Escape clause

Bankers, not just banks, should be prosecuted

The Justice Department announced last week that four banks, American giants Citigroup and JPMorgan Chase plus Barclays and the Royal Bank of Scotland, have agreed to plead guilty to illegally manipulating the $5-trillion-a-day foreign currency trading market.

Their activities, over at least six years, cost Americans and others trillions of dollars on credit card borrowing and other loans, sometimes through the banks’ collusion to fix the London Interbank Offered Rate. LIBOR is the daily rate at which banks lend each other money, including internationally. Traders at these banks set the rates as an unregulated group, even privately calling themselves a cartel. Profits on these trades amount to more than 12 percent of the banks’ total revenue.

In detailing the Justice Department action against the megabanks, newly installed Attorney General Loretta Lynch said, “Having to enter into a guilty plea, at the parent level by a major financial institution, is not something that they enter into lightly, nor is it something they enter into with any great joy in their hearts,” she said.

Even so, the fines against the banks totaled only $5.6 billion, a laughable amount considering what their manipulations cost consumers and what the banks make in profits each year. Another shortcoming in the department’s handling of the case was no bank executive, so far, has been charged personally with committing criminal offenses. Years ago, the banks dismissed some employees who had been involved and New York State’s financial regulator recently required Barclays to get rid of eight more.

It’s hard to imagine that the illegal manipulation occurred without the knowledge of some highly placed officers of the banks. Until the individuals responsible for the criminal activity are prosecuted, such behavior will not change.

Shoddy ethics and criminal conduct by bankers are one thing. But Americans also have to wonder why their government allows these abuses to be carried out without individuals having to pay a stiff price.