Saturday, December 24, 2016

Big Bank Humbug

The New Round of Bank Bailouts You Won't Be Hearing About:

European banks have rushed to cut deals with prosecutors over longstanding claims that they pushed toxic mortgage securities in the years before the financial crisis.

The payouts are steep: Deutsche Bank and Credit Suisse said that they would disgorge nearly $13 billion combined to settle with the United States Justice Department.

But with the clock ticking before President-elect Donald J. Trump takes over, there appears to be an eagerness in Washington to conclude cases before a new, potentially more sympathetic, administration begins. As a result, these banks may have benefited from paying billions less than once proposed.

The $7.2 billion settlement with Deutsche Bank was a relief on Friday to its investors, who were rattled when it emerged in September that prosecutors were seeking a penalty of as much as $14 billion. Shares of Deutsche Bank rose as much as 5 percent in Frankfurt, before settling up 0.8 percent.

A smaller player in the mortgage-backed securities market, the British bank Barclays, appears to be willing to take its chances under the administration of Mr. Trump.

The crackdown on banks for those tainted securities was the Obama Justice Department’s biggest and most prominent crisis-era legal effort by far. Banks, most of them American, have paid more $100 billion in settlements with the government.

Yet the Obama administration has been criticized for allowing banks to write big checks to settle claims and for not prosecuting Wall Street executives.
As the history of the Obama administration starts being written, one of the most significant failures of his eight years in office will be their decision not to prosecute and jail the people responsible for the greatest financial catastrophe since the Great Depression. As I've noted on this blog since he was sworn in, the minute he uttered those now infamous words "we need to look forward, not backwards," we were doomed.

And now with an incoming administration seen as potentially far more friendly to the Big Banks than Obama has been (how that's possible, I'm not sure), they are quickly cutting deals and walking off into the sunset, totally escaping once again any criminal liability for the Great Recession.

So, bend over and grab your ankles, America. Since writing checks is the now accepted method of beating a criminal rap on Wall Street, expect a Caligula-like orgy of white-collar crime the next four years (and just as assuredly, another epic financial meltdown).

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