| The global financial institutions Citicorp, JPMorgan Chase, Barclays and Royal Bank of Scotland pleaded guilty on May 20 to criminal charges of conspiring to rig the value of the world's currencies for private gain. A fifth bank, UBS AG, entered a guilty plea of manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates, although the court noted that UBS also participated in the broader currency conspiracy. The U.S. Justice Department accepted the guilty pleas in exchange for a collective $9 billion fine but took no further action against the banks or individual executives involved to hold them to account for the stolen money and damage they caused. The Justice Department clearly said the guilty pleas are not a prelude to further court action but its "resolution." In their guilty pleas, the banks acknowledged that they criminally conspired to manipulate the value of currencies for personal gain from the end of 2007 to the beginning of 2013. During this period, the four banks' gross income from transactions dealing with foreign exchange totalled $85 billion. No calculation was made of the damage their manipulation caused to countries, companies and individuals involved in exchanging currencies or the collateral damage to international trade, where the spot value of currencies is a crucial element. The banks involved have not had their banking privileges suspended or received any other punishment of note. Business as usual and lives of continued class privilege seem to be the result. No one from the banks involved has even been named let alone charged. The U.S. Justice Department refused to explain how such lengthy, lucrative and repeated criminal conduct could have gone unsuspected and undetected by supervisors, managers and executives. Also of note, the Justice Department labels the banks involved as serial offenders constantly breaking previous non-prosecution agreements yet refuses to restrict their financial activities as required in U.S. law. Reflecting the absence of any serious accounting for their criminal activities, the chief executive of Citicorp (after yet another takeover and merger now known as Citigroup), Michael Corbat, in a memo to employees called the criminal conviction "an embarrassment." Compare the "embarrassment" Mr. Corbat is experiencing with the arrests, indictments, and resignations forced upon executives of FIFA who have been targeted by the same U.S. Justice Department for corruption involving far less money. A double standard appears obvious. The friendly relations of FIFA executives towards South Africa, Brazil, Russia, Iran, Qatar and even Palestine spurred the U.S. Justice Department towards harsh punishment. Quite the contrary has occurred in the case of the five banks, which hold prominent positions within the U.S.-led imperialist system of states. They received the kid gloves treatment with a tender admonishment, "You're one of us and too big to fail so carry on but don't be so obvious."[1] The U.S. Securities and Exchange Commission (SEC) embraced the plea deals as good for the economy and gave its official blessing and assurance that the banks could keep operating the same as always, despite their criminal misconduct and recidivism. One SEC commissioner, Kara Stein strongly disagreed and issued a public dissent from the Justice Department and SEC's decision to excuse the banks and not hold them to account. This sordid affair is yet another example of the necessity for a new pro-social direction for the economy. The modern socialized economy embraces all the people and is their lifeblood. The economy and its institutions must serve the broad public interest and not the narrow private interests of a privileged few. Just think of how this currency manipulation affected not only those directly involved, concentrating social wealth and power in fewer hands, but also affected the much broader issue of international trade and development. The recidivism of the banks brings to the fore their motive based on greed and class privilege. Their central position within the economy highlights the fact that private banks operating for profit no longer serve any useful purpose in the modern economy. They are tools of private interest to enrich a privileged few and in this way are in contradiction with the socialized economy and public interest. Their criminal disruptive activities are factors causing economic crises. The financial institutions are currently accountable to themselves and their private ownership groups. They hold extensive authority over the economy that can be characterized as self-serving to particular powerful private interests and against the public interest and good. Even within the current capitalist system, private financial institutions play no positive role but are a drain on the socialized economy and a disruptive and destructive force. As part of the drive for a new direction for the economy, the people should insist that the financial sector be recognized and treated in law as a public utility and enterprise with a mandate to serve the public interest and good. Note 1. Citigroup, the largest bank in the world during the global economic crisis of 2008, suffered huge losses from trading in derivatives with the crash of the mostly fictitious bond market. The U.S. government rescued the company and its "troubled assets" in late 2008 and early 2009 as "too big to fail," providing a massive pay-the-rich scheme totalling hundreds of billions of dollars in an equity stake, grants, line of credit and guarantees. |