The headquarters of JP Morgan Chase on Park Avenue December 12, 2013 in New York. JP Morgan Chase and federal authorities are close to a USD $2 billion settlement over the bank's ties to financier Bernard L. Madooff that involve penalties and deffered criminal prosecution. AFP PHOTO/Stan HONDA STAN HONDA/AFP/Getty Images
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A few years ago, $67 billion in fines would have forced banks into bankruptcy. Today, U.S. banks are more at risk than during the 2008 world economic meltdown and continue with business as usual.
Since 2010 six Wall Street banks have agreed to pay $67 billion in penalties and settlements, but no one has been prosecuted since 2008. We are now on the verge of yet another round of settlements with JP Morgan's proposed $13 billion settlement and Bank of America's $8 billion settlement, which would bring the total to just under $90 billion.
We hear these numbers, but they're only numbers. People just turn their heads and say, " it's just a cost of doing business". If we stop for a moment and try to comprehend the enormity of the frauds that could precipitate $90 billion in fines, we might just barely comprehend the vast amount of illegal and unethical (probably not illegal) activity practiced daily by these behemoths.
A few years ago, the size of these fines would have put the banks out of business. Today, with the help of tax payer bailouts, these banks are making more money than before the 2008 crisis that put us into this mess.
Just how much is a billion? Let me give you some perspective. One billion seconds ago it was 1959. One billion minutes ago Jesus walked the Earth. One billion hours ago our ancestors lived in the Stone Age. One billion days ago nobody walked on two feet. One billion dollars ago was only eight hours and 20 minutes, at the rate of government spending.
We spent $800 billion on the war in Iraq, but our government won't approve of adding another ice breaker to our miniscule dilapidated fleet of two. The Russians have 10 ice breakers, including six nuclear powered ones. The economic consequences of relinquishing the Antarctic to Russian dominance, is no small matter. I will address this in another post.
The big six U.S. banks, Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo now possess assets equivalent to approximately 60 percent of America's gross national product. If that doesn't sound healthy, it's because it isn't. If any of these six banks fail, the repercussions to the U.S. and global economies would be disastrous.
And guess what? When the next financial crisis arrives and there isn't enough money to save the banks again, we will bail them out with taxpayers dollars. The banks take on enormous risk. Heads they win and tails we lose. It isn't supposed to work this way. Companies that make bad bets are suppose to fail and not get rewarded for their inappropriate speculation and bad investments.
Unlike our leaders of today, our founding fathers learned from the past and were very concerned about the future, most particularly banks and the control of money. James Madison said,
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over government by controlling money and it’s issuance.”
Thomas Jefferson didn't pull any punches either,
"I believe that banking institutions are more dangerous to our liberty than standing armies.”
If we don't learn from our founding fathers, we may find our republic has become an oligarchy, if it hasn't already.
John Lawrence Allen, a nationally recognized legal expert, represents investors nationwide in securities arbitration. Mr. Allen’s second book, “Make Wall Street Pay You Back,” was just released. For more information visit www.MakeWallStreetPayYouBack.com.
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