Kong and Israel once it was clear American authorities were on the trail of tax evaders at big Swiss banks.

This is a promising route both to recover unpaid taxes and to deter other Americans from trying to evade the I.R.S. this way. So far, however, the banks have faced no charges. The country-hopping by the Credit Suisse account holders in search of a safer hiding place suggests that cross-border tax evasion won’t be shut down until the institutions determine that secret offshore accounts are too risky a business.

The I.R.S.’s strategy gathered momentum when the agency went after UBS, which was caught sending bankers to the United States to offer tax evasion services and settled with the government. The bank paid a $780 million fine and exited the business. It promised to cooperate with the government and later revealed the names of some 5,000 American secret account holders. The case eventually led Switzerland to relax its bank secrecy laws and cooperate with American authorities.

Since then, some 20,000 Americans have disclosed their accounts to the I.R.S., taking advantage of programs that shielded them from prosecution in exchange for paying back taxes, interest and a substantial fine. UBS has since gotten out of the American cross-border banking business, as have Credit Suisse and other big Swiss banks. But there are still banks willing to open secret offshore accounts for wealthy Americans. It will take some more high-profile action against financial institutions to force them out of the racket.

By: The New York Times-Editorial, Opinion Page, March 13, 2011

March 15, 2011 Posted by | Banks, IRS, Justice Department, Offshore Accounts, Tax Evasion | , , , | Leave a comment

   

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