Major U.S. banks have accumulated nearly $200 billion in fines and penalties over the past 20 years for alleged illegal activities in 395 major legal cases. Bank of America tops the list, followed by JPMorgan, Citigroup and Wells Fargo, according to a new report, which also covers Morgan Stanley and Goldman Sachs.
Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo have collectively racked up $195 billion in fees and fines, according to Washington-based advocacy group Better Markets.
Fees and penalties from 395 major legal cases since 2000 were disbursed to government agencies, investors and consumers harmed by the banks’ conduct.
The report finds that “banks’ behavior is deteriorating because it finds that their behavior since the financial crisis has triggered more major legal actions than their previous behavior,” Better Markets executive director Dennis Kelleher has reported for the Financial Times.
Between 2000 and the 2008 financial crisis, banks were hit by 85 major legal complaints, the report details. During the financial crisis between 2008 and 2012, there were 110 major cases. Between 2012 and the present, there were 204 legal actions against banks.
Types of Financial Crime: Scandal Figures
The types of financial crimes banks engage in include money laundering, bribery, “massive fraud in the sale of mortgage-backed securities,” credit card and checking account abuses, and foreclosure and debt collection violations, the report describes. Also included were breaches of fiduciary duty, antitrust violations, market manipulation, Ponzi scheme enablement and election law violations.
“These are all important legal actions,” Kelleher said. “It’s not like it’s a ‘broken windows’ theory after the accident, where prosecutors are ticketing every little infraction.” The CEO of Beter Markets pointed to some examples of cases that emerged this year that show banks repeating their past mistakes. While financial institutions generally do not admit or deny wrongdoing in most cases, guilty pleas have become more common.
In October, JPMorgan Chase was fined $920 million for its alleged manipulation of the metals and Treasury markets. The company “entered into a deferred prosecution agreement in 2014 after admitting anti-money laundering failures linked to Bernard Madoff’s Ponzi scheme and pleaded guilty in 2015 to criminal charges of manipulating foreign exchange markets,” the report notes.
Kelleher opined that it is absolutely shocking that JPMorgan has now pleaded guilty to three separate criminal charges for egregious criminal conduct over the years.
Over the past 20 years, JPMorgan has racked up $40 billion in 83 different cases, about $10 billion of which related to crisis-era activities at Bear Stearns and Washington Mutual, which it bought when they were in trouble in 2008.
Bank of America paid 91 billion, the highest fees and penalties, in 86 legal cases, most of which were related to “mortgage-related issues that preceded Bank of America’s acquisitions of companies more than 10 years ago.” The report adds that $40 billion of the bank’s fines and penalties were tied to Countrywide, a mortgage lender the bank bought in 2008, and billions were tied to Merrill Lynch, the brokerage it bought during the crisis. In addition, Goldman Sachs recently paid settlements for its role in Malaysia’s 1MDB development fund.
