Four Banks Guilty of Currency Manipulation but, as Usual, No One’s Going to Jail
Four major banks—Citigroup, JPMorgan Chase, Barclays, and the Royal Bank of Scotland—have agreed to plead guilty in a Connecticut federal court to conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency market. But instead of sending those responsible for the crimes to prison, various government entities are fining the institutions a total of about $5.5 billion, the cost of which the banks will pass on to shareholders.
“For more than five years, traders in ‘The Cartel’ used a private electronic chat room to manipulate the spot market’s exchange rate between euros and dollars using coded language to conceal their collusion,” Attorney General Loretta Lynch said in announcing the settlements Wednesday morning.
In one of the chatroom conversations, a Barclays employee said: “If you ain’t cheating, you ain’t trying.”
Lynch said the currency manipulation “inflated the banks’ profits while harming countless consumers, investors and institutions around the globe — from pension funds to major corporations, and including the banks’ own customers.”
The Justice Department also announced that a fifth bank, Switzerland’s UBS, pleaded guilty to manipulating the London Interbank Offered Rate (LIBOR) and will pay a total of $545 million in fines, according to USA Today.
Legally, guilty pleas such as these would mean the banks would be restricted from conducting certain kinds of business, according to ThinkProgress. However the banks, as they have consistently in the past in other cases, received waivers from the Securities and Exchange Commission to continue business as usual.
The settlement by Lynch’s Justice Department follows the pattern of her predecessor, Eric Holder, who was criticized for not punishing Wall Street enough for its greedy and reckless behavior that caused the 2008 financial crisis.
- Steve Straehley, Noel Brinkerhoff
To Learn More:
Banks to Pay Billions to Settle Charges (by Lorraine Bailey and Dan McCue, Courthouse News Service)
5 Banks Guilty of Rate-Rigging, Pay More than $5B (by Kevin McCoy and Kevin Johnson, USA Today)
Rigging of Foreign Exchange Market Makes Felons of Top Banks (by Michael Corkery and Ben Protess, New York Times)
Megabanks Fined $2 Billion For Criminal Activity, Will Be Able To Continue Business As Usual (by Alan Pyke, ThinkProgress)
Five Major Banks Agree to Parent-Level Guilty Pleas (U.S. Department of Justice)
Big Banks Fined Billions in Foreign Currency Scandal (by Noel Brinkerhoff, AllGov)
World’s Biggest Banks in Fresh Crosshairs of U.S. Justice Department…But Will Anyone Go to Jail? (by Noel Brinkerhoff, AllGov)
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