Five Major Banks to Plead guilty
to rigging currency markets
Source: Andre Damon, Guest Post
Five major international banks are expected to plead guilty as
soon as next week to criminal charges in the US related to their
deliberate manipulation of global foreign exchange markets, which
allowed them to rake in billions of dollars at the expense of retirees,
university endowments and municipalities.
Citigroup, JPMorgan Chase, Royal Bank of Scotland Group, Barclays
and UBS are expected to plead guilty to felony fraud and antitrust
charges. They will pay fines totaling several billions of dollars,
according to bank and regulatory officials who spoke anonymously with
the New York Times, Bloomberg and Reuters.
The effect of the guilty pleas will be essentially zero, beyond the
immediate costs of the fines levied on the institutions. As the Times
put it, “life will go on, probably without much of a hiccup.”
In the years since the financial crisis, federal regulators avoided
bringing criminal charges against banks and their executives, opting
instead for either cash settlements and so-called deferred-prosecution
agreements, in which charges are delayed on the basis of the banks’
compliance with certain conditions.
In 2012, it became clear that major global banks, including UBS and
Barclays, were systematically engaged in manipulating LIBOR (London
Interbank Offered Rate), the benchmark global interest rate on the basis
of which hundreds of trillions of dollars of financial contracts are
valued.
In June of that year, Barclays was fined $200 million by the
Commodity Futures Trading Commission and $160 million by the United
States Department of Justice. This was followed by UBS’s agreement in
December 2012 to pay regulators $1.5 billion in connection with the
scandal and an agreement by Deutsche Bank in 2015 to pay $2.5 billion to
regulators. Numerous other banks, including Citigroup and JPMorgan,
were fined by European authorities.
UBS was offered a deferred-prosecution agreement in connection with
the LIBOR scandal, but broke the terms of the agreement by manipulating
the $5.3 trillion-a-day foreign exchange markets in the subsequent
periods.
In late 2014, six banks—JPMorgan Chase, Citigroup, Bank of America,
UBS, Royal Bank of Scotland and HSBC—agreed to pay $4.3 billion to
federal regulators to settle civil charges.
The investigation charges also had a criminal component, which the
Justice Department is now seeking to settle with guilty pleas from the
banks. Unlike some previous cases, however, these guilty pleas are
expected to come not merely from the subsidiaries of the banks, but from
bank holding companies themselves.
Financial regulators have released voluminous records in connection
with the foreign exchange scandal, showing how brazenly and openly bank
traders discussed rigging currency rates, even as they knew their
employers were being investigated for similar activities with regard to
LIBOR.
Despite the unprecedented character of the pleas, the actual impact
of the admissions of criminal wrongdoing by the banks is expected to be
next to nothing.
As the Times reports, “Behind the scenes in Washington, the banks’
lawyers are also seeking assurances from federal regulators—including
the Securities and Exchange Commission and the Labor Department—that the
banks will not be barred from certain business practices after the
guilty pleas.”
In particular the banks are seeking waivers to retain their status as
“well-known seasoned issuers,” allowing them to raise credit more
easily, as well as the ability to operate mutual funds. The Times
reports that “a majority of commissioners” of the SEC are in favor of
granting such such waivers.
In fact, for the biggest corporations, being convicted of a felony is
increasingly becoming legally irrelevant, and just one element of their
normal operations.
As the Times points out, the guilty pleas are merely
“an exercise in stagecraft.”
One former Justice Department official told the Times that an
“underlying assumption” of the Justice Department is that “the bank is
not a criminal operation.” But the emergence of scandal after scandal,
including the selling
of toxic mortgage-backed securities that caused
the financial crisis, the forging
of foreclosure documents, widespread
complicity in Bernard L. Madoff’s Ponzi scheme, money laundering, and
tax evasion by Wall Street testifies to the fact
that the banks are, in
fact, criminal outfits.
Since taking office shortly after the onset of the financial crisis,
the Obama administration has sought not to hold the banks to account and
prevent criminal wrongdoing, but rather to conceal their crimes and,
when this becomes impossible, to issue wrist-slap punishments that allow
the banks to go on largely as before.
In these cases, the fines levied by financial regulators remain a
cost of doing business, and pale in comparison with the billions of
dollars made by the major banks every year through criminal activities.
The guiding principle of the Obama administration, in the words of
former Attorney General Eric Holder, is that the giant banks are “too
big to jail.” As the Times article explained, prosecutors are “mindful
that too harsh a penalty could imperil banks that are at the heart of
the global economy.”
In exchange for their services, top financial regulators are almost
universally provided with high-paying positions in Wall Street after
their stints with the government.
Most notably, Ben Bernanke, the former Federal Reserve chairman who
funneled trillions of dollars in government funds to Wall Street,
announced last month that
he has been hired by Chicago-based hedge fund
Citadel LLC. This followed the announcement in November 2013 that former
Treasury Secretary Timothy Geithner joined the hedge fund Warburg
Pincus.
To this day, not a single executive at any major bank has been
criminally prosecuted for helping to cause the financial crisis, or any
of the crimes that followed.
3 comments:
The reason bank management doesn't go to prison is because banks operate under the Justice Department. Bankers are one of their own being under the Justice Department.
That is why is so easy for the Justice Department to lock down your accounts and/or seize money from your bank accounts.
We desperately need De-jure Grand Juries to jail these criminals working for the banks and the Justice Department. Ken T.
I agree... These guys need to go to prison... So laughable... These guys are paying the fines out of the money they "Stole" from the taxpayers... Do we get that money back from the fines they pay.... Of Course NOT! More evidence of massive Corruption!!!
Until we establish the Common Law court system we can't prosecute anyone! They own the Admiral Law court system! The Pope removed the protection of the individuals who manage the corporations that are committing the crimes. They can now be held personally accountable for their crimes against we the people. We need to eliminate the Electoral College! This would be a great time for NESARA!
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