Another Bank Avoids Criminal Prosecution For Admitted Illegal Actions

What a surprise. Yet another bank has been caught in clear violation of the law but has essentially bought its way out of any real punishment. JPMorgan Chase (JPM) has been accused and essentially admitted that it had engaged in a long-running foreign bribery scheme in China. The bank hired the children of Chinese business and political leaders in a direct quid-pro-quo attempt to win business in that country. The practice was formalized into what was called the “Sons and Daughter Program” and the bank even tracked how much business each of these “employees” managed to generate for the firm. The bank has reportedly admitted to violating the law on foreign bribery called the Foreign Corrupt Practices Act but managed to work out a non-prosecution agreement with the government and pay a truly pathetic fine of $264 million. Part of the rationale for such light punishment is that the bank apparently cooperated with the government in its investigation and offered the defense that “everyone else is doing it, too”, claiming that this practice was common in China. That defense further implicates other big banks who are also suspected of having similar programs.

I think we all know how well the “everybody else does it” defense works for most of us when we are caught on the wrong side of the law. Not only does it never work, but it actually creates the situation where the criminal justice system is more inclined to make an example out of the criminal party because it shows the criminal is “not really willing to take responsibility for his/her actions”. But if you are a corporation, the rules are quite different. The Times points out that JPM has already been forced to pay nearly $20 billion in fines for violations related to derivatives and mortgage-backed securities before and during the financial crisis. The Times article describes this as “a painful period for the bank”.  NO! Painful is when you lose your job and your house because of unscrupulous bankers. Privileged is when you consistently break the law and manage to avoid criminal prosecution while paying a small portion of your profits as restitution.

One of the reasons that Donald Trump is going to be the next President is because the Obama administration refused to criminally charge any of the Wall Street banks or executives involved in the massive fraud that led to the financial crisis. And that lax attitude toward continual criminality extends to most American industries but the financial community has benefited far more than most. And the crimes in the financial community are continual. If it was a normal small business, the government would be going after them for RICO violations as a continuing criminal enterprise. When Trump says the system is “rigged”, it is exactly this type of settlement with JPM that most people think of. And you know the behavior must be truly egregious if you can agree with Donald Trump. Somehow, this must end and companies and their executive must be held accountable for the criminal behavior they engage in.