HNewsWire.com Crooked bankers aren’t born. They’re made.
The banking industry has been able to ripoff, con, scam hard worling American for so long, it has become acceptable...
More to come on "First State Bank" now BanCorpSouth in small-town Texas Un-ethical banking practices...
BancorpSouth pays $10.6 million for mortgage practices
Penalty Type: Fair Lending/CRA
Issued by: CFPB, DOJ
A CFPB press release and blog article have announced a joint action by the Bureau and the Department of Justice (DOJ) against BancorpSouth Bank for discriminatory mortgage lending practices that harmed African Americans and other minorities. The complaint filed by the CFPB and DOJ alleges that BancorpSouth engaged in numerous discriminatory practices, including illegally redlining in Memphis; denying certain African Americans mortgage loans more often than similarly situated non-Hispanic white applicants; charging African-American customers more for certain mortgage loans than it charged non-Hispanic white borrowers with similar loan qualifications; and implementing an explicitly discriminatory loan denial policy. A consent order, which is subject to court approval, would require BancorpSouth to take a number of remedial measures. Among other things, the order would require BancorpSouth to:
Revise its policies to prevent discrimination in the future
Provide fair lending training to its employees, including training on implicit racial bias
Pay $4 million to subsidize mortgage loans in the minority neighborhoods in the Memphis area that were allegedly redlined
Open a new branch or loan production office in a high-minority neighborhood in the Memphis area
Invest $500,000 to partner with community-based organizations that provide education, credit repair, and other assistance in minority neighborhoods in the Memphis area
Spend $100,000 per year during the term of the order on advertising in minority neighborhoods in the Memphis area
Pay $2.78 million to African-American consumers who were unlawfully denied loans or overcharged for their loans
Offer subsidized credit to African-American consumers who were wrongfully denied loans, and
Pay a $3.03 million penalty.
More to come on BanCorpSouth now in Texas Un-ethical banking practices
There is a parallel between bankers and priest, Each has been above the law. Or rather, each has its own internal system of laws.
Bankers have Gyges's ring of invisibility. Most of society can't see what they're doing. They enjoy virtual impunity for acts that harm other people and society as a whole.
Decent people will always be eaten up by such an indecent system. The real challenge is to recognise that its indecency is not accidental but inherent. These institutions are too big, too justifiably arrogant, too often fawned over by intellectual and political lackeys and too detached from democratic and social values. They brought the world to the brink of economic collapse and survived with little real change. Unless democracies force them to do otherwise, they will rightly expect to ride out these smaller scandals.
Americans want their pound of flesh, and rightfully so. We’ve seen our bankers commit every kind of financial crime imaginable. They trade on insider information. They manipulate markets. They rig bets. They fix prices. They sell securities that are designed to fail so that they can bet against them. They launder money for rogue nations. They create too-big-to-fail banks that gamble with impunity knowing that we will bail them out again and again. And they collectively crashed the economy causing 8 million workers to lose their jobs.
Wouldn’t it be lovely to see these financial felons doing the perp walk?
Sure, that might satisfy our desire for justice or even revenge, but it wouldn’t solve our banking problem. Neither would a return of Glass-Steagall, which would separate investment banking (the gambling part) from commercial banking (where our deposits are federally insured). And neither would a properly enforced Dodd-Frank legislation that was supposedly designed to prevent the next financial crash.
The Justice Department’s latest settlement with felonious big banks but the repercussions were limited to a few headlines and some scattered protestations.
That’s not enough. We need to understand that our financial system is not merely corrupt in practice. It is corrupt by design - and the problem is growing.
None of this will work because even if vigorously enforced, our too-big-to-fail banking system will still be there, ripping us off each and every day. Worse still, even if you locked up all the CEOs and replaced them with saints selected by Ralph Nader, these giant banks would still be a clear and present danger to our economic system and to each of our jobs, if we’re lucky enough to have one.
The simple truth is our giant banking system is metastasizing throughout our economy. It’s sucking away our wealth, and it’s out of control. No bank CEO can effectively manage the empires they now preside over. No regulator can keep up with the financial games that are played right under their noses. It’s just not possible. Too-big-to-fail also means too-big-to-control.
The latest sweetheart deal
Four of the world’s biggest banks pleaded guilty to felony charges this week, agreeing to pay roughly $5.6 billion in fines for fixing the price of currencies on the foreign exchange market. Justice Department officials made much of the fact that, unlike previous sweetheart deals with Wall Street, this one required the banks’ parent companies to enter a guilty plea.
That’s an improvement over previous deals. But it’s not as significant as it might have been, since the settlement wasn’t finalized until the banks were able to strike side agreements with regulators to ensure they’d be able to keep doing business as usual.
One of the institutions involved in this deal was Citigroup. That’s the bank whose self-written and self-serving “Citigroup amendment” passed Congress last December, a move which made it the target of an epic Elizabeth Warren takedown.
Another was J.P. Morgan Chase. Chase CEO Jamie Dimon was lionized for far too long by politicians and members of the mainstream media, many of whom insisted that Dimon was smarter and more ethical than his peers. There is now a considerable body of evidence to contradict that assertion - and it keeps on growing.
All four banks of these banks are repeat offenders with long records of serial fraud, as even this outdated graphic shows.
In a related development ...
A fifth bank, UBS, was forced to give up a deferred prosecution deal as a result of its involvement in currency exchange fraud. In “deferred prosecution” agreements the Justice Department agrees not to prosecute a bank for crimes it has committed, if it keeps a promise not to commit those crimes again. It was not clear whether this would lead to any real-world consequences for the bank, however.
In yet another related development, Bank of New York Mellon Corporation agreed this week to pay $180 million to settle a foreign exchange-related class-action lawsuit. This followed a $714 million settlement for writing pension funds and other institutional clients by overcharging them for currency transactions.
J.P. Morgan Chase - again
This one seemed to slip through under the public’s radar. In a development that will trigger severe déjà vu for anyone who’s been following the big banks’ foreclosure scandals, the serially criminal J.P. Morgan Chase agreed on March 3 to pay more than $50 million over “robo-signed” documents - that is, documents which the bank fraudulently submitted to courts in mortgage-related hearings.
From the Wall Street Journal:
“ ... Bank officials admitted to filing more than 50,000 payment-change notices that were improperly signed, under penalty of perjury, by persons who hadn’t reviewed the accuracy of the notices, according to Justice Department officials.”
Telling a court you’ve reviewed a document when you haven’t? That’s perjury.
The Journal also noted that the Justice Department found that “more than 25,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.”
Many people lost their homes unjustly as a result of this mass-produced fraud. The practice was so widespread at J.P. Morgan Chase that it required the hiring of untrained college-aged temps - referred to within the organization as “Burger King kids“ - to generate all the fraudulent paperwork.
This is where we’re obliged to insert a sentence that has long been superfluous when reporting on deals of this kind:
The Justice Department did not announce the indictment of any individual bankers for the crimes which led to this settlement.
Corrupt, and getting worse
In an expanded version of a survey we first reported on in 2012, an updated study on behalf of law firm Labaton Sucharow found a deep-seated culture of immoral behavior among bankers in the United States and Great Britain. And it found that the situation was getting worse, not better, noting “a marked decline in ethics” since the first study was conducted.
The authors also found that there had been a”proliferation of secrecy policies and agreements that attempt to silence reports of wrongdoing and obstruct an individual’s fundamental right to freely engage with her government.”
In other words, bankers are becoming even more unethical - and banks are making it harder to report ethical lapses to the authorities.
The percentage of bankers who believed their own colleagues had engaged in illegal or unethical behavior has nearly doubled since 2012. And more than one-third of those earning $500,000 or more annually said they had first hand knowledge of wrongdoing in the workplace.
Born this way?
The Labaton Sucharow study illustrates something important: Crooked bankers aren’t born. They’re made.
According to the report, “Nearly one-third of respondents (32%) believe compensation structures or bonus plans in place at their company could incentivize employees to compromise ethics or violate the law. “
In fact, bankers’ bonuses do incentivize unethical and criminal behavior - and anything else it takes to generate profits. “Clawbacks” for ill-gotten gains are still few and far between. Remarkably few bankers have been fired for the widespread fraud that continues to characterize their industry. Prosecution for criminal behavior is extremely rare.
A system which rewards antisocial behavior begets social tragedy. It’s also a law enforcement nightmare. Criminology teaches that the presence of reward for criminal behavior, along with the absence of deterrence, almost inevitably leads to more crime.
The song says “you’ve got to be taught,” and this lesson apparently hasn’t been lost on the newest generations of bankers. “We are particularly dismayed by the ethical standards of the most junior employees in the industry,” write the authors of the Labaton Sucharow study, who found that younger bank employees were much more likely than their elders to admit a willingness to commit fraud if given the opportunity to get rich illegally and get away with it.
But then, why wouldn’t they? The banking industry’s incentive system, combined with the government’s refusal to prosecute, has taught them that the old saying is wrong: crime does pay.
Back on top
Wall Street certainly isn’t suffering in the wake of the financial crisis it created. The financial industry is nearly as large as it was before the crisis. In fact, its profits are as large a chunk of the total economy today as they were before Wall Street imploded (and was rescued by taxpayers.)
Neil Irwin of the New York Times notes that current bank profits are “more than double their average level over the 70 years ended in 1999.” That’s called financialization. It’s what happens when the productive economy of building, selling, and servicing things is crowded out by unproductive activities which redirect profits toward the manipulation of money.
As Irwin notes, bankers’ incomes are rising again, and the World Financial Center’s vacancy rate has fallen to 5 percent from a post-crisis high of 41 percent.
The Wall Street Journal reports that “Top executives from the biggest U.S. banks, concerned about anti-Wall Street rhetoric already bubbling up on the 2016 campaign trail, are working to push back against the prevailing narrative that banks are bad.”
Are they rooting out corruption inside their own institutions? Changing their incentive plans? No. According to the Journal, discussions centered on “finding ways to emphasize the positive role banks play in the economy and the changes big firms have made since the 2008 crisis ... by engaging with local media, elected officials and community leaders.”
That’s not likely to move hearts and minds among the public at large. Two thirds of voters polled last year for Better Markets said they believe “the stock market is rigged for insiders and people who know how manipulate the system.”
“Deep-seated cultural and ethical failures”
These voters are right - and they’re not alone. William Dudley, President of the Federal Reserve Bank of New York, spoke in 2013 of “deep-seated cultural and ethical failures” and “the apparent lack of respect for law, regulation and the public trust” in the culture of our biggest banks.
Dudley reached that conclusion in 2013, and the Labaton Sucharow study suggests that banker ethics have gotten worse since then.
Our banking system has a design problem, because its incentives are broken. Financialization is stifling the productive economy. And the systemic threat posed by our biggest banks has made them immune from real punishment.
These massive financial institutions don’t need a PR campaign. They need to be cleaned up - and they need to be broken up.
“If you ain’t cheating,” said one of the traders involved in the currency exchange scandal, “you ain’t trying.” If we’re not addressing the financial sector’s systemic threat to our economy, or its affronts to our system of justice, then we ain’t trying either.Source
'In corrupt systems, decent people have two options: conform or be crushed'
This is what bad systems do: they reward the compliant with tribal approbation ("Done, for you big boy") and recast conscience as negativity. They invert altruism, using the instincts of decency – working co-operatively, being "in this together", upholding a communal ethic – to normalise sociopathic behaviour and make decency despicable.
Even good intentions are useless in such a world. Consider, for example, the Catholic bishops who ended up colluding with predatory paedophiles by shifting them from parish to parish. These are all men trained for many years in moral thinking. All of them, perhaps, dreamed of being saints in the same way that other boys dreamed of being footballers. Most of them are individually decent, compassionate and well-intentioned men. Yet they ended up enabling and covering up the most horrific crimes against children.
Why? Because they had too much power. Because they had to account to no one outside of their own institution. Because they had a fierce loyalty to their colleagues. Because they didn't want to be the one who betrayed the tribe. Because what might have seemed outrageous the first time you did it gradually became normal. And because they could convince themselves that, really, it was all in the service of a higher moral purpose.
Bankers are no different – in fact, the parallels are striking. They, too, deal in arcane mysteries whose meaning is denied to the uninitiated. They, too, have a hotline to the Supreme Being or as we now call him, the Market. They, too, operate within closed worlds which generate their own norms and a feverish tribal loyalty. They, too, have their acolytes and true believers – in this case, economists and politicians – to reassure them that their most appallingly self-serving behaviour is in fact for the greater good. An entire ideology tells them that vicious greed on the personal level translates miraculously into a collective social and economic good.
There is another parallel between bankers and priest, Each has been above the law. Or rather, each has its own internal system of laws: canon law for the clergy, financial regulations for the bankers. These systems become, in reality, substitutes for the basic common understanding of criminality. Assist a paedophile in ordinary society, and you can expect, if caught, to have your collar felt. Steal a million quid from a small business and you're going down. But do these things within the bounds of your own internal codes, and crimes become technical offences. Shame is minimised; consequences are softened.
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