One of the key strategies of power that perpetuates economic and social injustice is the numbing of all opposition by sanctioning the status quo. This is the technique the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) wield in allowing mega-banks to continue to engage in illegal, deceptive and exploitative practices.
BuzzFlash isn’t funded by corporate advertising, but by readers like you. Can you help sustain their work with a tax-deductible donation?
There are few subjects that BuzzFlash has covered more than the charade of the DOJ and SEC appearing to punish the big banks, while actually leaving them free to continue their systemic practice of dominating the financial industry – not infrequently through financial practices that are not only unethical and immoral, but also happen to violate the law and banking regulations.
Therefore, we are not surprised that the DOJ recently reached another sham settlement with megabanks over illegal activity (in this case focusing on the manipulation of currency prices), collusion to violate banking regulations and fraud. A May 20 article by The Wall Street Journal – the voice of the US and international financial industry – reports on the five banks involved with the settlement:
Five global banks agreed to pay more than $5 billion in combined penalties and plead guilty to criminal charges to resolve a long-running U.S. investigation into whether traders colluded to move foreign-currency rates for their own financial benefit.
The settlements largely close the book on the latest industrywide investigation, one of a steady stream of probes into mortgage misdeeds, manipulative trading behavior and tax evasion. The biggest global banks have paid more than $60 billion in penalties over the past two years to resolve allegations of wrongdoing.
Most of these fines are tax-deductible, and many of them amount to less than the profits that the banks made from their law-breaking behavior. In short, in at least some cases, the DOJ allowed the banks to make money off of illicit activity and fraud. Yes, the fines appear high, but the profits were often greater.
BuzzFlash was one of the first sites to document how, under the Holder DOJ, the three original top Obama administration officials in the Department of Justice were all partners at one time or another in Covington & Burling (now renamed simply “Covington”). Although the most recent settlements were announced under a new attorney general, former prosecutor Lauretta Lynch, they were negotiated under Holder. Holder’s original top criminal prosecutor, Lanny Breuer, who infamously stated in a television interview that prosecuting mega-banks could hurt the US financial system, returned to Covington & Burling at a salary of more than $4 million a year.
Attorney Mythili Raman replaced Breuer as acting head of the DOJ criminal division (which oversees enforcement of US banking laws) when he departed in early 2013. Since that time, Raman has moved on. Where is she now? Why, she’s a partner at Covington & Burling, as her web page at the firm attests. What is the very first sentence on Raman’s law firm bio on the Covington & Burling site?
Mythili Raman is a partner in our Washington, DC office who focuses on litigation and white collar defense and was most recently Acting Assistant Attorney General for the Criminal Division at the U.S. Department of Justice. Her practice focuses on representing corporate entities and executives in a wide range of criminal and regulatory investigations, including matters involving allegations of federal fraud, securities, and money laundering violations; foreign bribery; environmental crime violations; and customs and import violations.
Covington & Burling is a top DC white-collar defense firm that represents many financial industry clients – or financial industry business partners – in matters of federal prosecution. This means that the people at the Department of Justice (who were supposedly responsible for holding banks accountable) represented many of them and their clients before and after serving in the Department of Justice.
This is the epitome of a justice system that serves the interests of law-breaking banks and DC legal careerists alike. The very people responsible for holding banks accountable have built their lucrative careers on defending them – and returning to defend them (at enhanced salaries) after leaving the DOJ.
The result is a PR announcement of fines – and in the most recent case of the five-banks agreement, a rare actual admittance of criminal behavior – without any significant consequences to the untrustworthy and nationally harmful culture and systemic structure of the banks.
No individuals are prohibited from continuing in the banking business, no long-term systemic changes of significance are required and no US bank charters are revoked. Occasionally, restrictions are placed on certain practices (in this recent settlement, so-called “probation”), but with weak enforcement mechanisms, because the only threat to banks is more fines. As we noted, these fines (when you factor in their tax-deductibility) are frequently less than the profit gained by engaging in the illicit activity in the first place.
In short, despite the charade of financial penalties and hollow pleas, the Department of Justice has left the banking system that brought the US to its knees in 2008 systemically intact.
Robert Weissman, president of Public Citizen, said of the most recent DOJ “settlement” with five big banks:
Notwithstanding today’s announcement and others like it, these banks are not deterred from violating the law – indeed, they are literally not subject to the same standards as other banks and other companies. A democratic society cannot tolerate having banks above the law.
In 2012, the international banking behemoth HSBC admitted to knowingly laundering billions of dollars of drug cartel money and was, as Rolling Stone observed at the time, merely fined “about five weeks of income for the bank.”
With this week’s “settlement,” the public is once again forced to accept the megabanks as a cartel that flourishes due to the effective impunity bestowed by the Department of Justice upon the Wall Street criminal enterprise.
Copyright, Truthout.org. Reprinted with permission.