Eugene Grygo, Chief Content Editor, FTF News
To quote the late Yogi Berra, “It’s déjà vu all over again” when it comes to the crimes and misdemeanors of Wall Street.
Given the ongoing scandals among banks and other financial services firms, it seems that some on the left of the political scale are getting worried that Wall Street (and Main Street) institutions haven’t learned very much from the Great Recession and its aftermath.
A quick review of the past week or so helps make their case.
We have a major scandal via the retail banking business of Wells Fargo as well as our own story about the CFTC nailing Wells Fargo for allegedly inaccurate faulty large trader report (LTRs) for physical commodity swap positions. The CFTC charges, though, pale in comparison to the discovery that over a five-year period Wells Fargo employees felt the need to open two million fictional customer bank accounts. The bank’s misdeeds have caused a justified uproar among politicians, investors and the general public.
Just last week in another of our stories, alternative investment and hedge fund manager Och-Ziff Capital Management Group announced that it is settling with the U.S. Department of Justice (DOJ) and the SEC over alleged bribes paid to high-level officials in Africa, questionable investments via Libya and for missing red flags about these activities. Ultimately, Och-Ziff will be paying $412 million in fines and has begun revamping internal procedures as a result of the bribery and operational mismanagement charges brought against it.
If those two cases were not enough, Deutsche Bank is taking heat for an apparent capital squeeze that is rattling nerves among investors and competitors. In fact, none other than Wall Street favorite son Jamie Dimon, chairman of the board and CEO of JPMorgan Chase & Co. has come to the defense of Deutsche Bank and Wells Fargo.
When interviewed by CNBC, Dimon argues that the German giant will get through its crisis just fine. “There is no reason that Deutsche Bank shouldn’t get over its problems,” Dimon tells CNBC. “They have plenty of capital, plenty of liquidity … We want all these banks to get through because it’s better for everybody.”
Few would disagree that it is best for all that an institution as large and influential as Deutsche Bank remain standing despite a challenging capital position and fears that a huge, multi-billion-dollar settlement with the DOJ would put in a more precarious position.
But the cumulative effect of these and many other scandals is very disturbing.
Bernie Sanders, former presidential candidate and U.S. Senator from Vermont, tweeted: “Unbelievably, Wall Street today continues corrupt practices that caused the 2008 crash, as though millions of lives weren’t destroyed.”
My hope is that we are seeing the results of revitalized regulators, stronger regulations and laws, and invigorated investors. The problem is that changing the culture of Wall Street is proving to be difficult and will take a lot longer than expected.
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