Citygroup will pay $7 billion for having misled investors in selling them risky mortgage securities leading up to the 2008 financial collapse.
Yesterday with great fanfare, the Justice Department presented a new fine imposed on a bank for its actions in the largest financial crisis since the 1930s.
Once again, an institution is punished with a fine that is less than the earnings obtained through its illegal actions. In other words, even with the fine, it was good business. And, of course, no bank executives are affected by this.
Federal authorities decided themselves that the most effective way to punish the banks that played a major role in the mortgage crisis was to fine them. The only arrests were of careless low-ranking employees, but no charges have ever been filed against the senior executives who engaged in fraud and deception on Wall Street from the time mortgage loans were granted to the sale of the investment package.
The best example of bank impunity was that of HSBC. It is estimated that the bank laundered more than $881 million for the Sinaloa Cartel and Colombia’s Norte del Valle Cartel. This is just part of the $9.4 billion it sold in Mexico. The bank was also accused of violating U.S. economic sanctions against a number of countries. The punishment was a fine of just $1.9 billiona shame considering that the bank helped move blood-stained drug money.
It is true that it is hard to successfully prosecute bankers for financial crimes. It is complicated to prove culpability, and they have the best, most expensive lawyers by their side.
But that leaves an aftertaste of injustice when there are people who lost their homes and shareholders who watched their money go up in smoke when Wall Street’s irresponsible actions caused the Great Recession, leaving an economy of unemployment in its wake.
The executives who make decisions are protected by the law within their institutions. They take the bonuses and compensation, while the bank pays the fines. The problems will not end until the perpetrators are punished