Top US banks have incurred nearly $ 200 billion in fines and penalties for illegal activities in 395 major lawsuits over the past 20 years. Bank of America tops the list, followed by JPMorgan, Citigroup and Wells Fargo, according to a new report, which also includes Morgan Stanley and Goldman Sachs.
Big Banks’ $ 200 billion in fines
Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo together raised $ 195 billion in fees and fines, according to Washington-based advocate Better Markets. The fees and fines from 395 major lawsuits since 2000 have been paid to government agencies, investors and consumers harmed by the banks’ behavior.
The report finds that “banks’ behavior is deteriorating as it appears that their behavior since the financial crisis has triggered more significant legal action than their behavior before,” Financial Times chief Dennis Kelleher reported Thursday.
Between 2000 and the financial crisis, banks were hit by 85 major legal complaints, the report says. During the financial crisis between 2008 and 2012, there were 110 major cases. Between 2012 and the present there were 204 legal proceedings against the banks.
The types of financial crime that banks engage in include money laundering, bribery, “massive fraud in the sale of mortgage-backed securities,” misuse of credit cards and checking accounts, and foreclosure and collection violations, the report describes. Also included were violations of fiduciary duty, violations of antitrust laws, market manipulation, activating Ponzi schemes and violations of election law.
“It’s all important legal action,” Kelleher said. “It’s not like it was a ‘broken windows’ theory after the crash, with prosecutors fining every minor offense.” The CEO of Beter Markets commented:
Had they been held to higher standards, they would all have gone out of business because the recidivism is really upsetting.
He pointed to some examples of the cases that emerged this year that showed banks were repeating their past mistakes. While in most cases financial institutions do not recognize or deny misconduct in most cases, guilty pleas are more common.
In October, JPMorgan Chase was fined $ 920 million for alleged manipulation of metals and treasury markets. The company “entered into an agreement to postpone prosecution in 2014 after admitting anti-money laundering shortcomings associated with Bernard Madoff’s Ponzi scheme and pleaded guilty to criminal charges in 2015 for manipulating currency markets” , the report said. Kelleher opined:
It is absolutely shocking that JPMorgan has now pleaded guilty to three separate criminal charges for blatant years of criminal behavior.
Over the past 20 years, JPMorgan has raised $ 40 billion in 83 different instances, including about $ 10 billion of crisis-era related operations at Bear Stearns and Washington Mutual, which it bought when they were in trouble in 2008.
Bank of America paid $ 91 billion, the highest in fees and fines, in 86 lawsuits, most of which were related to “mortgage-related issues that predate Bank of America’s takeover of businesses more than 10 years ago.” The report adds that $ 40 billion of the bank’s fines and fines were linked to Countrywide, a mortgage lender that bought the bank in 2008, and billions were linked to Merrill Lynch, the brokerage that bought it during the crisis.
Plus, Goldman recently paid Sachs settlements for his role in Malaysia’s 1MDB development fund.
What do you think about the illegal activities and fines of banks? Let us know in the comments below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Better Markets
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