The banks and bankers that triggered or caused the global financial crash with their reckless drive for grotesque profits continue to get away with the consequences of their actions. The latest fine by US regulators on the Bank of America was a whopping $17bn. But, as has been pointed out by various bloggers and the Economist, it was not really so whopping. That’s because of the $17bn fine, for selling misleading mortgages to poor householders and distributing rubbish mortgage bonds to customers and investors, only $9bn is in cash. The rest is an amount reckoned to be equivalent to revising mortgages for householders in difficulty. That’s something that should have been done anyway by the banks. Instead, the US Justice department has done sweetheart deals with the banks so that they can count part of the fine as providing the service they ought to have done before.
The ratio of these corrections to cash is 89% in the case of the Bank of America deal; 44% for the JP Morgan fine of $13bn and 56% for the Citigroup deal of $7bn. The non-cash element keeps rising in every new deal. So it seems that bankers can avoid prosecution for offences that have devastated millions of livelihoods (loss of homes, jobs, savings etc) and can get a special deal with the authorities that increasingly does not involve even cash but simply a form of corporate ‘community service’. It’s time the banks were a public service and not money-making sharks designed to fleece the public (see my posts, https://thenextrecession.wordpress.com/2013/02/01/the-never-ending-banking-story/ and https://thenextrecession.wordpress.com/2010/09/15/banking-as-a-public-service/).
Not one banker in the US has faced a criminal charge out of the global financial crash while the fines are piddling compared to the estimated trillions of dollars lost by their customers and investors. And the fines will come out of the profits of the current shareholders, not from the gargantuan salaries and pensions of the chief executives (many of whom have done a runner) or even from the original shareholders. And the bulk of the settlements will be tax deductible. For destroying trillions in wealth and thousands of jobs, banks will get a write-off. And this is after former Fed Chairman Ben Bernanke, recently described the crisis in the banking system as worse than in the Great Depression: “September and October of 2008 was the worst financial crisis in global history, including the Great Depression….Of the 13 most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.” This is how far the bankers had destroyed America’s credit system.
The deals with the US Justice Department for JP Morgan or Bank America also mean that all the scandals are buried and won’t be revealed to the public – unlike the scandals revealed with HSBC’s laundering of Mexican drug cartel money or BNP’s laundering of cash for Iran and warlords in Sudan etc – all against US law. So US bankers are getting off scot-free with not even a slur on their characters, let alone a charge. After ‘fining’ Bank of America $17bn, the public will not know why.