Imagine, for a moment, that you are a career criminal. You've been busted, once again, for armed robbery. The case is pretty well open-and-shut. Everyone knows you're guilty: heck, you've even admitted that you were guilty.
The admission of guilt might offer a bit of mitigation but there's no doubt that, as a repeat offender, you should expect a fairly heavy sentence. In some states, it might even be life in prison.
Now imagine, instead, telling the prosecutor that you'll do a deal. You'll pay a big fine out of the money that you stole but you won't do any time. You won't even consent to a monitored probation. Moreover, you won't promise to stop committing armed robberies.
Is there a district attorney on the planet that would take such an offer?
But what if the local paper started accusing the DA of obstructing justice? What if they said the DA should just take the payment and let you get back to your life of crime?
The editor or publisher of that paper would most likely be regarded as insane, right?
But that's exactly what has happened in the case of the Securities and Exchange Commission and a group of banks, including JPMorgan Chase, Citigroup, Royal Bank of Scotland, Barclays and UBS.
The banks are prepared to plead guilty to rigging foreign exchange rates for their own benefit. They're prepared to pay billions of dollars in fines. But they want conditions.
Mind you, these banks have already been convicted by the European Union for manipulating European and Japanese benchmark interest rates. These rates affect hundreds of billions of dollars worth of contracts worldwide, including credit cards, mortgages and other forms of credit.
But the banks want assurances that they won't be barred from business as usual. They want waivers and exemptions because criminal convictions could have consequences.
Imagine that. Committing a crime and having to face consequences.
The banks maintain that convictions could impair their opportunities to manage retirement plans and make it more difficult to borrow money.
So they want "get out of jail free" cards that allow them to remain considered "well-known seasoned issuers" that can sells stocks and debt without SEC approval, which is more convenient.
They also don't want to be subject to civil lawsuits when they make forward-looking statements. In other words, they want immunity from future lies.
Now in the good ol' days, this wouldn't have been a problem: the SEC would pass out waivers like candy at Halloween.
But today's SEC has been accused of letting criminals, especially repeat offenders like this group, off too lightly. Commissioners are becoming reluctant to rubber-stamp deals like this.
So Reuters reports "SEC a stumbling block in banks' forex guilty pleas...".
W. T. F.?
The Reuters article is critical of the SEC for standing in the way of allowing the banks to pay their billions, which will come out of shareholders' pockets, anyway, and getting back to doing what they did, including that which got them into trouble.
It takes more chutzpah than I can even imagine to print something like that. Or maybe it just takes an utterly insane value system.
Millions of people around the world were robbed by these banks. The banks have already been convicted of prior crimes. But we're supposed to be critical of the agency that is supposed to protect us from wrongdoing for taking a hard line?
Just how messed up is that?
Citizens United established that corporations are legal "people." At least when it comes to campaign contributions.
But people that are convicted of serious crimes go to prison. They don't get to continue in their chosen profession. Their "convenience" is not a factor in their punishment. In fact, they get a record that accompanies them for the rest of their lives and impacts their opportunities for pretty much anything.
If you're legally a person for one thing; you're legally a person for the rest.
While it may be impractical to park JPMorgan Chase in Leavenworth, these banks should be made to accept the real consequences of their actions. Their ability to do business should be curtailed and they should be strictly monitored for some period of time.
Yes, this will have financial repercussions, maybe even some serious ones. But investors and customers can find other financial institutions and those other institutions might be less inclined to dabble in forbidden territory (and their shareholders might be less inclined to let them).
The billions aren't enough; they don't hurt enough to drive a change. Unless these banks realize they can suffer real penalties for breaking the law, they won't stop.
How do we know that? Because we've been through all of this too many times before.