When a self-described cabal repeatedly engages in what the attorney general calls “brazenly illegal behavior” and pleads guilty to criminal acts, it is reasonable to expect its members will get some jail time. But not in the paradoxical world ruled by mega banks and paralyzed by fears that being too harsh with banks deemed too big to fail might implode the economy.
Consequently, JPMorgan Chase, Barclays, Citigroup, and the Royal Bank of Scotland, which recently pleaded guilty to conspiring to manipulate international currency markets, will collectively pay only $5.7 billion in state, federal and foreign fines for a scam that ran six years and netted them $85 billion. A fifth bank, UBS, cooperated with investigators and pleaded guilty to a charge in a separate investigation.
Currency manipulation inflates the cost of imported consumer goods ranging from phones to clothing. That means Americans who purchased these items have already paid for the banks’ crimes. But they will pay even more. The banks will likely charge higher service fees to recover the cost of their fines.
That’s not justice. Some people busted for small amounts of marijuana face jail time. Was no one in the executive suites aware of the banks’ criminal acts? These sweetheart plea deals are hardly a deterrent to future misdeeds. Before the deals were even struck, the banks extracted assurances from banking regulators that their businesses would in no way be inconvenienced by the guilty pleas.
The whole affair is proof that this nation hasn’t taken to heart lessons learned from the subprime mortgage scandal that was one of the primary causes of the 2008 recession. Financial institutions were let off the hook while millions either lost their home or saw its value plummet. The banking industry’s avaricious recklessness wiped out retirement accounts and created record unemployment from which the nation is still trying to fully recover.
Lofty speeches from the White House and Congress led to promises to better regulate financial institutions, but too little has changed. In fact, last year President Obama and Congress signed off on a deal, authored by Citigroup lobbyists, that rolls back a ban on banks using federally insured funds to gamble on highly speculative stock derivatives. That leaves taxpayers in the lurch to cover stock losses.
Attorney General Loretta Lynch has promised to aggressively pursue financial crimes, but it’s hard to know what that means based on the Justice Department’s track record under her predecessor, Eric Holder. Maybe Lynch should take a hint from prosecutors in Iceland, where four top bankers were jailed, or Ireland, where two bankers were recently convicted.
The United States should just as easily find the will and a way to get tough with greedy bankers, and prosecute the ones responsible for crimes.