For ripping off the global economy between 2008 and 2012 – contributing to the worst recession since the Dirty Thirties, throwing millions of people out of their work, their homes and demolishing their sense that, in the end, universally applicable golden rules of fair play and decency trump the periodic predations of barbarians digging beneath the gates of civilization – some of the world’s biggest banks have just received slaps on their wrists.
Naughty, naughty boys you are. Oh, please don’t make us admonish you again. It hurts us to cut your allowance. Now, go forth and play nice.
According to a recent New York Times article by Ben Protess and Michael Corkery, the U.S. Justice Department has reckoned that Citigroup Inc., JPMorgan Chase & Co., Barclays Bank PLC and Royal Bank of Scotland PLC conspired to commit “multiple crimes” in the five years following the Great Financial Collapse of 2007 by “manipulating foreign currencies and interest rates”. These once-venerable institutions employed pinheads who executed “a scheme that padded the banks’ profits and enriched the traders who carried out the plot.”
Apparently, “The traders were supposed to be competitors but. . .they colluded to manipulate the largest and yet least regulated market in the financial world, where $5 trillion changes hands ever day.”
These criminals may have pilfered as much as $1 trillion from global markets, and yet the highest law enforcement agency in the United States has seen fit to level fines against these carpetbaggers (all of whom have plead guilty) in the collectively paltry amount of $5.6 billion – a book entry, given the value of their ill-gotten gains. No one is actually accountable. No one goes to jail.
Still, as the Times story reveals, the dimension of hubris was breathtakingly brazen:
“To carry out the scheme, which went for five years through 2012, one trader would build a huge position in a currency and then unload it at a crucial moment, hoping to move prices. Traders at the other banks agreed to, as New York state’s financial regulator put it, ‘stay out of each other’s way.’
“The banks also misled their clients about the price of currencies, the federal and state authorities said, imposing ‘hard mark-ups,’ which one Barclays employee described as the ‘worst price I can put on this where the customer’s decision to trade with me or give me future business doesn’t change.’ Or, to put their mission in the starkest of terms, the employee said: ‘If you ain’t cheating, you ain’t trying.’”
How exquisite is this, how predictably reliable are our runaway capital marketeers?
In fact, this sort of aberrant, sociopathic behaviour along the virtual highways that connect Wall and Lombard Streets should now be boring. But the sheer scale of the larceny sheds a bright light on the fundamentals that underpin growing income and wealth disparity, not only in the West but everywhere in the world.
When a small cartel of “players” can and do game global markets for their own fun and immense profit without fear, what hope remains for the rest of us who, playing by the rules, assume that our small chest of treasures in capital markets will keep us safe, housed, clothed and fed?
And, here’s the final insult, courtesy of the Times report: “For the banks, life as a felon is likely to carry more symbolic shame than practical problems. . .The banks have obtained waivers from the Securities and Exchange Commission that will allow them to conduct business as usual.”
Laughing all the way to the bank, indeed.