Dennis Kelleher on the Big Bank Plea Deals — If You Ain’t Jailed, You Ain’t Nailed

The Department of Justice is proud of the fact that it has secured guilty pleas from five big banks.

Better Markets CEO Dennis Kelleher — not so much.


“The settlement charade continues where it talks tough, but winks at Wall Street’s too-big-to-fail banks’ criminal conduct, structuring sweetheart deals to minimize the impact on the criminals,” Kelleher said.

“That doesn’t punish past crime or deter future crime at these global too-big-to-fail banks. In fact, as the repeated illegal conduct by these banks prove, the Department’s parade of pretend-punishment actually rewards and incentives more crime.”

“The settlements this time are again for particularly egregious conduct: referring to themselves as ‘The Cartel,’ the traders at these banks knowingly and criminally engaged in a massive, far-reaching, global conspiracy to rig the foreign exchange markets for many years ‘to drive up their own profits at the expense of clients.’ For that, they get a slap on the wrist fine, paid for with shareholder’s money and is possibly tax deductible. In addition, the Department of Justice again has failed to hold any individuals accountable for their crimes and didn’t disclose key details to the public, including how such extensive and lucrative criminal conduct could go undetected for so many years under the nose of management and supervisors.”

Kelleher said — banks don’t commit crimes, bankers do.

“Until the feds personally and meaningfully punish actual executives and supervisors for their wrongdoing, big banks will continue their crime spree at the expense of investors, our markets, and families on Main Street,” Kelleher said. “Pleading guilty to a crime must mean jail time. The Cartel said ‘if you ain’t cheating, you ain’t trying.’ It is long past time for the Department of Justice to adopt a real law enforcement strategy for Wall Street: ‘if you ain’t jailed, you ain’t nailed.’”

Public Citizen’s Robert Weissman said the plea deals send two messages. First, that criminality is rampant on Wall Street. And second, that 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,” Weissman said. “The illegal acts to which the five banks have admitted wrongdoing weren’t accidents or technical violations. They were intentional violations of the law. They were conducted in concert with purported competitors. And they were hidden through use of code words.”

“Many of the five banks are repeat lawbreakers, and the Department of Justice deserves credit for revisiting a prior non-prosecution agreement, and now prosecuting prior crimes at the giant company UBS. But the lesson for the Department should be that it never should have entered into deferred and non-prosecution agreements in the first place, and it should cease using them for future corporate wrongdoing. They are simply escapes from criminal pleas with no demonstrable deterrent effect.”

“It is being reported that the U.S. Securities and Exchange Commission has granted a waiver to the banks from rules that would otherwise require the agency to revoke the banks’ authority to undertake certain securities activities. If these reports are accurate, this action is disgraceful and intolerable,” Weissman said. “Congress must investigate this dereliction of duty at the agency.”

“Important questions remain about this plea deal: Will individual executives be prosecuted? And did the Department of Justice charge the parent companies in this case to avoid triggering potential sanctions with real and significant business consequences for the banks, including charter revocation hearings? The public deserves answers to these questions. In that information is some insight into whether the government continues to protect the megabanks – those colloquially labeled ‘too big to jail.’”

“What becomes clear is that regulators genuinely are afraid of enforcing the law when it comes to the megabanks,” Weissman said. “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.”

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