Monday, January 27, 2014

Bankers swindle customers,
Customers pay bank's fines

In an LA Times article by by Jim Puzzanghera, Obama appointee Attorney General Eric Holder claims that no bank is "too big to indict," said the Justice Department will be bringing more cases involving "significant financial institutions" as it continues to investigate Wall Street misconduct.


More financial institutions will be fined thousands or millions and the people who directed the banks when the shenanigans were unfolding get away scot free. Some even get massive performance bonuses!

None goes to jail, not even a federal country club such as Eglin Air Force Base in Florida's panhandle where the temperature at 11 a.m. on January 24, 2014 was a chilly 63F/17C. (By contrast, the temperature at Fort Leavenworth KN where military prisoners are lodged was 12F with a "feels like" of 5F).

Granted, some Ponzi schemers have been deposited into crossbar hotels, but bankers? I know of none, certainly no bank executive is "doing time."

Bank executives set the tone for the bank's dealings. They can, and many did and do, turn a blind eye to questionable practices. The are above examining the organization's policies and procedures to assure that, at least on paper, senior management is telling those reporting to it that the bank's good name depends not on its stockholder but on its customer base; the same people many financial institutions think it's OK to fleece.

If Mr. Holder & cronies were serious about cleaning up the financial institutions, bankers would go to jail.

Federal prisons can be "inconvenient." Executives accustomed to living in mansions and being catered to by a bevy of servants might find the open space dormitory at Lewisburg Penitentiary less than accommodating. (Your scrivener has visited Lewisburg in central Pennsylvania where, as it happens, today's temperature noon is a balmy minus 4F.)

How long should the financial "wizard" stay incarcerated? How about long enough to pay off the institution's losses at the rate of an "average" American's annual compensation: about US$46k/year. If the institution was fined, say, US$500,000, then its chief executive would be behind bars for (500,000 / 46,000 =) 11 years. Not bad. Eleven years during which our executive is fed, clothed, housed, and cared for medically on the dole, but at least the executive is being deprived of his astronomical salary - and bonuses - for the duration.

Maybe making PSA (public service announcements) that the price of swindling customers is uncomfortably high or at least inconvenient.

Financial organizations' executives' greed is behind the current financial doldrums (depression if you are out of a job, recession if your neighbor is out of a job).

Levying fines against financial institutions is not a way to make executives change their ways and their organization's way - the customer pays the tab and the malefactors continue enjoying their ill-gotten gains.

Eric Holder got it wrong. Don't fine the organizations; jail the executives. THAT will end the financial slight-of-hand being played with the customers' money today.

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