Crime and punishment in the banking sector
November 2013, London
Every week now we hear of yet another ‘record fine’ imposed on one bank or another for their role in the financial crisis and the more recent rigging of benchmark interest rates in the Eurozone. We know that Brussels is preparing to fine six more banks for the latter, and that JP Morgan is about to agree a $13 billion settlement for the former. (This relates to the sale of mortgage-based securities that contributed to the near collapse of the banking sector in 2007).
What ARE these fines, other than an exchange of money? What do they amount to? What do they mean? What do they set to achieve? Surely not anything moral – neither apologetic nor in any way restorative – as they are not accompanied by any attribution (and even less acknowledgement) of guilt. In fact, if anything, they represent a settlement stricto sensu – being meant to settle (or put aside) any investigations by the Justice Department and other regulatory bodies. How is this good for anyone, I am curious to know, other than the banks themselves?Read More