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May 21, 2015


It was announced today (May 21, 2015) that JPMorgan Chase and Citigroup along with Barclays and the Royal Bank of Scotland have pled guilty to crimes related to manipulation of foreign currencies and have been fined in excess of $5 billion for their criminal efforts, and though JPMorgan Chase and Citigroup have pled guilty, the agreement with the government, as usual, does not call for any jail time for any of the banking executives or directors of either bank. It is presumably the “bank” which did the dirty work and the “bank” which must pay the fine. No personal responsibility apparently accrues to the banking executives or the board or those who traded on their behalf in colluding to manipulate foreign currencies; it was the “bank” which is responsible for such Sherman anti-trust misdeeds as collusion between competitors, as here.

I have blogged on this before, and in a nutshell, here’s what I had to say about banks and the executives and the boards who run them: A banking corporation is a piece of paper sitting in some Secretary of States’ office – or whatever office the state law calls for. The bank does nothing; the corporate board and the bank’s executives act for and on behalf of the “bank.” They and only they are ultimately responsible for the “bank’s” conduct and misconduct of the banks’ executives, its board, its employees, agents et al., yet we continue to engage in this fantasy that the “bank” did this or the “bank” did that, a convenient if unreal means of avoiding sending bank directors and executives to jail and sticking the “bank” with a chump change fine while those truly responsible (the executives and directors) go on to the next item destined to show up on the bank’s future rap sheets. When will this charade end and the humans in charge pay the fines AND go to jail?

As I have also often blogged: We will never end Wall Street banks’ chicanery until they hear the clink of handcuffs in the boardroom. Given their record from what we already know (and this is probably only the tip of the iceberg), what message are our regulators sending to Wall Street banks? Go ahead, do your thing, and if we catch up with you, we will fine your “bank” but you will walk? What incentive does that give those who run these banks to take a straight and narrow path of the ethical over the acquisitive?

We know of JP Morgan Chase’s guilty plea to Chinese bribery under the Foreign Corrupt Practices Act (a felony) and the games Barclay’s pulled with its laundering of Mexican drug gangs’ money and doing banking business with Iran in violation of sanctions (still in effect). Nobody went to jail. The banks paid chump change fines and their executives and directors walked. JP Morgan Chase’s CEO, Jamie Dimon, even got a raise! Who says crime doesn’t pay?

How come bank robbers don’t walk but do hard time? After all, the money they take from nervous tellers is really chump change compared with the billions and billions the bankers extract from the rest of us via unlawful means. We can’t even identify the true defendants in these cases of overreach and manipulation of interest rates, foreign currency markets etc. We “rough up the banks” with a chump change fine while the true defendants go to the next page. How can we expect a change in banking ethics when we give the bankers no reason to change?

Traders in foreign currency markets who are dealing with an exchange of $5 trillion dollars a day need only a smidgen of change to make serious profit, and when the traders who were supposed to be competitors get their heads together and collude to manipulate this, the least regulated market in the financial world, and who make a killing because of their illegal collusive effort, you have a crime under the Sherman Act.

Their collusive effort resembles “spoofing” (or tricking the market) where supposed competitors lay off the market in favor of allowing one of the traders to build up a big position in a currency on the uncompetitive cheap, and then unload it suddenly, hoping to move the market to advantage of himself and his fellow colluders. Its effect is reminiscent of what some companies pulled in rigging prices of vitamins and auto parts not so long ago. Bankers have company in the illegal manipulation game.

So when are we the people going to go after the right defendants in these cases? When are we going to amend the anti-trust and other relevant criminal statutes to provide for penalties beyond treble damages and rarely used criminal sanctions, put some real teeth into the law as newly amended, and then proceed to enforce it?  How about amending Sherman to call for any such agreements on fines and imprisonment between regulators and banks to call for joint and several liability of directors to pay 50 percent of such assessment and the remaining 50 percent to be paid by the “bank” along with language requiring the government in egregious cases to institute criminal proceedings against those directors and executives of these “banks”( as well as their traders and agents) who are responsible for the manipulation of interest rates, foreign currency markets et al.? Gaming the market is the same as stealing a couple of layers removed.

The so-called veil of corporate non-liability is not and should not be applicable to shield criminal acts, so if we had such amendments to relevant laws and they were enforced, perhaps this would finally get the bankers’ attention (during visiting hours) and we could clean up this mess.   GERALD     E

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