<html><head></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; "><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Arial; min-height: 16px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Georgia; color: rgb(202, 133, 24); "><a href="http://www.alternet.org/">AlterNet</a><span style="color: #000000"> / </span></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Arial; min-height: 16px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 24px/normal Georgia; ">Are Big Banks a Bunch of Organized Criminal Conspiracies?</div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 16px/normal Georgia; "><i>The record of deceit and deception that has surfaced in just the past two months points to yes.</i></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 16px/normal Georgia; min-height: 19px; "><i></i><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Georgia; color: rgb(202, 133, 24); "><span style="color: #000000"><i>By</i> <a href="http://www.alternet.org/authors/les-leopold-0"><i>Les Leopold</i></a></span></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Georgia; min-height: 16px; "><br></div><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Georgia; "><i>February 27, 2013</i> | </div><p style="margin: 0.0px 0.0px 0.0px 0.0px; font: 14.0px Arial"> </p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Are too-big-to-fail banks organized criminal conspiracies? And if so, shouldn't we seize their assets, just like we do to drug cartels?</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Let's examine their sorry record of deceit and deception that has surfaced in just the past two months:</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>Loan Sharking</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">You want to get really, really pissed off? Then read "<a href="http://www.nytimes.com/2013/02/24/business/major-banks-aid-in-payday-loans-banned-by-states.html?hp&_r=0"><span style="color: #ca8518">Major Banks Aid in Payday Loans Banned by States</span></a>" by Jessica Silver-Greenberg in the <i>New York Times</i> (2/23/13). In sickening detail, she describes how the largest banks in the United States are facilitating modern loansharking by working with Internet payday loan companies to escape anti-loansharking state laws. These payday firms extract enormous interest rates that often run over 500 percent a year. (Fifteen states prohibit payday loans entirely, and all states have usury limits ranging from 8 to 24 percent. <a href="http://www.lectlaw.com/files/ban02.htm"><span style="color: #ca8518">See the list</span></a>.)</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">The big banks, however, don't make the loans. They hide behind the scenes to facilitate the transactions through automatic withdrawals from the victim's bank account to the loansharking payday companies. Without those services from the big banks, these Internet loansharks could not operate.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Enabling the payday loansharks to evade the law is bad enough. But even more deplorable is why the big banks are involved in the first place.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">For the banks, it can be a lucrative partnership. At first blush, processing automatic withdrawals hardly seems like a source of profit. But many customers are already on shaky financial footing. The withdrawals often set off a cascade of fees from problems like overdrafts. <a href="http://www.pewstates.org/research/reports/how-borrowers-choose-and-repay-payday-loans-85899452131"><span style="color: #ca8518">Roughly 27 percent</span></a>of payday loan borrowers say that the loans caused them to overdraw their accounts, according to a report released this month by the Pew Charitable Trusts. That fee income is coveted, given that <a href="http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/financial_regulatory_reform/index.html?inline=nyt-classifier"><span style="color: #ca8518">financial regulations</span></a> limiting fees on debit and credit cards have cost banks billions of dollars.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Take a deep breath and consider what this means. Banks like JPMorgan Chase provide the banking services that allow Internet payday loansharks to exist in the first place, with the sole purpose of breaking the state laws against usury. Then Chase vultures the victims, who are often low-wage earners struggling to make ends meet, by extracting late fees from the victims' accounts. So impoverished single moms, for example, who needed to borrow money to make the rent, get worked over twice: First they get a loan at an interest rate that would make Tony Soprano blush. Then they get nailed with overdraft fees by their loansharking bank.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">For Subrina Baptiste, 33, an educational assistant in Brooklyn, the overdraft fees levied by Chase cannibalized her child support income. She said she applied for a $400 loan from <a href="http://loanshoponline.com/"><span style="color: #ca8518">Loanshoponline.com</span></a> and a $700 loan from <a href="http://advancemetoday.com/"><span style="color: #ca8518">Advancemetoday.com</span></a> in 2011. The loans, with annual interest rates of 730 percent and 584 percent respectively, skirt New York law.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Ms. Baptiste said she asked Chase to revoke the automatic withdrawals in October 2011, but was told that she had to ask the lenders instead. In one month, her bank records show, the lenders tried to take money from her account at least six times. Chase charged her $812 in fees and deducted over $600 from her child-support payments to cover them.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Let's be clear: JPMorgan Chase, the big bank that supposedly is run oh-so-well by Obama's favorite banker, Jamie Dimon, is aiding, abetting and profiting from screwing loanshark victims.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">What possible justification could anyone at Chase have for being involved in this slimy business? The answer is simple: profit. Dimon and company can't help themselves. They see a dollar in someone else's pocket, even a poor struggling single mom, and they figure out how to put it in their own. Of course, everyone at the top will play dumb, order an investigation and then if necessary, dump some lower-level schlep. More than likely, various government agencies will ask the bank to pay a fine, which will come from the corporate kitty, not the pockets of bank executives. And the banks will promise -- cross their hearts -- never again to commit that precise scam again.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">(Update: After the publication of Jessica Silver-Greenberg's devastating article, Jamie Dimon "vowed on Tuesday to change how the bank deals with Internet-based payday lenders that automatically withdraw payments from borrowers’ checking accounts," <a href="http://www.nytimes.com/2013/02/27/business/jpmorgan-chase-vows-to-fix-payday-loan-practices.html?ref=business"><span style="color: #ca8518">according to the New York Times</span></a>. Dimon called the practices "terrible." In a statement, the bank said, it was “taking a thorough look at all of our policies related to these issues and plan to make meaningful changes.”)</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>Money Laundering for the Mexican Drug Cartels and Rogue Nations</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">HSBC, the giant British-based bank with a large American subsidiary, agreed on Dec. 11, 2012 to pay $1.9 billion in fines for laundering $881 million for Mexico's Sinaloa cartel and Colombia's Norte del Valle cartel. The operation was so blatant that "Mexican traffickers used boxes specifically designed to the dimensions of an HSBC Mexico teller's window to deposit cash on a daily basis," <a href="http://www.reuters.com/article/2012/12/11/us-hsbc-probe-idUSBRE8BA05M20121211"><span style="color: #ca8518">reports Reuters</span></a>. They also facilitated "hundreds of millions more in transactions with sanctioned countries," <a href="http://www.justice.gov/criminal/pr/speeches/2012/crm-speech-1212111.html"><span style="color: #ca8518">according to the Justice Department</span></a>.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Our banks got nailed as well. "In the United States, JPMorgan Chase & Co, Wachovia Corp and Citigroup Inc have been cited for anti-money laundering lapses or sanctions violations," continues the Reuters report. My, my, JPMorgan Chase, the biggest bank in the U.S. sure does get around.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">And the penalty? A fine (paid by the HSBC shareholders, of course, that amounts to 5.5 weeks of the bank's earnings) and we promise – honest -- never to do it again.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>Too Big to Indict?</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Wait, it gets worse. Why weren't criminal charges filed against the bank itself? After all, the bank overtly violated money laundering laws. This was no clerical error. The answer is simple: "<a href="http://www.nytimes.com/2012/12/12/opinion/hsbc-too-big-to-indict.html"><span style="color: #ca8518">Too big to Indict,"</span></a> screams the NYT editorial headline. You see federal authorities are worried that if they indict, the bank would fail, which in turn would lead to tens of thousands of lost jobs, just like what happened to Arthur Anderson after its Enron caper, or like the financial hurricane that followed the failure of Lehman Brothers. So if you're a small fish running $10,000 in drug money, you serve time. But if you're a big fish moving nearing a billion dollars, you can laugh all the way to your too-big-to-jail bank.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>Fleecing Distressed Homeowners</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">The big banks, in collusion with hedge funds and the rating agencies, puffed up the housing bubble and then burst it. Nine million workers, due to no fault of their own, lost their jobs in a matter of months. Entire neighborhoods saw their home values crash. Tens of millions faced foreclosure.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">The big banks, which were bailed out and survived the crash, sought to foreclose on as many homes as possible, as fast as possible. Hey, that's where the money was. In doing so they resorted to many unsavory practices including illegal robo-signing of foreclosure documents. When nailed by the government, the big banks agreed to provide billions in aid for distressed homeowners. Were they finally forced to do the right thing? Not a chance. (See "<a href="http://www.nytimes.com/2013/02/22/business/homeowners-still-face-foreclosure-despite-billions-in-aid.html?pagewanted=all"><span style="color: #ca8518">Homeowners still face foreclosure despite billion in aid" NYT 2/22</span></a>.)</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">The big banks, despite what they say in their press statements, found a convenient loophole in the government settlement. The banks began forgiving second mortgages, and then foreclosing on the first mortgage. That's a cute maneuver because in a foreclosure, the bank rarely can collect on the second mortgage anyway. So they're giving away something of no value to distressed sellers and getting government credit for it. Just another day at the office for our favorite banksters.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>The Indictments Go On...</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">I could write a book about all the ways in which banks and their hedge fund cousins have turned cheating into a way of life. (In fact, I just did: <a href="http://www.amazon.com/How-Make-Million-Dollars-Hour/dp/1118239245/ref=tmm_hrd_title_0?ie=UTF8&qid=1358022645&sr=1-1"><span style="color: #ca8518">"How to Earn a Million Dollars an Hour: Why Hedge Funds Get Away With Siphoning off America's Wealth</span></a>. Here's the <a href="http://www.alternet.org/just-what-do-hedge-fund-honchos-do-million-bucks-hour"><span style="color: #ca8518">AlterNet interview</span></a>. )</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">JPMorgan Chase, Citigroup and Goldman Sachs have been fined over a billion dollars for creating and selling mortgage-related securities that were designed to fail so their hedge fund buddies could make billions. And then we've got the recent LIBOR scandal where the biggest banks colluded to manipulate interest rates for fun and profit.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">It's not about good people or bad people running these banks and hedge funds. It's the very nature of these institutions. That's what they do. They make big money by doing what the rest of us would call cheating. As the record clearly shows, they cheat the second they get the chance.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">What kind of institution would loanshark, money launder, fix rates, game mortgage relief programs, and produce products designed to fail? Answer: An institution that should not exist.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>Nationalize Now and Create State Banks</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">There are about 20 too-big-to fail banks which have been designated "systematically significant." These should be immediately nationalized. Shareholder value should be wiped out because these banks are repeatedly violating the law, including aiding and abetting criminal enterprises. All employees should be placed on the federal civil service scale, where the top salary is approximately $130,000.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Can the government run banks? Yes, if we break up the big banks and turn them over to state governments so that each state would have at least one public bank. (North Dakota has a strong working model.) The larger states would have several public state banks. But never again would we allow banks to grow so large as to threaten our financial system and violate the public trust. Let FDIC regulate the state banks. They're actually good at it.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">(We'd also have to do something about the shadow banking industry -- the large hedge funds and private equity firms. Eliminating their carried-interest tax loophole and slapping on a strong financial transaction tax would go a long way toward reining them in.)</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Won't the most talented bankers leave the industry?</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">Hurray! It can't happen soon enough. It's time for the best and the brightest to rejoin the human race and help produce value for their fellow citizens. Let them become doctors, research scientists, teachers or even wealthy entrepreneurs who produce tangible goods and services that we want and need. What we don't need are more banksters.</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial"><b>Isn't This Socialism?</b></p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">We already have socialism for rich financiers. They get to keep all of the upside of their shady machinations and we get to bail them out when they fail. This billionaire bailout society is now so entrenched that our nascent economic recovery of the last two years has been entirely captured by the top 1 percent. Meanwhile the rest of have received nothing. Nada. (See <a href="http://www.huffingtonpost.com/les-leopold/economic-inequality_b_2742092.html"><span style="color: #ca8518">"Why Is the Entire Recovery Going to the Top One Percent?</span></a>")</p><p style="margin: 0.0px 0.0px 22.0px 0.0px; font: 14.0px Arial">I know, I know, people say, "Next time, just don't bail them out!" Meanwhile, they get to rip us off, day in and day out, until the next crash? No thanks. Put them out of business now. If you have a better idea, let's hear it.</p><div style="margin-top: 0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; font: normal normal normal 14px/normal Georgia; "><i>Les Leopold is the executive director of the Labor Institute in New York, and author of </i><a href="http://www.amazon.com/How-Make-Million-Dollars-Hour/dp/1118239245/ref=tmm_hrd_title_0?ie=UTF8&qid=1358022645&sr=1-1"><span style="color: #ca8518"><i>How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America's Wealth</i></span></a><i> (J. Wiley and Sons, 2013).</i></div></body></html>