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Have Banks Become Criminal Enterprises?

Posted by Larry Doyle on July 22, 2012 6:41 AM |

I continue to maintain that the overwhelming percentage of people working on Wall Street are good and decent people trying to make an honest living in what has become an increasingly challenged industry.

I also maintain, and always will, that the spirit of capitalism that drives Wall Street is a necessary and vital engine if our economy and country are to recover.

I rail so hard on the failures and captures within our financial system for the very simple reason that I believe a healthy country needs healthy markets. Neither our country nor our markets are anywhere close to being healthy right now. In fact, with the news surrounding the Libor scandal taken in conjunction with word of massive money laundering within HSBC, the question begs, “Have banks become criminal enterprises?”

Let’s put the industry on the stand and pose that question and subsequent questions in a very serious manner against the backdrop of both 9/11 and September 2008.

Did our global economy take such a massive hit post 9/11 that lax regulators became totally ineffectual?

Has the financial system overall been infiltrated by international drug cartels?

Did the banking regulators look the other way with the rigging of Libor in the early to middle part of the last decade merely as an extension of other manipulative schemes ongoing within their operations?

Post September 2008, were regulators so focused on saving the system that the positive streams of revenue connected to criminal activity found a safer haven and perpetuated?

Why such hard hitting questions? To wit, I submit the following:

In the rinse and spin of money cleaning, HSBC was simply one washing machine among many. As Antonio Maria Costa, the former head of the UN Office of Drugs and Crime (UNODC), says: “Today I cannot think of one bank in the world that has not been penetrated by mafia money.”

The global trade in illicit drugs is huge. The UNODC estimates it is worth $380bn in 2008 dollars, about 10 times the annual sales of online retailer Amazon. Indeed, it was because of international drug trafficking that money laundering first vaulted on to the agenda of international crime fighters.

Read the entire story of Money Laundering: Taken to the Cleaners

While regulators here in the U.S may have breathed a sigh of relief that HSBC was implicated in this money laundering activity, which bank seems to have been the central ‘laundromat’? Wachovia.

Federal prosecutor, Jeffrey Sloan told The Guardian: “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.”

Was Wachovia so financially strapped and facing such massive losses within its mortgage operations that the allure of revenues from the drug trade became too captivating? Great question.

Read the entire story of Laundering Cartel Money Is Nothing New for Banking Industry.

What other banking enterprises deserve further cross-examination? Let’s put UBS and JP Morgan on the stand.

. . .  in many ways, UBS is in a league of its own given its track record for scandals. Should UBS be implicated in the Libor rate-fixing conspiracy, it’s hard to imagine a better corporate candidate for a criminal indictment . . .

Tax-evasion, bid-rigging, insider trading within the auction rate securities market, Libor. UBS seems to have touched all the bases.

Read the entire story of For UBS, A Record of Averting Prosecution.

Not to leave out the bank with the fortress balance sheet, but what about JPM?

. . . according to published reports, JPMorgan is also being investigated for alleged improprieties in the municipal securities market, the electric power market and in setting Libor, the basic index for corporate and consumer financial instruments worth hundreds of trillions of dollars.

Read the entire story at American Banker of Too Big to Behave, Not Too Big to be Punished.

I am not making this stuff up.

While I am not here to promote the candidacy of Elizabeth Warren, I am here to promote truth and transparency. Warren is spot on in her recent commentary in the Washington Post:

 . . . the only question remaining is whether Wall Street has so many friends in Washington that meaningful reform is impossible.

Real accountability would mean prosecuting the traders and bank officials who violated federal laws and prosecuting the executives who knew what they were up to. It would mean forcing executives to pay back any inflated compensation that was based on padded profits.

. . . the heart of accountability lies deeper. It rests on acknowledging that we cannot trust Wall Street to regulate itself — not in New York, London or anywhere else.

The club is corrupt.

Your witness.

Who will clean up this mess? America needs real leaders and real leadership now more than ever.

Larry Doyle 

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.


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