What exactly does it mean for a big Wall Street bank to plead guilty
to a serious crime? Right now, practically nothing.
But it will if California’s Santa Cruz County has any say.
First, some background.
Five giant banks – including Wall Street behemoths JPMorgan Chase and
Citicorp – recently pleaded guilty to criminal felony charges that they rigged
the world’s foreign-currency market for their own profit.
This wasn’t a small heist. We’re talking hundreds of billions of
dollars worth of transactions every day.
The banks altered currency prices long enough for the banks to make
winning bets before the prices snapped back to what they should have been.
Attorney General Loretta Lynch called it a “brazen display of
collusion” that harmed “countless consumers,
investors and institutions around the globe — from pension funds to major
corporations, and including the banks’ own customers.”
The penalty? The banks have agreed to pay $5.5 billion. That may sound like a big
chunk of change, but for a giant bank it’s the cost of doing business. In fact,
the banks are likely to deduct the fines from their taxes as business
The banks sound contrite. After all, they can’t have the public believe they’re outright
It’s “an embarrassment to our firm,
and stands in stark contrast to Citi’s values,“ says Citigroup CEO Michael
Values? Citigroup’s main value is to make as
much money as possible. Corbat himself raked in $13 million last year.
JPMorgan CEO Jamie Dimon calls it “a
great disappointment to us,” and says “we demand and expect better of
Expect better? If recent history is any
guide – think of the bank’s notorious “London Whale” a few years ago, and,
before that, the wild bets leading to the 2008 bailout – JPMorgan expects exactly this kind of behavior
Originally appeared at: http://robertreich.org/post/122011081135