Hold Bankers Accountable for Their Crimes

Last week, Attorney General Loretta E. Lynch announced that five major banks were pleading guilty to criminal charges for what she described as a "brazen display of collusion" to manipulate the currency markets. The banks -- Citigroup, JPMorgan Chase, UBS, Barclays and Royal Bank of Scotland Group -- were hit with $5.6 billion in fines and penalties.

Sensibly, the banks were forced to plead guilty, not simply pay fines in settlements where they neither admitted nor denied the changes. But the charges still were brought against banks, not bankers. No banker was held accountable. The personal fortunes of the bankers who profited were not touched. Shareholders, not bankers, will pay the fines. The Justice Department would have us believe that criminal banks ran profitable criminal conspiracies without involving any bankers.

The unwillingness to hold bankers accountable for their frauds and crimes is a great and continuing failure of our justice system, one that poses a clear danger to this country in the years ahead.

Banks have been on a criminal wilding -- allegedly laundering money for drug dealers, systematically defrauding homeowners on their mortgages, routinely committing perjury in courts and much more. They've paid more than $60 billion in fines over the past two years. Yet virtually none of the bankers -- certainly not one of those who claim to run these behemoths -- have been held criminally accountable. They have recovered from the economic crash they helped cause, even if millions of Americans have not. And their criminal environment and culture remains intact, despite scandal and plea agreements and tens of billions in fines.

Yes, the banks are back. As the New York Times's Neil Irwin reported, employment has returned to 2007 levels; the gap between the pay of Wall Street workers and everyone else is back near record levels, and the profits of the financial sector are soaring.

This is, as Irwin notes, a glaring contrast to what occurred after the crash that led to the Great Depression in the 1930s. Then banks were shackled, tightly regulated and greatly diminished in scope and license. The result was decades without major financial crises, during which the economy boomed and the United States grew together, with inequality decreasing. Now, however, while Dodd-Frank reforms have forced some changes, the big banks are more concentrated than ever. They continue to profit from high leverage, exotic trades and very high risk. They remain too big to fail -- and apparently the bankers are too big to jail.

More and more studies, including one by the International Monetary Fund, hardly a radical bastion, suggest that a bloated financial sector is bad for an economy. It generates destructive booms and busts. Its high pay entices the most creative to use their talents on financial schemes rather than in more productive activities. Its culture of greed corrupts not just Wall Street but also our politics and economy more generally.

And these recidivist banks -- and the bankers who run them -- clearly remain unrepentant. The law firm Labaton Sucharow recently updated its 2012 survey of bank employees and their ethics. It noted that there was a "marked decline in ethics" in the three years since their first survey. More than one-third of those earning $500,000 or more annually reported that they had firsthand knowledge of wrongdoing in the workplace. The percentage of bankers who believed their own colleagues had engaged in illegal or unethical behavior has nearly doubled since 2012.

According to the bank employees, this isn't an accident. Nearly one in three admits that compensation and bonus plans in their company "could incentivize employees to compromise ethics or violate the law." The raft of charges, costly settlements and now criminal pleas apparently has had little deterrent effect. The report found that the banks weren't responding by cracking down on crime; instead, they reported a "proliferation of secrecy policies and agreements that attempt to silence reports of wrongdoing" and discourage workers from reporting lawlessness to government authorities.

The criminal pleas by the five banks will not redress this. In a stinging dissent, Securities and Exchange Commission Commissioner Kara Stein objected to the fact that the SEC granted the guilty banks waivers from the automatic disqualifications that they should have suffered, measures that would have had a dramatic effect on business as usual. She summarized the criminal conspiracy, noting, "The conspirators communicated . . . almost daily in an exclusive online chat room that the traders referred to as 'The Cartel' or 'The Mafia.' " They "lied to customers in order to collect undisclosed markups. . . . This criminal behavior went on for years, unchecked and undeterred."

Yet the SEC waived the disqualifications after already having granted more than 20 waivers to the same banks for criminal activities in the past. Stein wrote, "This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them."

The big banks -- and the danger they still pose to our economy -- should be at the center of the 2016 political debate. Last week, Sen. Bernie Sanders, a candidate for the Democratic presidential nomination, introduced a bill titled "Too Big to Fail, Too Big to Exist," calling for breaking up the big banks. With bankers lavishing big contributions on political candidates in both parties, citizens and the media should insist that candidates describe how they would deal with banks that are too big to fail and with recidivist banks that seem to operate as continuing criminal conspiracies. We need to know who is prepared to stand up and who is in the banks' pocket.