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Big Banks Keep Paying a Pittance to Settle Fraud Charges
ThinkProgress / News Analysis
Published: Sunday 23 October 2011
“It’s already looking like the banks are going to largely get off the hook for widespread foreclosure fraud, trading protection for charges for some small amount of help for homeowners.”
This week, Citigroup announced that it had settled with the Securities and Exchange Commission over charges that the mega-bank misled investors in a derivatives deal and then bet against them. Under the terms of the settlement, Citi agreed to pay $285 million.
Citi is not the first bank to settle these sorts of charges with the SEC. Previously, Goldman Sachs had agreed to a $550 million settlement, while JP Morgan Chase paid $154 million. (Goldman’s settlement was over the now infamous “shitty deal.”)
Having to fork over hundreds of millions of dollars may seem like a lot, but it’s chump change to these banks. Citigroup, for instance, just announced profits of $3.8 billion for the last quarter alone, while JP Morgan made $4.2 billion. Goldman Sachs this week announced just the second losing quarter since the bank went public in 1999, but it paid its SEC settlement in 2010, a year in which the bank made $39.2 billion overall.
And as ProPublica pointed out, Citi’s settlement will not only cost it a pittance, but ends the SEC’s inquiries into the vast multitude of junk the bank peddled onto its unwitting customers:
The bank says it has settled all of its potential liability to a key regulator – the Securities and Exchange Commission — with a $285 million payment that covers a single transaction, Class V Funding III. ProPublica first raised questions about the deal [1] in August 2010. In announcing a case, the SEC said it had identified one low-level employee, Brian Stoker, as responsible for the bank’s misconduct.
It made no mention of the dozens of similar collateralized debt obligations, or CDOs, Citi sold to investors before the crash.
A bank spokesman said the SEC would not be examining any of those deals.“This means that the SEC has completed its CDO investigation(s) of Citi,’’ the spokesman asserted in an e mail.
“This represents extreme caution, at best — and a failure to grapple with the magnitude and harmfulness of the misconduct, at worst,” said Stephen Ascher, a securities litigator.
It’s already looking like the banks are going to largely get off the hook for widespread foreclosure fraud, trading protection for charges for some small amount of help for homeowners. When it comes to charges that they intentionally misled investors and then bet against them, while simultaneously setting the entire economy up for a fall, that’s basically what’s happened already.
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ABOUT Pat Garofalo
Pat Garofalo is Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.
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5 comments on "Big Banks Keep Paying a Pittance to Settle Fraud Charges"
October 23, 2011 8:50pm
The fine should be $2 billion + 50 years in prison MINIMUM and revoke their buisness license, shut them down immediately!!
October 23, 2011 4:30pm
sorry for the duplicate post OOPS
October 23, 2011 4:29pm
bio is there corruption in gov't Yes always has been -will be. But People must speak up and do so often not just gripe . Hammer their reps over and over till they listen Tell them Stop working for DC Lobbyists , big corps , and Grover Norquist Their sworn duty is to us . They act like Kings They Are Robber barons like back in the Gilded Age ( google it ) We the people are the real servants They serve top 2 % and screw rest of us Our wages tanked last 25 yrs Benefits too Good jobs sent overseas with big Bush cuts.. 1981 Reaganomics Bush 1-2 Cheney GOP fat cat policies almost ruined USA Stop the GOP Tea Vangelicals now All they have done is demand more corp cuts - more deregulation that led to disaster GOP did NADA for jobs They blocked stalled filibustered 100;'s of bills they used to agree with Its about Breaking Obama Making him fail I can not vote for people like that .Can you ?
October 23, 2011 4:24pm
is there corruption in gov't Yes always has been People must speak up often Hammer their reps over and over till they listen Tell them Stop working for and sucking up to DC Lobbyists , big corps , and Grover Norquist Their sworn duty is to us . They act like Kings They Are Robber barons like back in the Gilded Age ( google it ) We the people are the real servants They serve top 2 % and screw rest of us Our wages
October 23, 2011 3:59pm
Let's face it, left, right, or in-between, our government is corrupt.
Let’s wake up America!
The 1% of Piratical Capitalists are strangling the other 99% of Americans and the rest of the world to death!
I’m sick and tired of the Democrats, the Republicans, the tea party, and the news media!
I’m sick and tired of listening to incessant political nonsense while we the people, are losing everything!
Are we supposed to remain passive while we lose our jobs, our homes, our families, our health, our savings, our future, and our lives!? Are we…really!?!?! Do you people out there want to let this happen!?
Are we just supposed to lie down and die?! Sure, greedy corporations and the elite rich would love that wouldn’t they? If we’re dead, then we can’t cause any trouble. If we’re dead, then we can’t come after them!
We’ve been blind and passive way too long. We keep dancing around the real solution here, while the rich pay off our politicians and the courts to stay free and so they can repeatedly rape us!
No-way, it’s time we put a stop to this! They need a lesson here. Unfortunately, the American Revolution, the French Revolution, and the Russian Revolution were necessary because the royals and elite rich just never did get it. They didn’t care that millions of people were being hurt or dying because of them.
We have that same exact international situation right here…right now. We’re not dead yet, and there are millions and millions of us around the world. And that, is OUR POWER!
People, we are in the midst of a Global Revolution! It’s happening now and it’s time we pulled these arrogant royals off of their thrones. Yes people, IT’S TIME IT GOT UGLY!
This is why.
THE NEW AMERICAN PIRATES, ARE KILLING AMERICANS.
This is not about glamorized or fictional piracy. This is, “real piracy.”
Hundreds of our wealthiest leaders and most powerful corporations know that in the next few years, they will be able to siphon, skim, and steal, so much “NEW CASH,” that they and their progeny will be ultra-rich for generations to come.
Welcome to the modern “Piratical Capitalism” movement. And, welcome to WAR!
No, this is not funny, or fiction, or a conspiracy, it is just simple greed and simple theft.
The new pirates of America have launched an all-out siege on us…the 99%, in order to capture, amass, and hold many trillions of dollars for themselves.
All of the recent political power grabs and nonsensical debating is purely a slight-of-hand deflection. President Obama, Democrats, Republicans, the International Press, and even the Tea Party, are watching the tiny pea in the shell game…while the rich and powerful “Piratical Right” is stealing America right out from under us.
Consider that their combined total plunder from corporate flipping, downsizing, offshore labor, speculation, price fixing of oil and energy plus, corruption in defense, health care, banking, student loans, foreclosures, etc., etc., is a trillion dollar treasure for these pirates.
Go ahead, put your own calculator to it.
Are they smarter than we are? Yes, and they are laughing at us. I, we, you, and all of us, have not been able see the big picture of what is happening to our own country and to our own people. The rape and theft of America, has been cleverly packaged, promoted, and sold under the guise of “cost-cutting,” “deregulation,” and “free enterprise.”
The “Piratical Right” is directly responsible for millions of people dying, getting sick, losing their jobs and homes, losing their ability to fight, their spirit, and even losing their will to live. The sick smell of this carnage now permeates the air across America.
To us, this is all unimaginable, because we look for some sense or the morality of things. These modern-day American pirates however, have no moral compass. They are devoid of any conscience, humanity or soul, and are feeding on the flesh of the American people.
Don’t look to the President, the Senate, Congress, the press, or any political party to help. Sadly, they just don’t see it, don’t care, or are part of it. “We the people” are on our own. Start asking questions. Demand answers. If we don’t fight back America…who will!?
History has taught us how to stop piracy!