Would you turn over your hard earned money to a convicted felon? Many readers are saying “No way!” but many do so everyday. Yes, everyday.
Yesterday, four major money center banks agreed to plead guilty to criminal charges in connection with a worldwide conspiracy among several banks to manipulate foreign exchange rates (“FOREX”). Citi, JPMorgan Chase, Barclays and RBS. To be precise, it is the parent or holding companies that are pleading guilty. Having the actual bank plead to felony charges could trigger additional consequences. For the average Joe on the street, however, the distinction between bank and bank holding company is meaningless.
If you are breathing a sigh of relief because your bank isn’t named, don’t relax just yet. Earlier this spring UBS was granted immunity and agreed to cooperate. UBS, however, was already the subject of an earlier nonprosecution agreement with the U.S. Department of Justice. They are still stuck paying a huge fine.
Bank of America escaped a criminal conviction but paid a $205 million fine to the Federal Reserve.
HSBC and Standard Chartered Bank are also implicated in the mess.
The charges involve a conspiracy to manipulate foreign exchange rates. The feds were already investigating a similar conspiracy to rig the so-called LIBOR rate, a common benchmark that affects interest rates worldwide.
Whether civil or criminal, banks have paid tens of billions of dollars in fines and penalties. To date the Department of Justice, Commodity Futures Trading Commission, the Federal Reserve Board, the Comptroller of Currency and the SEC have all been levying fines but with questionable impact.
We believe the decision to start charging bank holding companies criminally is an important next step. Maybe the stigma of being a convicted felon will have some impact. Unfortunately, we worry that many Americans and businesses will continue to do business as usual with these criminal enterprises.
Our new Attorney General, Loretta Lynch, says her agency’s investigation isn’t over. That’s good news. About the only thing that gets the attention of big bankers is seeing one of their brethren doing the perp walk on the six o’clock news. When more bankers start being held individually accountable, the culture inside these big banks may begin to change.
Have the banks taken notice yet? Law360 quotes Citi CEO Michael Corbat as saying, “conduct by certain individuals has fallen short of the firm’s expectations.” That is probably the understatement of the year!
So what is the solution? As indicated above, more criminal prosecutions. The big banks and the people who run them have been given more than enough chances. We can’t put banks in jail and shutting them down runs the risk of hurting our fragile economy.
Need more solutions? Corporations and individuals can remove their money from these corrupt institutions. The banks will quickly get the message if institutional investors and the public start moving their money elsewhere.
Finally, we need more whistleblowers to come forward. Never in modern history has there been a better time to come forward. Anyone with information about wrongdoing by a federally insured bank may be eligible for up to a $1.6 million award under FIRREA, the Financial Institutions Reform, Recovery and Enforcement Act.
If the wrongdoing involves fraud against the government or a federal program (residential mortgage underwriting, TARP funds), there is no cap on the size of the award. Awards in excess of $25 million are common.
It’s time for whistleblowers to step up, prosecutors to target senior bank officials and depositors to show their displeasure by moving their money.
MahanyLaw is a full service law firm concentrating in whistleblowers and lender liability cases. We have helped our clients collect over $100 million in whistleblower awards and have over $100 million in claims against banks currently pending.
Need more information? Contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries protected by the attorney – client privilege and kept strictly confidential.
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