About a week ago Matt Tiabbi documented how the biggest banks on Wall Street were engaged in a racketeering operation that was pioneered by the Mafia.
The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement.It was a damning verdict that got mostly ignored by the corporate media. It didn't fit in well with the conservative meme that our real problem is high school teachers, firefighters, policemen, the same first-responders that were considered heroes by the right-wing just a decade ago.
And then, just a week later, the major banks admitted to a much larger market rigging scandal.
On Wednesday, Barclays won the race to reach a deal with U.S. and British regulators, beating UBS, which was reportedly the first bank to begin cooperating with international antitrust authorities. Barclays agreed to pay at least $450 million to resolve government investigations of manipulation of Libor and the Euro interbank offered rate (or Euribor): $200 million to the U.S. Commodity Futures Trading Commission, $160 million tothe criminal division of the U.S. Department of Justice and $92.8 million to Britain's Financial Services Authority.20+ banks are involved in this crime, all major banks. Like the municipal bond bid-rigging, no one is going to jail despite billions of dollars of theft. European regulators are no more interested in investigating fraud than American regulators.
So why does the LIBOR and this latest scandal matter?
The importance of Libor and, to a lesser extent, Euribor, is hard to overstate. They are used to value of hundreds of trillions of dollars of financial instruments. Or as Matt Levine puts it, they “set the rates on pretty much all the loans and swaps in the world … CFTC order mentions $350 trillion of [over-the-counter] swaps, $10 trillion of loans, and $437 trillion of CME eurodollar contracts indexed to Libor alone”.The DOJ has granted “conditional leniency” on anti-trust charges. Price fixing is criminal under the Sherman Act.
Collusion, fraud, and more collusion. If they can rig trillion dollar markets, what can't they rig? Why are there no criminal proceedings? Why are the fines nothing more than the cost of doing business? 65 years ago the Justice Department believed in anti-trust laws. No longer.
Speaking of fines, do they even matter anymore?
Remember the government's settlement with the major banks for massive, systemwide foreclosure fraud. They were to pay $25 Billion, and no criminal prosecutions, for openly defying laws and kicking people out of their homes with fraudulent paperwork. $10 Billion was for loan forgiveness or principal reduction.
Well, when it came to actually paying those fines, things haven't really worked out.
But three months later, the banks' progress in distributing that relief is slow, said housing counselors at 12 agencies, mostly in Florida, surveyed by The Huffington Post. At nine of the agencies, counselors reported that the banks had granted just one or two principal reduction offers out of dozens requested. Counselors at three other agencies -- in North Carolina, Ohio and Florida -- said that they had no clients who had received a bank's loan forgiveness offer as a result of the settlement.Banks get to openly break the law, causing hardships on hundreds of thousands of families, and then get a token fine that they have little obligation to actually pay.
Banks like Bank of America prevented homeowners to get federal loan modifications so that they would steal their homes. Military veterans were targeted with illegal homeowner fees by the 13 major banks.
The levels of fraud in the banking industry are unprecendented, yet the regulators refuse to prosecute.
"It seems to me that Washington is deathly afraid of the banking industry," Tirelli said. "If you're talking about filing false documents and filing false notarizations, do you really think that the U.S. Attorney would find it too difficult to prosecute?"
You would think that openly manipulating trillion dollar markets and robbing people of their homes would make the industry massively profitable. And it is to an extent, but not as much as you would think. Why? Because these people are narcissistic gamblers.
Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation.The derivatives trade, made with massively leveraged bets, dwarf the economies of the world. The money they steal from you they blow on cocaine, hookers and legal gambling, also known as derivatives.
These are the guys we mortgaged our future for to bail them out in 2008-2009. In fact, the TARP banks significantly increased their riskier bets after the bailout.
So why isn't the government doing anything about this systemic theft of the working class by the major banks? Why should they when they are engaging in the same game of stealing from the poor?
It's not just the private sector preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.If voting could really change things, it would be illegal. — Revolution Books
We have arrived at a terrible place. The government no longer exists for the people, but to prey on the people. Petty crimes without victims are cracked down upon with police state brutality. Corporations, banks in particular, are calling all the shots, and they openly defy a legal system that no longer applies to them.
To make it worse, the corporations are being run by insane gamblers who seem determined to destroy everything in order to satisfy their gambling fix.
Things are so broken that comparisons to the late Roman Empire no longer seem like hyperbole. The system is long past the point of being able to fix itself. No amount of regulators will change things if the regulators won't uphold the law. No amount of fines will change things if the fines are only token amounts, without prosecutions. Only a determined, global, grassroots movement willing to defy police repression can change the system.
Unfortunately I just don't see it happening.
[Update: Let's not forget the drug money laundering by our major banks.
The mechanisms of laundering drug money were highlighted in the Observer last year after a rare settlement in Miami between US federal authorities and the Wachovia bank, which admitted to transferring $110m of drug money into the US, but failing to properly monitor a staggering $376bn brought into the bank through small exchange houses in Mexico over four years. (Wachovia has since been taken over by Wells Fargo, which has co-operated with the investigation.)Amazing to think that bank oversight in Colombia is superior to ours.
But no one went to jail, and the bank is now in the clear. "Overall, there's great reluctance to go after the big money," said Mejía. "They don't target those parts of the chain where there's a large value added. In Europe and America the money is dispersed – once it reaches the consuming country it goes into the system, in every city and state. They'd rather go after the petty economy, the small people and coca crops in Colombia, even though the economy is tiny."
Colombia's banks, meanwhile, said Mejía, "are subject to rigorous control, to stop laundering of profits that may return to our country. Just to bank $2,000 involves a huge amount of paperwork – and much of this is overseen by Americans."
With Britain having overtaken the US and Spain as the world's biggest consumer of cocaine per capita, the Wachovia investigation showed much of the drug money is also laundered through the City of London, where the principal Wachovia whistleblower, Martin Woods, was based in the bank's anti-laundering office. He was wrongfully dismissed after sounding the alarm.
Gaviria said: "We know that authorities in the US and UK know far more than they act upon. The authorities realise things about certain people they think are moving money for the drug trade – but the DEA [US Drugs Enforcement Administration] only acts on a fraction of what it knows."
"It's taboo to go after the big banks," added Mejía. "It's political suicide in this economic climate, because the amounts of money recycled are so high."