Five Big Banks Plead Guilty to Rigging Currency Markets and No One Goes to Jail

Five Big Banks Plead Guilty to Rigging Currency Markets and No One Goes to Jail


SHARMINI PERIES: Welcome to The Real News
Network. I’m Sharmini Peries coming to you from Baltimore. The five biggest banks, Citigroup, JP Morgan
Chase, Barclays, The Royal Bank of Scotland, and UBS, have all pleaded guilty to multiple
crimes involving foreign currencies, interest rates, and collusion. The traders, according
to the New York Times, had formed a, quote, ?an invitation-only club where the stakes
were so high that newcomers were warned: mess this up, and sleep with one eye open.? The
pleas are expected to be heard this afternoon in federal court. Joining us now from Sag
Harbor, New York to discuss all of this is James S. Henry. James is a leading economist,
attorney, and investigative journalist. Thank you so much for joining us today, James. JAMES S. HENRY: You’re very welcome. PERIES: James, so let’s start off, and can
you explain to us exactly what these banks were involved in? HENRY: They set up a cartel to rig one of
the largest financial markets in the world. The $5.3 trillion per day foreign exchange
market. And some of them, most of them were also involved in rigging what’s called the
LIBOR interest rate market, as well. Which is a–. PERIES: Explain that. HENRY: –of fundamental importance for all
kinds of interest rate markets all over the world. PERIES: Explain the LIBOR scandal. HENRY: Well, the LIBOR scandal was very similar
to the foreign exchange scandal. You had traders who were involved in colluding on pricing
financial securities and agreeing on what interest rate they would bid on the part of
their banks, rather than compete on an arm’s-length basis. So this is a clear cut [inaud.] case
of where the invisible hand was nowhere to be seen. These are critical markets for all kinds of
corporate investors, financial investors of all kinds, housing markets, you know. It’s
trade–anyone involved in international trade. This is absolutely outrageous, and it’s an
example of really bad behavior by essentially a cartel of very large institutions that have
been behaving as if they are too big to jail, too big to penalize. PERIES: Now, explain further in terms of what
this pleading guilty actually means, and what is expected in terms of the next steps in
this case. HENRY: Well, they’ve agreed under this settlement
to pay $5.89 billion in fines in disgorgement of profit. But they’ve also, the five institutions
here, four of them have pleaded guilty. Which is a corporate plea submission. And that’s
really unusual. The problem is that in advance of this settlement, essentially the collateral
consequences that would have applied to a guilty plea by a corporate institution such
as losing the right to be a prime dealer for Federal Reserve securities, or losing other
rights to represent the pension funds and the U.S. pension fund system, those rights
were all shielded, protected. So essentially this is a plea that has been deprived of any
collateral consequences. So we also see nobody going to jail here.
The traders involved may have lost their jobs. But the profits from this activity were recorded
by these banks years ago, and now finally after six or seven years, lots of litigation,
they have finally come to this settlement. You know, you have to ask whether the settlement
has any real impact on their bottom lines. And I think the best answer to that is given
by today’s stock market price. Which, for this bank group as a whole, their market capitalization
actually rose. In the case of UBS the stock price rose 3 percent. In the case of Barclays
it rose 3.7 percent. PERIES: What’s the calculation there? Why
is that happening? HENRY: I think investors are looking at this
as a light, as a kind of slap on the wrist. I mean, if you look at JP Morgan for example.
JP Morgan is being fined under this agreement about a billion dollars. Little bit less than
that. About $900 million. But JP Morgan in the first quarter of 2015, this largest U.S.
bank, had net income of $5.9 billion. On a year basis–I mean, if they describe this
penalty as less than 3 percent of JP Morgan net income last year, it would come off as
a more realistic appraisal of how light the penalty is. And this is an important thing for us to look
at. These 22 largest global banks, in general, I have compiled a database of all the corporate
crimes they’ve been fined or had to pay penalties for, or settle private lawsuits for from 1998
to 2015. There’s a grand total of 255 felony-scale offenses. Not only LIBOR rigging and currency
markets, but money laundering, bribery, mortgage fraud, financial sanctions and [inaud.], wrongful
foreclosures. Total of 14 different offenses, and a grand total of, for this group of the
largest 20 banks in the world, more than 650 such fines. For which they received a grand
total of $246 billion of fines. But it hasn’t affected their behavior. PERIES: And it’ll continue to not affect their
behavior, unless key leaders of these organizations or banks are held accountable. Now, I know
in other countries like Ireland actually took the bankers to court and convicted them. Why
is that not happening here? HENRY: I think there’s a mentality in the
part of the Justice Department that they really can’t hold senior bankers responsible. In
the 1980s under the first Bush administration something like 880 bankers went to jail in
the United States for the savings and loan crisis and the financial fraud that was committed
there. Here we have banks that are engaged in much more damaging global activity, costing
tens of billions of dollars to financial markets, and no one’s going to jail. There may be jail for lower-level traders
going forward. But none of the CEOs at these institutions have experienced any kind of
penalties. In fact, their payment schedules are going up as the stock market increases.
JP Morgan’s stock price has appreciated 20 percent in the last year alone. The main point about this is that if you look
at this strictly on a business basis, this is a very profitable kind of crime. Because
the profits are all realized five or six years ago, at least, from this kind of activity.
It’s been going on for a long time. And finally, after a lot of litigation, a lot of settlement
negotiations, maybe five to six years after the fact, they finally have to pay a fine.
So on a net present value basis, putting aside the ethics or the morality of this, it’s been
a profitable business for the banks and there’s no reason they shouldn’t be expected to continue
doing it. PERIES: And the Department of Justice here
in this case, why haven’t they moved more swiftly? HENRY: These are institutions that are not
without influence in Washington. Eric Holder, if he goes back to Covington and Burling,
joining Lanny Breuer, who used to be head of the white-collar crimes unit of the Department
of Justice, that’s a big law firm at Covington. They represent all of these institutions.
There’s a tremendous amount of political influence on the part of the large institutions and,
and Jamie Dimon basically taunted Elizabeth Warren back in the fall, saying you know,
go ahead, fine us. He’s been complaining about being targeted by the regulators. But the
history is that these banks have not changed their behavior. And these fines are just passed
along to customers. They’re not borne by the executives involved at all. And the behavior
goes on. PERIES: James, do you think Loretta Lynch,
the new Department of Justice head, will have anything to add to this case, and bring it
to greater conclusion? HENRY: I think going forward you’d like to
believe that she would have a tougher stance towards the banks than her predecessor. But
she was deeply involved in the slap on the wrist settlement with HSBC in 2012, which
was, where HSBC was caught red-handed laundering billions for the cartels in Mexico, and also
busting sanctions against U.S.–sanctions that have been imposed on countries like Iran
and North Korea. The track record suggests that she will be
as accommodating as her predecessors. But that’s not the way we’re going to bring these–essentially
banking has become a kind of criminal enterprise. And we’re talking about multiple crimes over
multiple years, committed by the same institutions under the administration of the same senior
executives. So it isn’t a quick case of one or two rogue traders or bad actors here. We
have an institutional problem, a real culture of crime and opportunism within these financial
institutions. PERIES: And in spite of what we have seen
over the years since 2007 and 2008 crises, things really haven’t changed. There has really
been no reform of the system in any way. HENRY: Well, I think the banks are very busy
right now trying to undermine the reforms that were made. There were some efforts on
the part of Congress to toughen up on bank regulation, to establish new bank regulators.
But right now they’re spending a lot of money on lobbyists to undermine that and to roll
it back, and I don’t think there’s much support for tougher regulation in Congress, on the
part of this Congress. I think we’re, the problem is that we’re looking
at a situation that hasn’t fundamentally changed from a standpoint of tough penalties. What
you need to stop this kind of behavior is proactive regulation. This kind of ex-, post-facto,
cleaning up after the fact takes years, it imposes a fine that is a fraction of profits
or cash flow or trivial, and I think the behavior underlying it just goes on. PERIES: It appears that the bark of the banksters
prevailed. James Henry, thank you so much for joining us. HENRY: Thanks very much. PERIES: And thank you for joining us on The
Real News Network.

25 Comments

  • Collosus Tone

    May 21, 2015

    All the banksters should be serving life sentences for the fraud, theft, and victimizing they have imposed upon the general populace. Problem is, they control our sell-out politicians who write the laws, and thus no one will prosecute them.

    Reply
  • Ladyshystar

    May 21, 2015

    So they agreed to give back 5.8 billion that they originally stold… And how is this a "penalty"??????  This is a BAD JOKE.7

    Reply
  • TerraRubicon

    May 21, 2015

    Pay a fine, don't go to jail. It's good to be a banker..

    Reply
  • Jefe Anson

    May 21, 2015

    The truth is that the banks and traders weren't stopped and regulated, so the fault really lays on the government, with no discipline or limits these things will naturally happen. "Leave the cookie jar open and unguarded , and the cookie monster is happy" put the cookie monster in charge of guarding the cookies and you'll be in serious trouble. The government had to directly intend to leave the cookie jar open , because this would not happen unless they didn't.

    Reply
  • clearasvodka

    May 21, 2015

    No one goes to jail.  A license to steal…

    Reply
  • bicycle X

    May 21, 2015

    That's a very large amount of money even though it's just a slap on the wrist to the bankers. where did all that money go ? it could boost the economy in whatever country you choose . Their are children with no shoes and no food. The American economy is crashing. This kind of money could be used to build instruments of peace .

    Reply
  • Just K

    May 21, 2015

    So crime doesn't pay…huh?!?

    Reply
  • mars Cubed

    May 21, 2015

    The Libertarian Cato Institute's (used to be called the Charles Koch foundation) main backers include..
    Chase Manhattan Bank, Chemical Bank, Citicorp/Citibank, Prudential Securities and Salomon Brothers , American Express . 
    Energy conglomerates include: Chevron Companies, Exxon Company, Shell Oil Company and Tenneco Gas, as well as the American Petroleum Institute, Amoco Foundation and Atlantic Richfield Foundation. 
    Cato's pharmaceutical donors include Eli Lilly & Company, Merck & Company and Pfizer, Inc 
    Corporate sponsors include: Philip Morris, R.J. Reynolds, Bell Atlantic Network Services, BellSouth Corporation, Monsanto… etc etc.

    Murdoch used to be on the Cato board too.

     These far right corp and bankster liar factories, with same ideology as StormFront Nazis.. they wreck debate and sane policy with Paulbot and Alex Jones conspiracy thugs.. Glenn Beck pro war propaganda.. ranting fundamentalist and  tabloid imbeciles., scapegoating, racism, attacks on women etc.

    Everybody needs to kick conservative and libertarian greed and liar cult shite out of politics.
    GOP is evil but  Dems are not much better..

    Build even bigger movements than Occupy.. Take over production as Mondragon worker coops have done..
    Cooperative banks where everyone in the bank is voted in or out by regular working people.. & nobody gets a wage more than a few times higher than the lowest paid workers… 
    Everybody needs to move beyond the lies and shams of USA libertarian corp and bankster thieves.

    http://www.socialistalternative.org/about/

    Reply
  • Bob Crestwood

    May 21, 2015

    The "fines" are an illusion.  Because guess who the banks are going to pay the fines to?  The Federal Reserve Bank.  And guess who owns the Federal Reserve Bank? Them!  So they are going to pay the "fines" to themselves!  So there really is no penalty at all!  It's all just a big charade designed to bolster Obama's image so he can say "We prosecuted the banks!" while he is actually letting them off scott free.

    Reply
  • alice coppers

    May 21, 2015

    Psychopaths and sociopaths run our legal system, bank system and every other system using the Tavistock Institute plan. Very sophisticated plan that's being slowly opened up.

    Reply
  • DrMecha

    May 21, 2015

    If all the bankers go to jail, what would happen to the people's money in those banks?

    It as if they're scared about shutting the bank industry down because everyone who use their services will become broke.

    Reply
  • alexpaguirre

    May 21, 2015

    So bringing tough legal action against to-big-too-jail banks is going to be ruff!

    Reply
  • Jay Kline

    May 21, 2015

    Jail? Nobody even noticed.

    Reply
  • shamanahaboolist

    May 22, 2015

    Pay Caeser's things to Caeser. It's their phoney promises.

    Reply
  • AMTV

    May 22, 2015

    Let me know if you would ever like me on your show. Good work!! CG

    Reply
  • Sirellyn Y

    May 22, 2015

    This is all thanks to all those who believe "too big to fail" is a thing!

    The banks pay a fine.  Even a large one wouldn't matter, as the fed supplies them with whatever money they need anyway.   In other words, they pay the government to pay them again anyway.  And yep, no one prosecuted.   But don't worry, it's the fault of those who are responsible for prosecuting them that they didn't prosecute.

    Reply
  • honda4004

    May 22, 2015

    Surely a class action of all those people world wide that have had houses repossessed should now action this as the interest rates that then gave rise to arrears to activate the repossession are now void as a crime has been admitted that would have acted by association in the false arrears being pledged as evidence for the repossession

    Reply
  • God's Creative Daughter Monique

    May 23, 2015

    I had an account with UBS months ago.   I stood up for my faith and my relationship with GOD ALMIGHTY AND THE LORD JESUS CHRIST.  They did not like it and  moved my account to a "financial pool."   After that, I closed my account and walked away from them.   They are dishonest thieving creeps!   REPENT UBS!! 

    They would not listen and it is the same for the USA.  AMERICA TURN BACK TO GOD NOW BEFORE IT'S TOO LATE.  JUDGMENT HAS ALREADY BEGUN.   GOD HELP US, PLEASE.

    Reply
  • Karla Agee-Seldon Bey

    May 24, 2015

    That's bull because their is no real value in the u.s. fiat, in fact it's not even Fiat.

    Reply
  • Garret Lewis

    May 27, 2015

    Why cant the host read or pronounce anything? She sounds like she has a mouth full of marbles on every vid.

    Reply
  • Spartaculus Jones

    May 31, 2015

    We are not making the transition from plutocracy to democracy.  We are making the transition from plutocracy to kleptocracy.

    Reply
  • Spartaculus Jones

    May 31, 2015

    Why don't they go to jail?  Because every man has his price.

    Reply
  • BitcoinsAndBeer

    August 5, 2015

    So the banks are felons? Don't they have to pass background checks for Government contracts? or to to work for them self or each other? Were are we going and why are we in this hand basket?

    Reply
  • Developer 004

    April 17, 2018

    Elite Criminal is still a criminal and only cowards would not prosecute these scum to the fullest extent of the law. Liquidate them completely! and drag them From their towers by their toes.

    Reply
  • Troy Walker The Progressive Proletarian

    April 29, 2019

    and the fines are paid by consumers/taxpayers, corruption is just a cost of doing business to these people

    Reply

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