Are Big Banks a Bunch of Organized Criminal Conspiracies?

Les Leopold claims these too big to fail/too big to indict banks are criminal to the core, and should be nationalized for the public good. I agree.

The record of deceit and deception that has surfaced in just the past two months points to yes.

Are too-big-to-fail banks organized criminal conspiracies? And if so, shouldn't we seize their assets, just like we do to drug cartels?

... read " Major Banks Aid in Payday Loans Banned by States" by Jessica Silver-Greenberg in the New York Times (2/23/13). In sickening detail, she describes how the largest banks in the United States are facilitating modern loansharking by working with Internet payday loan companies to escape anti-loansharking state laws. These payday firms extract enormous interest rates that often run over 500 percent a year. (Fifteen states prohibit payday loans entirely, and all states have usury limits ranging from 8 to 24 percent. See the list.)

The big banks, however, don't make the loans. They hide behind the scenes to facilitate the transactions through automatic withdrawals from the victim's bank account to the loansharking payday companies. Without those services from the big banks, these Internet loansharks could not operate.

Enabling the payday loansharks to evade the law is bad enough. But even more deplorable is why the big banks are involved in the first place.

For the banks, it can be a lucrative partnership. At first blush, processing automatic withdrawals hardly seems like a source of profit. But many customers are already on shaky financial footing. The withdrawals often set off a cascade of fees from problems like overdrafts.  Roughly 27 percentof payday loan borrowers say that the loans caused them to overdraw their accounts,...

Banks like JPMorgan Chase provide the banking services that allow Internet payday loansharks to exist in the first place, with the sole purpose of breaking the state laws against usury. Then Chase vultures the victims, who are often low-wage earners struggling to make ends meet, by extracting late fees from the victims' accounts. So impoverished single moms, for example, who needed to borrow money to make the rent, get worked over twice: First they get a loan at an interest rate that would make Tony Soprano blush. Then they get nailed with overdraft fees by their loansharking bank.

The big banks, in collusion with hedge funds and the rating agencies, puffed up the housing bubble and then burst it. Nine million workers, due to no fault of their own, lost their jobs in a matter of months. Entire neighborhoods saw their home values crash. Tens of millions faced foreclosure.

The big banks, which were bailed out and survived the crash, sought to foreclose on as many homes as possible, as fast as possible. 

In doing so they resorted to many unsavory practices including illegal robo-signing of foreclosure documents. When nailed by the government, the big banks agreed to provide billions in aid for distressed homeowners. Were they finally forced to do the right thing? Not a chance.

The big banks ... found a convenient loophole in the government settlement. The banks began forgiving second mortgages, and then foreclosing on the first mortgage. That's a cute maneuver because in a foreclosure, the bank rarely can collect on the second mortgage anyway. So they're giving away something of no value to distressed sellers and getting government credit for it.

JPMorgan Chase, Citigroup and Goldman Sachs have been fined over a billion dollars for creating and selling mortgage-related securities that were designed to fail so their hedge fund buddies could make billions. And then we've got the recent LIBOR scandal where the biggest banks colluded to manipulate interest rates for fun and profit.

It's not about good people or bad people running these banks and hedge funds. It's the very nature of these institutions. That's what they do. They make big money by doing what the rest of us would call cheating.

What kind of institution would loanshark, money launder, fix rates, game mortgage relief programs, and produce products designed to fail? Answer: An institution that should not exist.

There are about 20 too-big-to fail banks which have been designated "systematically significant." [emphasis mine]

Tags: criminal activity of big banks

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Replies to This Discussion

Outrage: Some Banks Are Too Big to Prosecute

Attorney General Eric Holder publicly admitted that the biggest banks are above the law.

Yesterday Attorney General Holder stated openly what was already apparent.  The Justice Department believes that Too Big to Fail Banks are Too Big to Jail.  Criminal indictments against banks or leading bankers might endanger the economy and thus were too big a risk.

Holder was responding to questions by Republican Senator Charles Grassley about why the Justice Department brought no criminal charges against the large British bank HSBC after it admitted laundering money for parties in Iran, Libya and Mexican drug lords.

Holder’s outrageous admission means that bankers operate – and know they operate – above the law. ... they can trample the laws, mislead the regulators and defraud their customers, bolstered by the confidence that the laws will not apply to them.

Holder’s argument, however, is indefensible.  There is no reason a bank with billions of assets could not survive the indictment of its CEO or CFO.

Elizabeth Warren Confronts the Atrocity of Drug Money Laundering by...

Sen. Elizabeth Warren leapt from the gate of her first term pummeling Ben Bernanke on too-big-to-fail financial institutions. Then she demanded to know why American banks were never brought to trial. Finally, last Thursday, looking for all the world like a school principal called to sort out teenage hooligans, she queried regulators as to why HSBC bankers who launder money for drug lords and terrorists should go free. Quoth the senator:

"If you're caught with an ounce of cocaine, the chances are good you're going to jail. If it happens repeatedly, you may go to jail for the rest of your life. But evidently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.”


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