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US inches closer to big bank charges

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.

In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fuelled a public outcry over the perception that Wall Street giants are “too big to jail.

Addressing those concerns, prosecutors in Washington and New York have met with regulators about how to criminally punish banks without putting them out of business and damaging the economy, interviews with lawyers and records reviewed by The New York Times show.

The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France’s largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.

In the talks with BNP, which has a huge investment bank in New York, prosecutors in Manhattan and Washington have outlined plans to extract a criminal guilty plea from the bank’s parent company, according to the lawyers, who were not authorized to speak publicly. If BNP is unable to negotiate a lesser punishment — the bank has enlisted the support of high-ranking French officials to pressure prosecutors — the case could counter congressional criticism that arose after the British bank HSBC escaped similar charges two years ago.

Such criminal cases hinge on the cooperation of regulators, some who warned that charging HSBC could have prompted the revocation of the bank’s charter, the corporate equivalent of the death penalty. Federal guidelines require prosecutors to weigh the broader economic consequences of charging corporations. — NY Times (1)

Note the wording: “popular belief” and “over the perception”

It’s not a “belief” or a “perception”. It’s fact. The media, ever mindful of the potential advertising revenues/subsidies the big banks provide them, are careful to manufacture the narrative to attenuate the big banks actions.

Of course, what is not mentioned, are the tools government provides the big banks to realize their predations on the market.

– People decry “corporations” and demand government do something about it. Of course, they don’t realize the corporation is a legal fiction that cannot exist without government. A corporation provides the aspect of “limited liability” to those within banks that direct their company in such a manner that harm others. It’s the flipside of “sovereign immunity” that shields politicians in the very same way. Both sides help create the two sides of the coin called “kleptocracy”.

– Government provides “bail-outs” to the big banks which are actually “bail-ins” from the taxpayer. Not possible in a free market.

– Government and the banking industry create “regulatory agencies” claiming to “protect the public” but are actually used as shields to inhibit inbound competition by strangling competition with rules that cost millions to implement before they can sell a single product.

– Government provides a central bank claiming to be the “lender of last resort” when in fact they are the “donor of the first resort”. Said central banks manufacture the volume of money and set interest rates via government violence sometimes called “law”. In a free society, there would be no such thing. There would be multiple competing currencies with the best rising to the top and the worst being phased out of existence (assuming the worst could get a foothold in the market at all). The better currencies would be sought out and have lower premiums charged on their usage with the worst having higher premiums (or eschewed by market actors completely). You might remember “Gresham’s Law” where it was stated “bad money drives out the good”. It’s only a law because of governments presence in money creation. If government left money production to the private market, good money would drive out the bad.

– Because of governments subsidies to the banks i.e. regulatory agencies, deposit insurance etc etc), people don’t research their banks solvency. They spend more time researching a microwave than where they place their deposits.

– Worst of all, governments replaced education with public schools, where you might have stood a chance to learn the above arguments in your most formative years.


(1) NY Times

Financial times

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