Fines here, fines there, fines everywhere!

The Wall Street Journal discusses the proposed $11 billion dollar JPM fine, but  buries the good stuff in this morning’s article on Jamie Dimon (This Generation’s Greatest Banker! ®)

We have been tracking JPM’s fines, but if you want an industry overview, try this collection: Here is a quick

Top 10 Bank Fines

$25 Billion for Foreclosure processing abuses.
Five Banks: Wells Fargo & Co., J.P. Morgan Chase & Co., Citigroup Inc., Bank of America Corp., Ally Financial Inc.
Regulators: U.S. Department of Housing and Urban Development, U.S. Department of Justice and 49 state attorneys general (2012)

$9.3 Billion for Foreclosure abuses.
Thirteen Banks: Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and 10 others
Regulators: Office of the Comptroller of the Currency and Federal Reserve (2013)

$1.9 Billion for Money-laundering
HSBC Holdings
Regulators: U.S. Department of Justice, Treasury and others (2012)

$1.5 Billion for Manipulating Libor rates.
Regulators: Commodity Futures Trading Commission, former U.K. Financial Services Authority, Swiss Financial Market Supervisory Authority, U.S. Department of Justice (2012)

$920 Million for Lack of oversight of giant bets by ‘London whale.’ (poor internal controls).
J.P. Morgan Chase & Co.
Regulators: Securities and Exchange Commission, Office of the Comptroller of the Currency, Federal Reserve and U.K.’s Financial Conduct Authority (2013)

$550 Million for materially misleading and incomplete information in sale of mortgage-related securities
Goldman Sachs
Regulators: U.S. Securities and Exchange Commission (2010)

$453.6 Million for Manipulation of  interbank lending rates (Libor).
Regulators: U.S. Department of Justice, U.S. Commodity Futures Trading Commission, former U.K. Financial Services Authority (2012)

$410 Million for Electricity market manipulation
J.P. Morgan Chase
Regulators: U.S. Federal Energy Regulatory Commission (2013)

$335 Million for Discrimination against black and Hispanic borrowers.
Bank of America
Regulators: U.S. Department of Justice (2011)

Note that the bad behavior generated big bonuses for execs based on the false (perhaps even fraudulent) depiction of profits. Now that this bad behavior has led to fines which resulted in the profits going away, shouldn’t those prior bonuses also disappear?

What should the shareholders pay for this?




J.P. Morgan Chief Dimon Meets With Holder
WSJ, September 27, 2013

Category: Bailouts, Corporate Management, Really, really bad calls, Regulation

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.

7 Responses to “Top 10 Bank Fines (Post 2008-09 Crisis)”

  1. ReductiMat says:

    Is ROCA (Return On Criminal Activity) a valid metric?

    How much money did those transgressions net them? Divide the two numbers and if it’s less than one, then yes, those managers did bad. But if it’s greater than one, wow, best bankers ever! MOAR BONUS.

  2. Keith R says:

    The list is a mixed bag of offenses that should be treated differently in my opinion. I see three buckets:

    1. Premeditated crimes for profit should be have criminal and civil penalties. This bucket includes LIBOR manipulation, electricity manipulation, incorrectly mortgage security info. Put people on trial and put them in jail. Force the disgorgement on prior profits and put civil penalties on top of that.

    2. Poor controls, such as London whale, should not have penalties at all. The $6B loss is the penalty to be paid if no laws were broken. However, if any laws were broken, then the offense goes into bucket 1: if the whale exceeded trading limits then folks need to go to jail.

    3. The foreclosure process abuses were a one-time politically motivated issue. The mortgage servicers did not create the real estate crisis, but they had to deal with the tsunami of issues. They had a duty to the owners of the mortgages and they tried to do the best that they could given the huge shortfall in trained staffing that suddenly appeared. I never understood the furor over robo-signing. If a servicer missed a step in processing, but the documents were correct, then I think that the robo-signing was a minor issue. (My impression is that robo-signing was used a scapegoat to protect people that legitimately should have faced foreclosure.) If there were other types of abuses, however, that were purely for profit, then these should go in bucket 1 and be prosecuted as fraud.

  3. farmera1 says:

    Hey BR, haven’t you read THE BATTLE FOR THE SOUL OF CAPITALISM by John Bogle founder of VAnguard. His main premise is that we’ve as a country moved away from ownership capitalism to managerial capitalism. Companies are managed for the benefit of upper management not the owners. These fines are just another example (although maybe extreme but I even doubt that) of self enrichment of management at the expense of everyone else. If you seriously think any bonus money will be returned/seized from the illegal activities that resulted in these fines, I’ve got a bridge to sell that you might be interested in (seriously I have a bridge to sell for the right price).

    If you haven’t read Bogle’s book you would be well served to spend a few hours reading it.

  4. dubaibanker says:

    Top investment bankers, CEO’s, CFO’s, top private bankers etc should have major claw backs going back to the years the fraud occurred under their watch.

    If they can make millions based on falsified or manipulated data, then they should be asked to return the bonuses and top salaries they demanded and received on the very same deals, when and if the deals go sour and the company (the bank) loses money and pays fines. Just a slap on the wrist is not enough!

    Secondly, after so many years of bad blood, why does no AG have the guts to file an actual lawsuit against a criminal activity? When a bank is given a licence, they are asked to abide by some rules. If those same rules are broken, shouldn’t their licence be taken away? Same is done for non compliance with FDA health regulations by a drug manufacturer or a cinema/restaurant with breaking fire code regulations or a restaurant making health and safety violations, then why are banks exempt? A violation is a violation, aint it? A restaurant should then be allowed to serve dog meat and cockroaches and if caught should ‘neither admit nor deny’ and serve the plate to Jaime Dimon!

    Banks have clients and they must serve them diligently from the hearts not from a money minded focus.

    Socialism should come to banking and all bankers should get paid same salaries regardless of market conditions. The top bankers should have in built contracts that if under their so called ‘blind leadership’ a bank does mismanagement even by so called ‘individual’ employees who are the same folks who contribute to the bottomline, their salaries should be linked to past 5 years if not 10 years of any fraud or losses or fines paid and previous year’s profits or losses should be adjusted and salary should simply be made equivalent to percentage of decline in profit under their management. If they can make millions when there are profits, they should be held accountable for all the losses as well. They cannot and should not get away scot free with unearned millions and tax payers keep giving their money to save their mess ups while the AG does not have the guts to charge them for violations.

    Thirdly, the same ‘individuals’ who are now being prosecuted, the CEO claims he/she was unaware of wrong doing. Then, what was CEO’s job? Just collect millions in pay cheques in expensive suits? Have a cigar and go to sleep? If those individuals contributed to profits, now when the losses/fines contribute to company’s losses not to mention goodwill and reputational damages, shouldn’t someone have to pay? It was all pervasive crimes and CEO should be held accountable and get passed on the losses similar to all the profits the CEO’s claimed were due to their competence.

    If this carries on any longer, the public may serve their justice to these CEO’s in the homes where they live, sadly it seems we may be reaching that breaking point within the next few years.

  5. [...] Normal Top 10 post-crisis bank fines – Barry Ritholtz America’s rising disability claims and its shrinking labor force – The [...]

  6. Robert M says:

    $29b in guarantees for JPM $7b in fines + write offs for the fines. When drug dealers loss products they at least eat the losses. Momma make sure your boys grow up to be banksters!

  7. scottinnj says:

    I would argue robo signing, MERS etc violate your 1. That is there is a rule of law to follow on proper documentary procedures and falsely foreclosing is not legal. if I as lender did not have title then it is 2.