In the wake of Wednesday’s announcement that five global financial institutions have agreed to plead guilty to multiple crimes and pay about $5.6 billion in penalties for manipulating foreign currencies and interest rates, corporate watchdogs are reiterating the call to ‘break up the banks’ in light of their ongoing malfeasance.
As with other recent settlements, Wednesday’s news provides further evidence to those who say certain megabanks are still considered “too big to fail”—or criminal bankers to jail.
“There are two messages in today’s plea deal,” said Public Citizen president Robert Weissman in a statement on Wednesday. “First, criminality is rampant on Wall Street. Second, the era of too-big-to-jail is alive and well. Even as they beat their chests announcing how tough they are, government regulators refuse to apply to the giant banks the same rules that apply to everyone else.”
According to the Wall Street Journal:
The New York Times adds:
SCROLL TO CONTINUE WITH CONTENT
In announcing the settlement, Attorney General Loretta Lynch called the megabanks’ crimes “a brazen display of collusion” that caused “pervasive harm.”
Lynch declared: “Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers.”
But as Weissman noted, “important questions remain about this plea deal,” including:
“What becomes clear is that regulators genuinely are afraid of enforcing the law when it comes to the megabanks,” Weissman concludes. “As a result, and notwithstanding today’s announcement and others like it, these banks are not deterred from violating the law—indeed, they are literally not subject to the same standards as other banks and other companies. A democratic society cannot tolerate having banks above the law. There’s a solution to this problem: break them up.”
Earlier this month, Sen. Bernie Sanders (I-Vt.) introduced a bill to do just that—the Too Big to Fail, Too Big to Exist Act—under which regulators on the Financial Stability Oversight Council would compile a list of institutions which say they are so large that their collapse could trigger an economic crisis. The Treasury Secretary, in turn, would then have a year from the bill’s passing to break up such banks.
In a recent report, the Corporate Reform Coalition warned that regulators’ continued reluctance to crack down on megabanks leaves the U.S. vulnerable to another financial crisis.
“Avoiding another meltdown depends on the will of federal regulators to use the new powers they were granted in the Dodd-Frank Wall Street Reform and Consumer Protection Act,” said Jennifer Taub, author of the report and professor of law at Vermont Law School. “If they behave as if they are beholden to the banks, we will likely face a more severe crisis in the future.”
Our work is licensed under a Creative Commons Attribution-Share Alike 3.0 License. Feel free to republish and share widely.