Banks and crime

kimmy · July 28, 2012

A couple of big items from the banking world seem to be getting surprisingly little attention.

The first is the LIBOR scandal, in which banks have been caught conspiring to rig the "London Inter-Bank Offered Rate", which is an interest rate benchmark that is used throughout the global financial community. Only Barclay's bank has been punished so far, but other banks are being investigated as well, and because of the way LIBOR is calculated, a considerable number of banks would have to be involved.

I think that few people are concerned about LIBOR because most people don't understand any of this, and I certainly count myself among those who have no clue how this works. However, financial analysts believe that this is an issue of major importance, and that assets and loans directly affected by LIBOR rigging are valued in the hundreds of trillions of dollars.

The second big news item from the banking world was the resignation of an HSBC executive after HBSC was caught laundering money for drug cartels, tax cheats, and terrorists.

I am starting to wonder if the ethics of the financial sector only extend to questions like "what can we get away with?" and "will we get caught?" It might be some comfort that no Canadian banks have been named yet, but given the potential scale of the LIBOR scandal, "yet" is a key word there.

-k

Canuckistani · July 28, 2012

I am starting to wonder if the ethics of the financial sector only extend to questions like "what can we get away with?" and "will we get caught?" It might be some comfort that no Canadian banks have been named yet, but given the potential scale of the LIBOR scandal, "yet" is a key word there.

-k

Only starting to wonder?

Our banks have grown very big. While we have very good regulations on them, those can be broken. So I do think it's a matter of yet.

Posted a good editorial on another website, that basically said congress sent 97 investigators to look at one baseball player using steroids. Nobody's been charged with the subprime scandal or this libor now. We as a society can't seem to keep our eye on the ball. Why would we expect the petty crooks to reform when the elite steal trillions and are admired for it?

Argus · July 28, 2012

I am starting to wonder if the ethics of the financial sector only extend to questions like "what can we get away with?" and "will we get caught?" It might be some comfort that no Canadian banks have been named yet, but given the potential scale of the LIBOR scandal, "yet" is a key word there.

-k

I think that's about the face of it. Sometimes in the seventies, I believe, the culture of the corporate sector began to shift into a "Greed is Good" mentality where anything and everything that would earn more profit was perfectly acceptable. Lie, cheat, steal, entrap poor people into buying houses they couldn't afford and credit card payments which would keep them living like serfs, bribe politicians to change the tax code and laws, refuse to pay insurance costs for the deathly ill, and outsource any job you could to whatever low rent hellhole you could find with employees who could be coerced into doing the grunt work. This mentality is also well exemplified by Ford's cost benefit analysis into whether it was cheaper to recall and fix the gas tanks on the Pinto or just pay off the lawsuits from the relatives of those who got burned up (they decided on the latter). It's worse in the financial world because of the incredible bonuses so many of them can make, bonuses which become the sole focus of their efforts, and are large enough to make many people completely ignore any moral implications of what they're doing.

July 28, 2012

Yes we received notice that our monthly banking fees are going up to $17 per month, from what used to be about $12. Nice to help the banks ensure that they make the biggest profits ever, year after year while many of us are sitting on frozen wages.

And then we hear stories like this.

Tell you what. Yes, most people don't know about things like this going on, they don't know the details but they hear things in daily discourse and they see short snippets on the news, and there is at least a subliminal awareness that, we're being systematically screwed.

And this, my dear forum members, leads to a whole host of issues that we can scarcely touch on in a simple thread such as this. But suffice to say we've all heard that consumer confidence is down, and that it's the main component driving the economic engine of western nations but people are no longer opening up their wallets, not buying goods like they used to and so the whole system is slowly grinding to a halt. Now you know why.

cybercoma · July 29, 2012

I am starting to wonder if the ethics of the financial sector only extend to questions like "what can we get away with?" and "will we get caught?"

I think that's about the face of it. Sometimes in the seventies, I believe, the culture of the corporate sector began to shift into a "Greed is Good" mentality where anything and everything that would earn more profit was perfectly acceptable.

Ah, but it's not the "corporate" sector, Argus. It's the investment bankers that create nothing. We're talking about the real-life Gordon Gekko's that were buying up businesses in the corporate sector only to completely dismantle them and earn a profit for themselves and the shareholders, at the expense of the working class that relied on those jobs for an honest living. It's people like Kevin O'Leary, who see to think that what's profitable is ethical, that fail to see the long-term ramifications of their greed. The problem, as I see it, is that these investment pirates want everyone to believe that they are the same people as the kids who put up lemonade stands.

Gordon Gekko, giving his greed is good speech below, wants people to believe that he, an investment banker, is the same as Carnegie or Rockefeller. Gordon Gekko, however, does not create anything. Those men did. These leeches have pulled the greatest scam in history: making people believe that they are building our world, when in truth they are parasites. They build nothing, create nothing, and make millions doing it.

Amazingly, Ivan Boesky gave a similar speech to the one above as a commencement speech for UC Berkeley students in 1986. Guys like Ivan Boesky and Michael Milken set us on this course in the early 1980s and we've yet to do anything about it.

Wild Bill · July 29, 2012

Ah, but it's not the "corporate" sector, Argus. It's the investment bankers that create nothing. We're talking about the real-life Gordon Gekko's that were buying up businesses in the corporate sector only to completely dismantle them and earn a profit for themselves and the shareholders, at the expense of the working class that relied on those jobs for an honest living. It's people like Kevin O'Leary, who see to think that what's profitable is ethical, that fail to see the long-term ramifications of their greed. The problem, as I see it, is that these investment pirates want everyone to believe that they are the same people as the kids who put up lemonade stands.

Gordon Gekko, giving his greed is good speech below, wants people to believe that he, an investment banker, is the same as Carnegie or Rockefeller. Gordon Gekko, however, does not create anything. Those men did. These leeches have pulled the greatest scam in history: making people believe that they are building our world, when in truth they are parasites. They build nothing, create nothing, and make millions doing it.

Your post reminded me of something I read about Lee Iacocca, the guy who saved Chrysler from bankruptcy in the 1970's. He was talking about all the junk bond dealers and investment managers and held them in contempt! From his POV, they did not create wealth so much as simply played with money. They did not actually make a product or a service. He believed that respect came from mining, or farming, or manufacturing - doing something for a real world result. Buying up companies just to shut them down for a tax dodge disgusted him.

I think today's corporate disrespect for the law and for the market at large is only a symptom of a deeper problem, CC. I think it has to do with a decline in the character of the average citizen!

Think back to the first half of the 20th century. Zenith Radio Corporation was one of the largest employers back then and one of the first to invent profit sharing, managing to keep their workers on staff through the Depression when so many other companies dramatically slashed their payrolls.

How about all those "One dollar a year" businessmen who rallied to FDR when America was dragged into WWII? What about all those "upper crust" young lads in Britain who volunteered to fly and when necessary die in Spitfires and Hurricanes during the Battle of Britain?

Fast forward to the Viet Nam war, when so many lads of privilege had their fathers find ways to exempt them from the draft, to serve in safety with the National Guard or some other domestic role.

It's character! A level of character that cut across economic lines. It was a universal cultural thing that affected the behavior of ALL citizens within a country! A Rockefeller might be ruthless in business but still felt obliged to set up charitable foundations. He would use his wealth and resources to help his country in time of war. He would never think of using his position to keep his sons out of the fighting. To such a man in those times it would be considered shameful.

As I said, business was just as ruthless in those times but there seemed to be more honour. A man was considered only as good as his word and a handshake was a contract.

How much of that do we see today? It almost seems as if Simon Legree has become a role model!

There are a myriad of reasons for this change in our culture. I think that "railing against the rich" is but a bandaid approach.

If we can do things to regain that sense of character in our society perhaps some of these problems in business and other areas would go away by themselves.

Edited July 29, 2012 by Wild Bill

GostHacked · July 29, 2012

cybercoma · July 29, 2012

I think it has to do with a decline in the character of the average citizen!

I wouldn't say it's the average citizen that lacks character. I wouldn't even say it's the entire corporate or investment banking sector. The problem is that there are enough people that truly believe "greed is good" is a mantra that should be lived by. Those people have no character. They've been convinced that if it makes money it's good for society. There is more to life and more to society than the never-ending pursuit of greed.

Argus · July 29, 2012

I wouldn't say it's the average citizen that lacks character. I wouldn't even say it's the entire corporate or investment banking sector. The problem is that there are enough people that truly believe "greed is good" is a mantra that should be lived by. Those people have no character. They've been convinced that if it makes money it's good for society. There is more to life and more to society than the never-ending pursuit of greed.

And the problem is these people can get away with it because they are rarely ever punished. As I've said in other threads, how many people went to jail for the S&L disaster? Or for 2008? Were the heads of the financial organizations which collapsed charged with anything? Nope. They took their golden handshakes and headed off for new challenges. Were any of the people involved in high pressure sales of houses to people who couldn't afford them ever charged with anything? Those mortgages were re-packaged into secure financial investments. Anyone involved in that go to prison? Think anyone will go to prison for the current libor scandal? Not bloody likely.

eyeball · July 29, 2012

And the problem is these people can get away with it because they are rarely ever punished. As I've said in other threads, how many people went to jail for the S&L disaster?

I guess the state is more interested in harsher longer punishment for the smaller fish that you spend even more time writing about. I guess it's a matter of priorities.

kimmy · July 29, 2012

I watched

yesterday.

There's obviously a couple of disclaimers that come with a film like this. First off, trying to explain such a complicated topic in the context of a two-hour movie is going to result in some oversimplification that detracts from the accuracy of the information. Secondly, there's certainly an editorial bias.

With that out of the way, here are the major lessons I got from the movie.

1) The buck doesn't stop here.

The heart of the problem is that the banks found a way to make risky investments and pass the risk along to somebody else. You would think that a bank would be careful to give mortgages to people who people who were likely to pay them back, and careful to avoid giving mortgages to people who were likely to default. And once upon a time, you would have been right to think that. But with the rise of deregulation in the 1990s, as well as the invention of complicated financial products called "derivatives" and "collateralized debt obligations" (CDOs) that was no longer true. It became possible for the banks to package up mortgages into bundles and sell them as "CDOs" to investors. In particular, the banks were able to hide sub-prime mortgages inside CDOs. The buyers of the CDOs didn't know that they were buying sub-prime mortgages, they just knew that they were buying a financial product that would provide X% return, and credit rating agencies like Moody's and S&P gave CDOs high credit ratings, so they felt safe. Disturbingly, the invention of CDOs made it *MORE* appealing for banks to give risky mortgages than safe mortgages, because risky mortgages gave higher interest rates.

If a deadbeat came in and asked for a mortgage, the old-style thinking would be "We shouldn't give him a mortgage because he's a high risk to default and I will be on the hook." The new-style thinking would be "I should give him a mortgage, because we can get a high interest rate from him, and if he defaults it doesn't matter to me, it'll impact some sucker buys this mortgage from us."

It's even more confusing than that, because the "securitization chain" passes through several different stages with added factors like default insurance and "credit default swaps" that it's difficult to know who exactly gets stuck with the bill if the mortgage defaults. But the short version of the story is that when banks thought they were free from the consequences of giving out risky loans, they started giving out risky loans as fast as they could.

2) People had powerful incentive to screw the future for the sake of short-term gain.

I'm not talking our children or our children's children, I'm talking next year. These companies-- Lehmann Brothers, Goldman Sachs, Merrill Lynch, etc, had executives who earned hundreds of millions of dollars based on the company's performance in 2005. And again in 2006. And again in 2007. Everything exploded in 2008, but so what? They already had their hundreds of millions of dollars.

That goes all the way down the food chain. The guys at the banks who got bonuses for selling more risky mortgages didn't have any reason to worry whether those mortgages defaulted in a year, because they already pocketed their bonus. The guys at AIG who got bonuses for selling more default insurance and credit default swaps didn't have any reason to worry that the defaults might ultimately kill AIG, because their bonuses were based on their sales, not the outcomes.

This is closely linked to lesson #1, because the basic message is the same: if you reward people for taking risks, and they don't face any consequences if their risks don't pan out, they will act recklessly.

3) The foxes are guarding the hen house.

Another key point the film makes is that the finance industry has become so complicated that only experts can understand what's going on, and the experts work for the financial industry. If you're a politician and you need policy advice on financial issues, who do you talk to? Well, you could ask industry professionals, but they obviously have a vested interest. You could ask experts working for the government's finance department... but within a few years those experts will be working for the financial giants, so they have a vested interest too. Politicians go to top academic experts, professors from schools like Harvard and Columbia... but those guys also make huge coin doing consulting work for the financial industry.

What it boils down to is that the people that politicians could go to to help figure out how to deal with the finance industry happen to be people who have a vested interest in making sure that the financial industry makes as much money as possible.

And it turns out that many of the people that Obama selected to help plan the recovery and rebuilding of the financial sector were key figures in designing the policies that led to the 2008 collapse.

So overall it was a very depressing film that left me sad and worried.

-k

Edited July 29, 2012 by kimmy

Argus · July 29, 2012

I guess the state is more interested in harsher longer punishment for the smaller fish that you spend even more time writing about. I guess it's a matter of priorities.

People tend to get more emotional about personal dangers, about the fear of someone invading their space, their home, stealing from them, hurting them physically, etc.

Nevertheless, I've written about the lack of prosecution for criminals and the lack of enforcement for laws against corporate fraud and misbehaviour before, as well.

The mere fact that the police will not even investigate the "low hanging fruit" of the fraud tree, in things like auto repair shops which lie, cheat and steal by exaggerating repairs, pretending to make repairs, or making unnecessary repairs, or that it will not bother with contractors who use substandard material, or do a deliberately shoddy job, or don't even finish the work, tells me that fraud is not something the authorities care much about. And if they won't go after the easy and obvious cases they're sure not going to be spend a lot of time on the ones they need to call in forensic accountants for.

As far as I'm concerned, immense fines should be levied on the organizations involved, driving them into bankruptcy if behavior is repeated, and the individuals involved should be jailed. But we don't see how this hurts us as individuals because no one establishes a price tag in the sense of how much extra we pay each year for repairs and insurance, etc. Likewise, how much did the price fixing among banks cost individuals? No one has worked that out so few really care.

Argus · July 29, 2012

So overall it was a very depressing film that left me sad and worried.

-k

Yeah. I saw Inside Job last year. It angered me, the way all those people clearly knew what they were doing, felt and still feel no moral qualms about it, no responsibility, and were, for the most part, never punished. In fact they were rewarded to the tune of tens if not hundreds of millions of dollars.

It's part of a series of such documentaries that have come out in recent years explaining the way things work to people whose knowledge is otherwise largely governed by the 30 second news bytes on the TV. Maxed Out was another one, which detailed how the credit card companies screw people over, entice especially lower income people into getting high interest credit cards because they know they won't be able to pay them off like better off people. Gasland is another one, focusing on the oil and gas industry and their poor environmental record. I'd also recommend Who Killed the Electric Car.

None of the behavior in any of these films has changed since they've come out, btw. The financial industry is every bit as focused on short-term greed as it was before the 2008 near crash, and is doing its best to bribe politicians like Mitt Romney to remove the regulations put in place since so they can do it all again.

Part of the reason why I, a conservative, don't trust corporate Canada/America AT ALL.

Edited July 29, 2012 by Argus

cybercoma · July 29, 2012

The issues with the financial/corporate sector certainly are not a Left vs Right issue. It's an issue of fairness. If everyone is playing by the same rules, then it's fair. When people can buy rule changes and tilt the game in their favour, not so fair.

August1991 · July 29, 2012

The first is the LIBOR scandal, in which banks have been caught conspiring to rig the "London Inter-Bank Offered Rate", which is an interest rate benchmark that is used throughout the global financial community.

It happened before, with Salomon Bros.

http://en.http://en.wikipedia.org/wiki/Paul_Mozer

The second big news item from the banking world was the resignation of an HSBC executive after HBSC was caught laundering money for drug cartels, tax cheats, and terrorists.

Not news.

Banks are in the business of recording numbers. Indeed, that's all they do.

What is called "money laundering" really amounts to putting your accounting books/records in a place where tax authorities cannot see them. The easiest place is your own head. When your accounts become too complicated for that, a portable laptop is better. In some cases, a portable laptop is not enough and you require an office with paper, people and several computers.

There's also a credibility factor with financial paper. A cheque written on the "The Fourth Bank of a Small Caribbean Island" is marginally more credible than a suitcase of US 100s.

Edited July 29, 2012 by August1991

August1991 · July 29, 2012

I am starting to wonder if the ethics of the financial sector only extend to questions like "what can we get away with?" and "will we get caught?" It might be some comfort that no Canadian banks have been named yet, but given the potential scale of the LIBOR scandal, "yet" is a key word there.

There are several differences between English Canada and the United States, and one of the differences concerns attitudes toward money.

The monetary histories of the two countries, Canada and the US, are remarkably different.

Edited July 29, 2012 by August1991

eyeball · July 30, 2012

People tend to get more emotional about personal dangers, about the fear of someone invading their space, their home, stealing from them, hurting them physically, etc.

If you say so. The last thing I'm worried about is being jumped on the way from parking my car to my oft-left-unlocked house. I know I'm far far more vulnerable to the effects of all the unresolved crimes of the - "high hanging fruit" like the banksters.

Nevertheless, I've written about the lack of prosecution for criminals and the lack of enforcement for laws against corporate fraud and misbehaviour before, as well.

Just nowhere near as much or as often as you do about the sort of crime which is still falling faster than ever before.

The mere fact that the police will not even investigate the "low hanging fruit" of the fraud tree, in things like auto repair shops which lie, cheat and steal by exaggerating repairs, pretending to make repairs, or making unnecessary repairs, or that it will not bother with contractors who use substandard material, or do a deliberately shoddy job, or don't even finish the work, tells me that fraud is not something the authorities care much about. And if they won't go after the easy and obvious cases they're sure not going to be spend a lot of time on the ones they need to call in forensic accountants for.
As far as I'm concerned, immense fines should be levied on the organizations involved, driving them into bankruptcy if behavior is repeated, and the individuals involved should be jailed. But we don't see how this hurts us as individuals because no one establishes a price tag in the sense of how much extra we pay each year for repairs and insurance, etc.

These are the sorts of thing that are easily corrected by simple competition and consumer choice. Since when did doing a shitty job have to be treated as a crime? Why someone like you should be the last person in charge of reforming our prison system is even more obvious.

Likewise, how much did the price fixing among banks cost individuals? No one has worked that out so few really care.

It's probably how much it earned certain individuals that should have been our first clue that some sort of nefarious fix was in but it seems everyone was too busy celebrating how rapidly the income gap was expanding to notice.

For what it's worth, I care to the extent that I think banksters should be treated, well, like me for example. I'm not allowed to pursue my livelihood as a commercial fisherman without cameras and black boxes recording and verifying everything I do because I might hurt the interests of Canadians. Note that preventing harm to the public's economic interests via video monitoring of industries capable of doing real harm to the economy is something I've cared enough about to have spent years writing about.

It works too, just ask Conrad Black.

Argus · July 30, 2012

If you say so. The last thing I'm worried about is being jumped on the way from parking my car to my oft-left-unlocked house.

I don't think our judicial system should be based on naivety.

These are the sorts of thing that are easily corrected by simple competition and consumer choice. Since when did doing a shitty job have to be treated as a crime? Why someone like you should be the last person in charge of reforming our prison system is even more obvious.

Why doing a shitty job should be treated as a crime? You promise to install twenty five year shingles but you use a much cheaper brand and the roof leaks in three years. That's not a shitty job. That's fraud. You tell someone that their transmission needs replacing, and charge them a lot of money to do it, when it was perfectly fine. That's not an error or poor job performance. It's theft and fraud. Mike Holmes famously said that 90% of all contractors are either crooks, incompetents, or both. So far that has been my experience. From substandard asphalt used to pave driveways, to substandard concrete used to pour stairs, to vastly overcharging for plumbing and sewage, to deliberately underestimating costs to win a job, then pausing halfway through to demand more money. I've seen a lot of it around here. Which is why I, like everyone else I know, never hires anyone unless someone they trust recommends them.

But it shouldn't be that way. You shouldn't assume that mechanics and contractors are crooks. The reason it's gotten that bad is lack of enforcement of laws. And the same can be said about corporate fraud and theft. You let things go, and fraud and theft become endemic, a normal way of doing business.

GostHacked · July 30, 2012

Kimmy, also check out Max Keiser's bits on RT's youtube channel. The name simple is 'The Keiser Report'. He has been on the LIBOR thing for a couple months now. Should have most of his stuff over at http://maxkeiser.com/

Hang em high indeed.

Bonam · July 31, 2012

I disagree with the premise of the the OP: both LIBOR and HSBC have gotten tons of attention. Both were on front pages, headlines, news shows, radio, etc.

I do, however, agree with the general sentiment in this thread that the financial industry is much larger and more powerful than it needs to be to provide the products and services that actually need to be provided. A lot of what they do creates no additional value.

I disagree with the generalization that "most" contractors are crooks. Maybe I've had good experiences, or maybe it's just a matter of doing a bit of research and reading reviews about companies before hiring them (which I do), but I've generally had good experiences.

GostHacked · August 1, 2012

Well, the Italians are going to be doing something about it it seems.

http://news.sky.com/story/967142/italian-police-raid-barclays-over-rate-fixing

Italian police have taken documents from a Barclays office in Milan as part of a probe into possible Euribor rate manipulation, according to Reuters.
It said the raid occurred as regulators investigated fixing fears of the eurozone equivalent of the scandal-hit, London-based Libor inter-bank lending rate.

The search was ordered by prosecutors in the southern city of Trani, who have opened a criminal probe into the possible manipulation of the Euribor rate.

The move comes after complaints were filed by two consumer groups, Adusbef and Federconsumatori.

Two judicial sources also confirmed the raid occurred last week, according to Reuters.

Documents, computer material and emails were seized, the consumer groups said in a joint statement.

They said the Milan raid occurred "with the aim of looking for evidence that Barclays also manipulated Euribor, as it did with Libor, with a negative impact on mortgage rates paid by Italians".

Sure looks like the crooks are running the global financial market. Financial terrorism.

Wild Bill · August 1, 2012

Why doing a shitty job should be treated as a crime? You promise to install twenty five year shingles but you use a much cheaper brand and the roof leaks in three years. That's not a shitty job. That's fraud.

Sorry Argus. I'm going to pick apart one of your models, which of course is irrelevant to your point!

I have some roofer friends. There's more to the problem with shingles you describe. For the past decade, roofers have been installing 25 year shingles in good faith, only to have them fail prematurely. At that point, the manufacturer starts dodging and the installer gets caught in the middle.

You see, we had shingles for decades and decades that would last 25 years. A bit less than 25 years ago, the eco-warriors began to attack shingle manufacturers for some of the ingredients used in their making. There was a lot of petrochemical thingies and some <gasp!> chemicals!

So some of those ingredients got banned! As is the norm in these situations, the eco-warriors and the politicians who backed them took it for granted that there were substitutes. Perhaps there are, but the shingle manufacturers had to provide shingles IMMEDIATELY!

The biggest problem is that there was no time to do lifetime real world durability tests. They had to do accelerated simulated testing in their labs. These are always a poor correlation to actually letting products age for the actual number of years.

Guess what? A lot of shingles didn't last as long as they thought! So we have a lot of upset customers. They go for the installer first because he is the most visible but the installer has no control over the product - he didn' make it! He has to take the manufacturer's word. The manufacturer of course has more expensive lawyers!

Once the whole process was so reliable that the few times they had failures the shingle company would cover the entire cost of replacement. Those days are long gone. Modern warranties are ONLY on the actual cost of the shingles and are pro-rated against how many years they were on the roof. With most failures, the actual refund to the roof-owner is only a small portion of the total cost.

Most fraud with roofers is much simpler than what you describe. The scoundrels simply ask for half the money up front and then disappear!

Argus · August 6, 2012

Yet another breaking banking scandal. Standard Chartered bank, one of Britain's biggest, has been accused by New York State Financial regulators of deliberately laundering $250 billion for Iran through it's New York branch. Unlike with HSBC, which had such lax oversight it was laundering drug money for the Mexican drug cartels, SCs efforts were deliberate, and the highest levels of the bank were fully aware of what was going on, and made extensive efforts to hide what they were doing from regulators. Now it could lose its license to operate in the US.

Standard Chartered

kimmy · August 6, 2012

Well that's certainly appalling.

However, what strikes me about this article is that it seems to illustrate a disconnect between what the regulators find unforgivable and what you and I find unforgivable.

Big penalties for dealing with Iran. Big penalties for dealing with Cuba. Big penalties for dealing with drug-lords. It appears that the regulators take it very seriously when banks help the government's enemies, but they don't take it nearly as seriously when banks rip off regular people.

-k

cybercoma · August 7, 2012

Well that's certainly appalling.

However, what strikes me about this article is that it seems to illustrate a disconnect between what the regulators find unforgivable and what you and I find unforgivable.

Big penalties for dealing with Iran. Big penalties for dealing with Cuba. Big penalties for dealing with drug-lords. It appears that the regulators take it very seriously when banks help the government's enemies, but they don't take it nearly as seriously when banks rip off regular people.

-k

The banks are an apparatus of the government and the government is an apparatus of industry. Screwing over regular people is their raison d'etre.