“The greatest triumph of the banking industry wasn’t ATMs or even depositing a check via the camera of your mobile phone. It was convincing Treasury and Justice Department officials that prosecuting bankers for their crimes would destabilize the global economy.”

-Barry Ritholtz

 

I have the above quote in a piece by Dan Gross int he Daily Beast this week. The very next line (which did not make it to print) is “It was a license to steal, and its one they have exploited relentlessly.”

Dan goes on to add:

“From the beginning of the financial scandal, there has been a noticeable lack of criminal prosecution at the largest institutions. Yes, the Securities and Exchange Commission and the U.S. Attorney for the Southern District of New York have cracked down on insider trading, and have sent scores of people to jail for illicit schemes that may have netted tens or a few hundred million dollars. . . . But that’s small change compared with the damage inflicted in the mortgage and LIBOR scandals.

A pretty clear rule of thumb has emerged: if you work at a well-known, large, systematically important financial institution, you may lose your bonus—but not your freedom. Simply put, authorities in the U.K., Switzerland, and the U.S. are not eager or willing to pursue banks to the fullest extent of the law. The trauma of the Lehman Brothers collapse has caused prosecutors around the world to treat banks with kid gloves. And that may be the greatest scandal stemming from the fall of 2008. (Emphasis added)

The full piece is worth a read.

 

 

Source:
Why Do Banks Get Away With Murder?
Dan Gross
Daily Beast, February 7, 2013
http://www.thedailybeast.com/articles/2013/02/07/why-do-banks-get-away-with-murder.html

Category: Bailouts, Legal, Really, really bad calls

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.

32 Responses to “The Greatest Triumph of the Banking Industry”

  1. MayorQuimby says:

    Bankers are now “made men”.

    “See, it’s the highest honor they can give you. It means you belong to a family and crew. It means that nobody can fuck around with you. It also means you could fuck around with anybody just as long as they aren’t also a member. It’s like a license to steal. It’s a license to do anything.”

  2. VennData says:

    I’d rather have all the money in fines in the Treasury Coffers.

    The industry knows who the bad guys are. The industry is being remade by the government, which is tricky due ot the global nature of things.

    Fine ‘em. Shame ‘em. Let blow their ill-gotten gains making the economy better.

  3. yuan says:

    “It was a license to steal, and its one they have exploited relentlessly.”

    I guess daily beast editors know who butters their bread…
    #mourning for our democracy

  4. ToNYC says:

    The vast majority will always vote for Stability. Stability is when the Big Banks have plenty of money to cash your check. Even Congress figured that out after the 300:1 letters against the first TARP vote in 2008. Enter Hank Paulson and the Stabilifiers: Act the First.

  5. Bob is still unemployed   says:

    If the bankers are now above the law because of Too Big To Jail, then the only way to restore the rule of law is to make the banks smaller.

    It is a simple choice

    — we continue to allow bank lawlessness go unpunished,

    — we fix the banks so that any appropriate punishment for lawlessness does not affect our financial system.

    Pick one.

  6. maynardGkeynes says:

    The saddest part is that it took very little convincing….

  7. key-bit says:

    Reminds me of the Usual Suspects:
    The greatest trick the Devil ever pulled was convincing the world he didn’t exist. And like that, poof. He’s gone.

  8. ilsm says:

    One form of fleece or another.

    Also, create debt using ordinary peoples’ money to bail the crooked banks out while doing their gig in the war on the New Deal.

  9. Frilton Miedman says:

    This blog serves as a friendly reminder that not everyone in finance is owned & intimidated by the global TBTF banking cartel.

    Barry, among others like Yves Smith, has had the integrity to keep this topic alive regardless of potential ostracism by their peers and certain media giants.

  10. financeboomer says:

    I heartily agree with the comments by Ritholtz and Gross. If any of these executives had held up a convenience store and walked away with twenty dollars, they would have been in jail a long time ago.

    Helen
    Boomers, Markets & Money

  11. yuan,

    don’t be so sure that it wasn’t Dan Gross, himself, that left it (that remark) ‘on the cutting room floor’..

    recall, that dude has been known to write things like..

    “Daniel Gross: America’s Amazing Comeback”

    First Posted: 06/10/10 06:12 AM ET Updated: 05/25/11 05:05 PM ET

    http://www.huffingtonpost.com/2010/04/10/daniel-gross-americas-ama_n_532995.html

    “Water Carrier, 1st Team”

  12. lotusblue says:

    Regardless of Dan Grosss’ past,Barry,you’re exactly on the point ! Only the Reinstitution of Glass-Steagall with the addition of automatic Bank seizure upon bailout request coupled with automatic piercing of corporate veil,criminal liability,automatic personal wealth seizure of any and all benificiariers of systemic risk creators will do the trick ! For example,- if your bank overreaches it’s viability automatic and immediate enforcement of personal wealth loss ensues. The fear of total personal loss should do the trick nicely.
    Make something like this the “cost of entry” if banksters wish to be banksters.No court,no arbitration -NO recourse of any kind. This should be the standard.

    The biggest problem with gov enforcement is lack of Qualified personal that understand these financial products.

  13. lotusblue says:

    Regardless of Dan Grosss’ past,Barry,you’re exactly on the point ! Only the Reinstitution of Glass-Steagall with the addition of automatic Bank seizure upon bailout request coupled with automatic piercing of corporate veil,criminal liability,automatic personal wealth seizure of any and all benificiariers of systemic risk creators will do the trick ! For example,- if your bank overreaches it’s viability automatic and immediate enforcement of personal wealth loss ensues. The fear of total personal loss should do the trick nicely.
    Make something like this the “cost of entry” if banksters wish to be banksters.No court,no arbitration -NO recourse of any kind. This should be the standard.

    The biggest problem with gov enforcement is lack of Qualified personal that understand these financial products.

    By the by Barry,we got 27 inches over here in Centerport in Huntington !

  14. lotusblue says:

    Regardless of Dan Grosss’ past,Barry,you’re exactly on the point ! Only the Reinstitution of Glass-Steagall with the addition of automatic Bank seizure upon bailout request coupled with automatic piercing of corporate veil,criminal liability,automatic personal wealth seizure of any and all benificiariers of systemic risk creators will do the trick ! For example,- if your bank overreaches it’s viability automatic and immediate enforcement of personal wealth loss ensues. The fear of total personal loss should do the trick nicely.
    Make something like this the “cost of entry” if banksters wish to be banksters.No court,no arbitration -NO recourse of any kind. This should be the standard.

    The biggest problem with gov enforcement is lack of Qualified personal that understand these financial products.

    By the by Barry,we got 27 inches over here in Centerport in Huntington !

  15. lotusblue says:

    Apologies for triple posting people.Wish an “edit” feature,I’ld delete myself.

    I have a number of friends that were sub-prime traunche creators at Citi among others.They didn’t even know or think thier products would explode.

    My suspicion now is only a bank size reduction and much deeper finance product viability analysis must be excercised.
    Additionally,lack of ethics,integrity even,consciousness is the daek root here.How do we impliment these ? I suspect only accomplished by emptiing board members wallets upon rougue outfits.

  16. Fred C Dobbs says:

    To understand why bankers get a ‘free pass,’ it helps to observe the power bankers have over politicians. The banks influence politicians at all levels, from the school and sewer districts, municipalities, states, up the federal government. Bankers have the ability to deny or limit loan funds one needs to purchase a residence or build up one’s successful business. Bankers have the ability to raise and lower one’s expense by setting the rates of interest paid. Bankers have the ability to regulate one’s liquidity by setting loan payment dates. Competition among banks is small, as they are very cozy with another, communicating on friendly terms with competition at all levels. Why else do they raise and lower prime rates in unison? Bankers have private information on every customer, which they can share with others, one’s competitors, creditors, etc. without one’s knowledge. And, what is worse, bankers are gutless bastards who can’t start and run a business themselves, but have the ego to tell others how to run their businesses. They would rather non-productively live off the sweat of others. Their power makes them think they are smart. The Democrats get all kinds of ‘favors’ out of bankers, from cozy loans, to forebear from collecting loans, to ‘free’ checking, jobs for close and distant friends and relatives. Banks are a powerful semi-underground political force and bankers should be exposed to the light of day at all levels. For example, they could be compelled to publish their relationships with politicians etc. The banking industry, for the most part, always gets its way. Check it out.

  17. Frilton Miedman says:

    lotusblue Says:
    February 9th, 2013 at 2:01 pm
    ” The biggest problem with gov enforcement is lack of Qualified personal that understand these financial products.”

    ~~~

    I thoroughly agree with your post, but wanted to point out that not all of our political leadership is necessarily stupid, they only play stupid in exchange for campaign bucks, A.K.A. bribery.

    Where 95% of all elections are won by the candidate with the most money, (http://www.businessinsider.com/congress-election-money-2012-11), it’s a given, they owe a debt to the back room government now allowed by the SCOTUS.

  18. zell says:

    Words worth systematic repetition. But it’s clear that gov’t will never do much to damage one of it’s major liquidity transmission systems. It’s like asking a tumor to damage it’s feeder vessels.

  19. zell,

    to your point, sometimes they (the Tumors) need to be ‘slipped a Mickey’..

    http://12160.org/forum/topics/researchers-find-molecule-that-drives-cancer-cells-to-suicide

  20. larster says:

    Watch the documentary on Eliot Spitzer and then think of who would want to take on the financial titans. Spitzer gave them the ammo but who is squeaky clean enought to stop the Langone’s, greenberg’s and stone’s of the world. In Spitzers case they even had the DOJ helping. His demise was not lost on the present officeholders.

  21. Glen says:

    I cannot find the link, but mid level Wall St and TBTF bank managers being interviewed by Senate investigators were being told that the fraud and corruption would continue until CEOs were sent to jail. Once CEOs went to jail, all the BS would stop practically overnight.

    So the Wall St fraud and corruption continues.

  22. boveri says:

    Great quote -and a fine example of creative destruction
    “The greatest triumph of the banking industry wasn’t ATMs or even depositing a check via the camera of your mobile phone. It was convincing Treasury and Justice Department officials that prosecuting bankers for their crimes would destabilize the global economy.”

    -Barry Ritholtz

  23. ToNYC says:

    “Money is the mother’s milk of politics” -Jesse Unruh 1966 Speaker of California State Assembly

    You don’t jail your mother. Get over it; it’s too hard!

  24. lo574 says:

    Fred C. Dobbs I chuckle you believe it’s only the Democrats who have that relationship ;)

  25. algernon says:

    We have a banking system that is consistent with economic fascism. Why would you expect anything else?

    Banking is and has been heavily regulated and subsidized for decades. The rating agencies are govt-mandated oligarches. There isn’t even the veneer of free market to anything having to do with money and banking in the US or any other country.

  26. stonedwino says:

    I created my own bailout starting in 2008 and got way more out of the TBTF banks than anyone else I know. I’m not sure a public forum is the right place to share it all, but I’d love to chat with you BR and tell you what I did and how I got the best of them…and then some, beating the banks at their own dirty game, repeatedly…

  27. techy says:

    I feel that most commentors in this forum are in the 5% of IQ. But when it comes to politics and society most are very naive.

    I am surprised nobody proposed an opposing view, are we sure the world is all black and white?

    You guys think that any elected officials top priority is making a better system, really? this is the root problem, and as of now its impossible to fix it since more than 60% of the people think being christian is the top priority for a person running for office.

  28. Robert M says:

    This was first said by the famous French poet Baudelaire in an unusual short story about meeting the Devil and having a grand old time.

    Elle ne se plaignit en aucune façon de la mauvaise réputation dont elle jouit dans toutes les parties du monde, m’assura qu’elle était, elle-même, la personne la plus intéressée à la destruction de la superstition, et m’avoua qu’elle n’avait eu peur, relativement à son propre pouvoir, qu’une seule fois, c’était le jour où elle avait entendu un prédicateur, plus subtil que ses confrères, s’écrier en chaire:

    «Mes chers frères, n’oubliez jamais, quand vous entendrez vanter le progrès des lumières, que la plus belle des ruses du diable est de vous persuader qu’il n’existe pas!»

    He did not complain in any way about the bad reputation he enjoyed all over the world, assured me that he himself was the person the most interested in the destruction of superstition, and admitted to me that he had only been afraid for his own power one time, and that was the day when he had heard a preacher, more subtle than his colleagues, shout out from the pulpit:

    “My dear brothers, never forget, when you hear the progress of enlightenment vaunted, that the devil’s best trick is to persuade you that he doesn’t exist!”

    “Le Joueur généreux,” pub. February 7, 1864; translation by Cat Nilan, 1999¹

  29. alaskanexile says:

    Turn the ‘Mall’ into a place de Concorde, guillotines and all. These criminals are a national security disaster.

  30. Fixerguy says:

    Nice article but IMHO, the #1 spot goes to the Banksters who convinced (or bribed) the Mortgage Insurers (and the Government) that the Banksters got KEEP the title on, and RE-SELL the foreclosed homes which they had been PAID OFF for….Normally with insurance when a thing is totaled-out and the claim is paid it’s the Insurer paying the claim who gets to keep the title.

    ~~~

    BR: Do you have some sourcing on this? I’ve never heard of that.