This past week the US Department of Justice (DoJ) announced that four multinational banks had recently agreed to plead guilty to felony antitrust violations and pay criminal fines and penalties approaching $3 billion. A fifth bank agreed to plead guilty and pay a $203 million criminal penalty for breaking the non-prosecution agreement it entered in December 2012 regarding manipulation of the London Interbank Offered Rate, or LIBOR – a benchmark interest rate used worldwide.
Simply put, these five banks agreed to plead guilty to manipulating the interest rates that nearly every consumer has to pay when we borrow money for mortgages, car loans, college loans, business loans, etc.
OpenCdA suggests readers take a look at two publications from the US Department of Justice. One is Antitrust Enforcement and the Consumer. The other is Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look For — An Antitrust Primer. For purposes of this post, pay particular attention to the sections on price fixing. That’s what these five parent banks had agreed to do.
In addition to reading Attorney General Loretta Lynch’s announcement, OpenCdA suggests reading the statements of Assistant Attorney General Bill Baer (DoJ Antitrust Division) and Assistant Attorney General Leslie Caldwell (DoJ Criminal Division). They do an excellent job explaining the violations in plain language that drives home their effect on all of us. (A couple of abbreviations used: NPA = Non-Prosecution Agreement; DPA = Deferred Prosecution Agreement.)
People reasonably wonder why banks that commit massive financial crimes only have to pay fines. It seems as if none of their corporate officers ever risk jail time. Here are links to the plea agreements with these banks.
- Barclay’s PLC Final Plea Agreement
- Citicorp Plea Agreement
- JPMorgan Chase & Co. Plea Agreement
- The Royal Bank of Scotland PLC (RBS) Plea Agreement
- UBS AG Plea Agreement
Note these agreements do not preclude individual criminal prosecutions and, in fact, require the convicted corporations to fully cooperate in individual investigations and prosecutions. However proving that individual corporate officers had criminal involvement with what their subordinates were doing is often very difficult in antitrust cases of this magnitude. After all, Tim Geithner is still a free man.
Just how does that work? The banks screw the people out of 9 billion or so dollars, but nobody is ever really guilty, even tho there were “chat rooms” where it all went down? Wow, what. a. career. and the government gets no one, only their money back and we the little people, will most likely never see it. Oh, I get it, it might take another five years or so before someone is indited if ever, and then they will probably go to cupcake prison and come out smelling like a rose. So wrong. Our justice system need to get a grip on something else besides their own retirement. So sick of white collar crime when we can all see that their white shirts really smell like … well you know what.
Comment by Stebbijo — May 24, 2015 @ 4:29 pm
Stebbijo,
Yes, it is frustrating. No rational person believes that in those banks, hirelings in chat rooms originated and executed the manipulations without implicit authority from those on mahogany row. I included the Geithner article, because as his comments made clear, presidents and cabinet officers know and knew what was going on, but they rationalized dishonest behavior as being in the best interests of the people who elected them.
My purpose in writing this post, though, was to get local people to ask if antitrust actions similar to what these five international parent banks and their subsidiaries did could ever be scaled down and executed on a local scale. For example, could local and regional banks collude with local elected officials to determine who received the tax-free interest loan to the community college last year, who gets the public safety bond this year, who will get the school bond next year, and so on? If all the supposed “competitor” banks know they will eventually get their “fair share” of the take at an inflated interest rate, is there really competition as the law intends? That kind of collusion would certainly be more easily accomplished if alleged “auditors conducting independent audits” were agreeable and local and regional skews media lacked any semblance of journalistic curiosity. It would be even more easily and comfortably done if the components of the criminal justice system (law enforcement, prosecutors, judges) were ignorant, incompetent, or worse, collusive.
Comment by Bill — May 24, 2015 @ 7:23 pm
I think it is interesting that on October 28, 2008, apparently Citicorp and JP Morgan Chase & Co each received $25,000,000,000 in bailout money. Apparently of the two, only JP Morgan Chase & Co has paid it back.
With regard to the plea agreements’ language the banks have to report to a probation officer. I wonder if a urine analysis test is required by the probation officer and, if so, who is designated to submit to it?
Comment by Tributary — May 29, 2015 @ 2:03 pm
Tributary,
Well, I think someone should cut off Citicorp’s allowance and make the bank take a timeout.
How do you do a urinalysis on a bank? Or a bed-check?
What are the terms of the probation? Maybe it’s like Idaho and the judge retained jurisdiction — if the defts don’t reoffend within the next year, their convictions are expunged and their records cleared so they’re free to act until the next time they’re caught?
More to the point, where does the money come from to pay the gazillion dollar fines and penalties?
Comment by Bill — May 29, 2015 @ 3:50 pm
Me too, very massive when you think about it. What about the banks and their customer’s who were not involved? How were their interest rates effected due to this manipulation of LIBOR? Of course, most customers will never find out because the media’s focus is never on a real story, it has to bring forward petty crimes for under a million dollars. Well, someone’s is going to pay for it and I suspect Barclay, JPMorgan Chase, Citicorp et.al will all be raising their interest rates soon enough, then the crime story may really break.
Comment by Stebbijo — May 29, 2015 @ 6:13 pm
Stebbijo,
When interest rates are manipulated as they were in this case, the “banks and their customer’s who were not involved” were involved. Unknowingly and distantly. You will notice that our local skews paper, the Coeur d’Alene Press, have had no articles explaining how this kind of international theft washes (not trickles) downhill over all borrowers. Our local skews paper would prefer that local citizens not ask embarrassing questions of their local banks, questions local banksters would neither be able nor want to answer.
Comment by Bill — May 29, 2015 @ 7:04 pm