A recent poll of 500 financial workers in the U.S. and Britain revealed 24% said they believed unethical or illegal behavior could help people in their industry to be successful. 16% said they would engage in insider trading if they could get away with it. We are watching a tsunami of corporate and bank scandals, which suggest both worlds, are lacking in ethical and moral compasses. These new revelations come at a time when Wall Street, and corporate America, are fighting off more regulation, trying to defeat President Obama, and elect the richest, and most secretive, candidate ever to run for the presidency.
Two of the biggest scandals were brought to light by Rolling Stone reporter Matt Taibbi. In the July issue, Taibbi covers a trial in New York City in which it is revealed that banks, lots and lots of banks, gamed municipal bond markets to steal billions of dollars from every city and municipality in the country. The did it by rigging the bidding between banks for the money communities were setting aside to build schools and other infrastructure projects. The list of banks involved is a who's who of the biggest and most corrupt. Bank of America (also found guilty of lying to investors about its financial condition after it bought Merrill Lynch and paying millions in fines), Chase, U.B.S., Wells Fargo (which just agreed to pay millions of dollars in fines for cheating minority customers and charging them higher interest rates and pushing them into sub prime mortgages), along with Goldman Sachs, TransAmerica, A.I.G. and banks in England, Scotland, France, Germany and the Netherlands. Taibbi notes the kind of bid rigging done in this case was historically the purview of the Mafia for most of the 20th century. The mob would rig garbage contracts and construction projects and other urban money pots by bribing officials and paying off regulators. Now, the nation's financial world has stepped in with their version of Goodfellows and the result is billions of tax dollars lost to cities and counties and deposited into the coffers of Wall Street.
The other scandal Taibbi revealed, and which has since exploded into the national and international scene, is the rigging of the London Interbank Offered Rate (LIBOR). This daily interest rate affects as much as $800 Trillion worth of financial instruments. (Can anyone really mentally picture how much money that is?) Since at least 2006, 16 major banks colluded and rigged how the LIBOR daily rate would be set. Much of the conspiracy was designed to cover up the weakened financial condition of many of the banks and rigging the number also enabled them to make allot of profit at the expense of their customers. (New York and Connecticut are the first American states to open investigations to see how much money they lost due to this scam) Many of the mortgages, car loans and other banking you do are directly impacted by the LIBOR rate. Barclays Bank has agreed to pay $450 million in fines and this is only the start. (If you need further outrage...after Barclays was caught and admitted to what it did, British banking authorities agreed not to reveal the names of the banks top officers who were involved in the scandal...agreed to let them keep their jobs and, in one case, approved a promotion for one of them) As many as 16 banks are involved, including J.P. Morgan Chase (who recently admitted it lost as much as $9 billion gambling with customer's money), Chase (again), Citigroup, U.B.S. (again) and others. Adding insult to injury, regulators (you know, the ones banks say there are too many of and the rules they enforce are too strict?) in Britain and the U.S. knew about the unreliability of LIBOR since 2007 and did nothing about it. (protecting your interests) The Financial Times, no liberal, left-wing, publication, opined this scandal shines a light on the "rotting heart" of the financial industry.
All of this comes during an election year where Wall Street banks are pouring money into Mitt Romney's campaign because he promises to roll back the meager regulations increased by the Dodd/Frank Financial Services legislation and while Romney himself faces questions about the ethics of his own fortune and his use of gimmicks and loopholes to pay as few taxes as possible.
Be very clear...what BofA, Wells Fargo, Chase, Citibank, Goldman Sachs, J.P. Morgan Chase, U.B.S. and the rest are doing is stealing from you...lying to you...conning you...engaging in conspiracies to defraud you to the tune of hundreds of billions of dollars. (I am currently living with folks accused of conspiracies and fraud and theft yet we will never see one of these Wall Street denizens as guests here of the federal government...a double standard?) Theft, deceit, bribery, conspiracy, fraud are just some of the crimes which have been perpetrated, and yet, except for three small fish in the New York trial, not a single major figure in the Wall Street financial world has been charged with a crime. (BTW, Barclays themselves informed the New York Federal Reserve office, while Timothy Geithner ran it, of problems with LIBOR in 2007, and brought it to the attention of British regulators, and no one did anything.)
On the heels of the bond bid-rigging and LIBOR collusion, comes news of another scandal in the financial industry. Peregrine Financial Group, a futures trading company, stole over $200 million of customer funds and the boss, who tried to kill himself, confessed. This latest revelation comes after the debacle, which is M.F. Global, where that company has lost or stolen over $1.6 billion of customer's funds. Once again, regulators failed to see the warning signs and to discover the thefts until it was too late. The fraud at Peregrine was going on for years and there were plenty of red flags for anyone who was truly looking. How many farmers or small investors have now seen their savings destroyed? How is it regulators failed to catch these criminals...failed to even see bright red warning signs...yet the financial world, and Romney, continue to claim they are overregulated and these regulations are hampering their ability to do business?
If all of this isn't enough to convince you corporate America is corrupt from Apple to Zynga, Glaxo, Smith, Klein has agreed to pay a $3 billion fine in the biggest health-care fraud in U.S. history. It promoted its anti-depressant drugs for inappropriate use, use not approved by the Food and Drug Administration, to millions of Americans. It marketed Wellbutrin as a weight-loss drug and Paxil to children and teens. (drug dealers marketing to children...I thought this was supposed to outrage average citizens) No one has been criminally charged despite the fraud and damage done to those who used the drugs inappropriately. Oh,Glaxo, Smith, Klein sold at least $27 billion worth of the drugs last year. The fine is just the cost of doing business... I guess.
All of the above occurs while a debate is on-going in this country. One side, Republican and regressive, argues for even less regulation...less scrutiny...fewer oversights and a Republican House consistently cuts funds for any government agency engaged in regulation or oversight. They are pushing for a pure market free of any restraints. They are pouring resources into Romney's campaign. The other side, progressives and Democrats, argues for more regulation, (although not enough and Obama has been a captive of Goldman et.al. for most of his term), more transparency, and more accountability. Elections mean something. The American people have to decide which view best represents their interests.
The financial and corporate worlds are corrupt beyond redemption. Young people aspiring to careers in these industries are no different than those who dreamed of being "made-men" with the mob. There is no moral underpinning to free market capitalism. Even Pope John Paul II declared it to be immoral without regulation. Since we know how corrupt and greedy this whole system of capitalism is, we have no one but ourselves to blame if we continue to allow them free reign and do not demand criminal consequences for their actions. Since we know they will lie, cheat and steal at any opportunity, perhaps we need to insure they are always watched and never left alone with our money. Which presidential candidate will accomplish this goal?