Holy cow! In today's Bank Investment Daily which is written by banking maven Steve Brown, CEO of Pacific Coast Bankers Bank in Walnut Creek, California, www.pcbb.com, we found the following: "Shareholder Return: Bloomberg reports the 6 largest US banks have paid $103B in legal costs since the financial crisis began. That is more than all of the dividends they paid to shareholders in the past 5Ys." $103 billion in legal fines and penalties, wow, that is a lot of money. Those six banks have many branches throughout the Bay Area and you are likely to pass by at least one today. Isn't it interesting that while these banks have paid enormous fines, few, if any of their errant management types have seen jail time. The "bank" is not some amorphous ethereal object, it is people and people behave well or badly. Clearly, at the six largest banks some people behaved very badly. How come they are not looking at any hard time in the big house? Why is it that the banks and not the people are fined? And wasn't the behavior that placed our economy precariously close to the edge of a full blown depression criminal in nature? In the 1950's and 60's the prevailing wisdom of the time put the age of reason at seven years of age. So, a seven year old should know the difference between right and wrong, good and bad. And yet, these highly educated bankers, MBAs', lawyers and accountants made decisions with sufficient reflection and full consent of the will that were bad and wrong. Hmm, the taxpayers bail out the big banks, the big banks pay over one hundred billion dollars in fines and the architects of this financial implosion skate. Seem fair to you?
August 28, 2013