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OpEdNews Op Eds    H3'ed 7/14/12

Playing Bank

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If I could convince you to knowingly participate in an illegal activity, would you? What if I were to say that the maximum punishment is a fine of only 10% of the amount you get from that crime. Would you now? How many people do you think I could get involved? That is the question banking executives face every day, and, since the punishments never fit the crimes, it is no wonder the headlines are rife with reports of fraud and illegal activity all over the banking sector. It turns out, business crime is very profitable indeed.

Over the past year or so, six banks have been fined $805 million for excessive overdraft fees.1  2  3  4  5 These are settlements and amount to nothing of the nearly $30 billion the banks earned collecting those fees.6

The investigations showed the banks optimized the order transactions were processed to increase the likelihood overdrafts would occur. Some banks processed debit transactions before credit transactions. Other banks ordered transactions by dollar amount, the largest amounts first, to increase the number of transactions after the balance dropped below zero. Then they would charge on every transaction after non-sufficient funds were essentially coerced upon the account. This means if you started with $100, then deposited $100, made two transactions of $100 each, deposited another $100 and withdrew $100, the bank would have charged you $70 in overdrafts, even though your chronological balance never fell below zero! To top it off, when you act to transfer money from one account to the other to cover the $70 deficit, they'd charge another $10 to $12. If you didn't make the correcting transfer within an amount of time arbitrarily determined by the bank, you'd owe yet another $25 to $33 fee! What was the punishment? Merrill made $32 million collecting the fees, but paid out only $2.8 million in fines!7

It seems these days, JP Morgan is the poster child of fraud, price-fixing, bid-rigging and other misconduct. They recently stooped so low as to pick on schools and not-for-profit groups. They were fined $228 million.8 Then they were "fined" a mere $30,000 for executing wash trades in oil and gas futures so they could avoid trading caps while they ran up our gas prices to make huge profits.9 If that isn't enough, they are under investigation by the Federal Energy Regulatory Commission for manipulating electricity markets.10

Of course, everyone is currently on the edge of their seats wondering what lies and dodges Jamie Dimon, JP Morgan's CEO, will disgorge to the Senate Banking Committee now that his original loss estimate of $2 billion in the London Whale derivatives has more than quadrupled to $9 billion!11 While Mr. Dimon and his presidential seal cufflinks12 tries to get his story straight about his unfortunate miscalculations, one wonders why a bank with $2.3 trillion in assets13 receives $14 billion a year in government provided subsidies.14

Of course, JP Morgan isn't the only company having a special relationship with government officials and golf buddies. The details are finally in about the favors Angelo Mozilo and company fed to hungry law makers and officials in the form of VIP loans.15 The VIP group also received waivers of bad credit, points, and "junk fees". I wonder what junk fees are and why Countrywide and probably the rest of the mortgage industry charges hard working Americans. Of course, this is years after billions was embezzled from the taxpayers and doled out to just about everyone in the boy's club. So again, we were raped by the mortgage industry twice. What I never really figured out was why the man that helped build and ran arguably the most successful mortgage servicing company in the world had to turn to cheating. Who was Angelo trying to beat?

Of course, Mr. Mozilo isn't the only victim of his own greed. This week, Russell Wasendorf Sr., the founder of Peregrine Financial Group, attempted to kill himself when it was discovered that the company held $5.1 million in customer funds but reported the amount at $220 million.16 The losses where hidden for more than two years, and the company filed for bankruptcy earlier this week.17

Banking scandals aren't limited to Wall Street. Barclay's recently opened a huge can of worms when they were caught illegally fixing Libor rates.18 Spain's Bankia is under investigation for fraud following their $24 billion bailout.19 What makes it worse is that Bankia's CEO, Rodrigo Rato, is Spain's former Minister of the Economy and International Monetary fund Chief!20

It is foolish to think the Bankia probe will lead to a cleaner banking system in Spain.21 JP Morgan has been investigated for just about anything and everything, and they remain one of the most corrupt companies on the face of and in the history of the planet! Like the American banking industry, the executives will publicly face Spain's parliament, but their many government golf buddies will ensure the probe won't turn into a political blood bath22, and Bankia's executive criminals will unlikely face any significant prosecution.23

So, why should the banks stop breaking the law? Barclay's was in a $350 trillion ($350,000,000,000,000) game with other big players such as Citigroup, UBS, the Royal Bank of Scotland, and HSBC.24 Yet, Bob Diamond, Barclay's fallen CEO, was being paid upwards of $97,000,000 and was still to receive a $31,000,000 bonus and a year's salary following his resignation over the scandal. This was approved by the board of directors!25 It doesn't matter that Diamond forfeited the bonus. In the schizophrenic brains of his golf buddies he was still, somehow, entitled to it. Where is the punishment for an undeniable crime?

The thing is, it doesn't take a lofty business school education or special creativity to perpetrate crime. All it takes is a complete and utter lack of integrity and ethics. It is endlessly repeated in history that when banks and governments are tightly entangled the only result that has ever come of it is a shameless and continuous raping of people. In this "New World Order", these crimes aren't perpetrated against those of just one region or country. It is a universal band of political and business criminals that the people of the world will have to come together to bring to justice.

  1. Reuters - US Bancorp settles overdraft fee case for $55 mln
  2. Reuters - UPDATE 2-PNC settles overdraft fee case for $90 million
  3. Reuters - UPDATE 4-JPMorgan settles overdraft fee case for $110 mln
  4. Daily Finance - Bank of America Settles Excessive Overdraft Fee Lawsuit for $410 Million
  5. Chicago Tribune - RBS Citizens settles overdraft-fees case for $137.5 million
  6. MetroActive - Big Banks: Bailout & Overdraft Fees
  7. Reuters - FINRA fines Merrill $2.8 million for excess fees
  8. The Epoch Times - JP Morgan Chase Settles Over Derivatives Misconduct
  9. Reuters - JPMorgan fined for 'wash trades' in oil, gasoline
  10. Reuters - Judge orders JPMorgan to explain withholding emails
  11. Forbes - JPMorgan's London Whale Losses Could Hit $9 Billion, Bank's Shares Slump
  12. The Daily - SEAL OF APPROVAL
  13. National Information Center - Top 50 Bank Holding Companies
  14. MSN Money - Jamie Dimon, welfare recipient
  15. Associated Press - Report: Countrywide won influence with discounts
  16. Associated Press - CFTC files civil fraud charges against Peregrine
  17. Huffington Post - Russell Wasendorf Sr. Married In Vegas Weeks Before PFGBest Scandal Broke
  18. The Daily Beast - Barclays' Rate-Fixing Is the Tip of a Much Larger Scandal, Bank Officials Say
  19. United Press International - Spain investigates possible Bankia fraud
  20. Wikipedia - Rodrigo Rato
  21. Reuters - Bankia probe will help Spanish banking cleanup
  22. Reuters - Bankia fraud case could set off political fireworks
  23. Reuters - Spain's ruling party wants 24 to testify on Bankia
  24. Associated Press - UK probing 4 more banks for interest rate fixing
  25. Atlanta Journal Constitution - Ex-Barclays chief Diamond forfeits $31M bonus
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Steven Saw Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Steven Saw is an activist educating the public about the depth of government and corporate corruption in America. Steven runs a blog, has been published in a number of sites, and was a featured guest on FreedomFighterRadio.
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