Posts Tagged corrupt banking
This is an example of how regulation has completely and utterly failed, despite it being there technically and looking like it has succeeded by mere virtue of existing. In other words, regulations have to be meaningful otherwise their mere existence is just lip service.
Case in point: JP Morgan Chase’s $410 million deal to settle charges it manipulated electricity markets in California and Michigan. This brings the amount the bank has paid in fines and settlements in the past couple of years to nearly $7 billion.
That may sound like a lot, until you consider the metric fuck tons of money the bank has made during that time.
The Daily Beast recently did the hard legwork of compiling all of these settlements into one helpful post, which are summarized in these charts.
See, if you keep breaking the law and pay the fine while continuing to break the law because you recognize that paying the “fine” is still more profitable than obeying the law, then that fine is no longer a fine, but a tax or a fee. In other words, the fines imposed on these banks are not harsh enough so they are seen by the company just as a fee or tax they have to pay so they can continue violating the law. In essence, therefore, they are just basically paying a fee for a license to break the law. Thing is, if the “fine” does not hurt the company, it is not a punishment. Seven billion may seem a lot to you and I, but for a company that makes above $50 billion, the fine they have to pay is a drop in the bucket.
And this is pretty much what it comes down to. We do have regulations which the GOP and its peons like to cite, but they are not really stringent enough. They are more like a slap on the wrist. Because that is the case, the thinking by such companies is “well, let’s just pay the fine and break the law.”
(I am using hypothetical figures to illustrate the point):
Option A: Don’t break the law = $40 billion profit
Option B: Break the law: $ 75 billion profit
Option C: Pay a fine, break the law: $75 billion minus $7 billion fine = $68 billion profit.
In conclusion: choose Option c: Break the law, pay the fee for the licence to break the law.