Big Banks Don’t Commit Any Crimes … Do They?
Here are some recent improprieties by the big banks:
- Laundering money for drug cartels. See this, this, this and this (indeed, drug dealers kept the banking system afloat during the depths of the 2008 financial crisis)
- Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
- Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts
- Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)
- Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
- Cheating homeowners by gaming laws meant to protect people from unfair foreclosure
- Committing massive fraud in an $800 trillion dollar market which effects everything from mortgages, student loans, small business loans and city financing
- Engaging in insider trading of the most important financial information
- Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this
- Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this
- Charging veterans unlawful mortgage fees
- Cooking their books (and see this)
The executives of the big banks invariably pretend that the hanky-panky was only committed by a couple of low-level rogue employees. But studies show that most of the fraud is committed by management.
Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this and this.
But at least the big banks do good things for society, like loaning money to Main Street, right?
Actually:
- The big banks no longer do very much traditional banking. Most of their business is from financial speculation. For example, less than 10% of Bank of America’s assets come from traditional banking deposits. Instead, they are mainly engaged in financial speculation and derivatives. (and see this)
- The big banks have slashed lending since they were bailed out by taxpayers … while smaller banks have increased lending. See this, this and this
- A huge portion of the banks’ profits comes from taxpayer bailouts. For example, 77% of JP Morgan’s net income comes from taxpayer subsidies
- The big banks are literally killing the economy … and waging war on the people of the world
- And our democracy and republican form of government as well
Category: Legal, Think Tank
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
The golden rules of banking – They make the rules, and get the gold
“… The laws of supply and demand do not apply. When food producers compete to supply a supermarket, the retailer has the luxury of selecting the lowest bidder. But when it comes to investment banking, wages are very high even though the number of applicants is vastly greater than the number of posts. If the same was true of, say, hospital cleaning, wages would be slashed…”
“… There is a survivorship bias in both fund management and trading. If your career starts with some bad losses, it will quickly come to an end. So, by definition, veteran traders will have had initial success. But that could be down to luck, not skill…”
“…The trader-cum-executive will make the biggest mistake when he is in charge of the whole bank. By this stage, he will be personally rich and will remain so even if the entire bank fails, not least because:..”
http://www.economist.com/node/21558584
Barry, I couldn’t agree more. There are a lot of people who should be in jail for this, and although ridiculously slow, I still hope the weals of justice are turning.
After we throw these bums in jail, how do we insure that the next batch behave differently?
For that, I’ve put some ideas into this blog post, please let me know what you think:
http://thatretiredguy.blogspot.pt/2012/07/fixing-banking.html
[...] Are big banks criminal enterprises? Yes. (TBP) [...]
I believe its possible because of real market advantages… and its utility for the user… to move a considerable portion of individual commons-related expenditures (charity and political contribution) through local independent banks and/or credit unions.
I believe that this could also stimulate other business and additional deposits for smaller banks.
The Banksters are Gangsters.
Barry,
There was not anything new in the list. The real problem is that government has done nothing about all this fraud and malfeasance. If there are no prosecutions, then there is no risk in continuing to do these same things. Until we get an administration that wants to put another Bill Black in, and wants to support him, everything coming out of the financial system is suspect.
Instead, though, what we get is bailouts for the big banks and Dodd-Frank bill that punishes the community banks who were not much involved, if involved at all, in all the fraud and unethical conduct. We are punishing the wrong people.
[...] Are Big Banks Criminal Enterprises? (ritholtz.com) [...]