The most powerful private banks in the world have been fined billions of dollars for their misdeeds over the past eight years or so. In an unprecedented move, these banks were held fiscally (but not criminally) responsible for the manipulation of markets and dishonest practices that bilked investors and account-holders of their hard-earned money.
With a reason spate of new fines being levied by financial regulators, it seems the banking cartel has not learned its lesson yet. More violations—or extensions of, and new revelations surrounding, past offenses—continue to work down the pipeline. Its remarkable how even the nine-figure fines for these banks merely serve as tolls for the privilege of operating a corrupt business (rather than actually discouraging such bad behavior).
Honestly, would we expect anything less from the big banks?
Barclays Pays Libor Fine to U.S. States
For the first time ever, a bank involved in the wide-reaching Libor rigging case has made compensatory payments to individual U.S. states. 44 states will get their share of $100 million from Barclays relating to “probes into false rate submissions that inflated borrowing costs linked to the London and U.S. dollar interbank offered rates,” which is known as Libor for shorthand.
To date, the fines tied to the Libor scandal have topped $9 billion globally. Initially, U.K. financial regulators (in cooperation with their counterparts in the U.S.) fined Barclays (BCS) a whopping £290 million ($377 million) for manipulating these benchmark rates lower in order to falsely portray a stronger financial picture of the firm. Naturally, the bank was slapped with a subsequent $60 million fine a few years later for violating its probationary agreement with regulators. As has been standard procedure, however, Barclays will make these settlement payments to U.S. states in exchange for neither admitting nor denying guilt.
Goldman Steals, Leaks Confidential Data
In a separate matter, the megabank Goldman Sachs has been fined $36 million by the Federal Reserve Board for essentially stealing and then leaking sensitive information.
The civil penalty is being imposed along with a potential ban on the bank’s former managing director from the financial industry entirely. Although he is reportedly claiming his innocence, Goldman as an institution is apparently cooperating with regulators.
The Fed alleges that a former associate of the bank, Rohit Bansal, admitted to illegally obtaining documents from one of his cronies at the New York branch of the Federal Reserve—which has long been known to have unethically close ties with Wall St, and Goldman Sachs (GS) in particular. The NY Fed is often cited as the most powerful bank within the Federal Reserve system, as well.
Bansal was not only in illegal possession of the confidential documents, but seems to have then disclosed this information, amounting to a second violation of the law. The civil penalty totals $36.3 million. For perspective, this represents just 0.05% of the company’s overall market capitalization of $66.9 billion.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.