Sometimes it causes me to wonder… wonder!
by Charlie Leck
Hope some of you got hold of a copy of THE BIG SHORT and read it. It tells a remarkable story of America’s financial industry out of control. And here’s more…
"LAST month, a federal district judge approved a deal to allow Barclays, the British bank, to pay a $298 million fine for conducting transactions with Cuba, Iran, Libya, Myanmar and Sudan in violation of United States trade sanctions. Barclays was discovered to have systematically disguised the movement of hundreds of millions of dollars through wire transfers that were stripped of the critical information required by law that would have enabled the world to know that for more than 10 years the bank was moving huge sums of money for enemy governments. Yet all federal prosecutors wanted to settle the problem was a small piece of the action.
"When Judge Emmet Sullivan of federal district court in Washington, who ultimately approved the deal with Barclays, asked the obvious question, “Why isn’t the government getting rough with these banks?” the remarkable response was that the government had investigated but couldn’t find anyone responsible."
[from an editorial in the 13 September 2010 New York Times]
The quotation above is from an extraordinary editorial in today’s (Monday) New York Times. I urge you to read it.
My wife was cussing the other night about America’s banks. She grew up in a respectable and proud banking family. Her grandfather, Lyman E. Wakefield, Sr., was pretty illustrious in the business as one of the founders of First Bank Corporation here in Minnesota. He served as the CEO of the Corporation for many years before his death in 1945. He started at the lowest possible level on the ladder when he was assigned to work as a clerk in a First Bank in Austin, Minnesota. His duties included janitorial responsibilities. Her father (Junior) went to work for the Corporation right after graduating from Dartmouth and put in hard-time in North Dakota and Montana before being called back to duties in St. Paul. He was one of the founders in the 70s of a creative bank and wealth management company (Resource Trust Company) that was eventually swallowed up by U.S. Trust and eventually by Bank of America.
“I feel so ashamed of America’s banking industry,” my wife said to me one evening. “Whatever happened to honest, conservative banking?”
Of course, I had no answer for her – only a consoling hug.
Slowly, over the years, the Republican Party won over a lot of people to the idea that American banking and investment companies were far too regulated. Restrictions and curbs were loosened and much more freedom and flexibility was given to the industry. Go back and reread the paragraphs from the New York Times quotation above. It was bad and it was dirty, but no one seems to know who was responsible.
Whatever happened to corporate responsibility? It isn’t that difficult to figure out! Barclays was responsible! Who was in control of Barclays at the time? Part of getting all that big time money to run a company like that is too take on the risks of something like this and to be responsible for it.
Let me be clear. The New York Times editorial is really an hard slap at federal law enforcement agencies for allowing so many banks to get away with this (and take a look at some of the incredible things that banks have pulled off by looking at the editorial).
We’ve got to get the financial industry under control in this nation and that means tougher and stiffer regulations and strict enforcement. It won’t happen under current Republican philosophies and politics. The price we’ll pay for reinstalling Republican control over the Congress will be devastating.
I’m not kidding!
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