Country Club Sopranos

American banks are on a massive crime spree. Obama and Romney hope you won't notice.

Last fall, JP Morgan was nabbed again, this time for violating international sanctions and anti-terrorism laws. The Treasury Department cited the bank for engaging in illegal and "egregious" transactions with Iran and Cuba over a five-year period. But instead of being indicted for treason, JP Morgan paid an $88 million settlement to make the problem go away.

In February, the bank was caught gouging customers on overdraft fees. Some were charged hundreds of dollars for being just a few bucks overdrawn. Yet cash—a $110 million settlement, to be exact—again made the accusations disappear.

The crime spree didn't end until August, when JP Morgan paid another $100 million to settle another class action suit. This time it was dinged for enticing customers to transfer balances at other banks to its own credit cards. In return, they would only have to pay 2 percent of the debt each month. But the bank quietly raised that minimum to 5 percent—the better to generate late fees.

Former governor and attorney general Eliot Spitzer compares Wall Street execs to Mafia dons.
Courtesy Current TV
Former governor and attorney general Eliot Spitzer compares Wall Street execs to Mafia dons.

In a span of eighteen months, JP Morgan was involved in three major fraud cases—while moonlighting in money laundering and treason. But not a single executive faced criminal charges. And since the bank posted $25.9 billion in revenue during its most recent quarter, the collective settlements amounted to docking it less than two days' wages.

The bankers behaved like mafiosi. The feds handed out parking tickets.

"It's just about dollars," says Mitchell Crusto, a law professor at Loyola University in New Orleans. "If no one's serving time and no one's personally liable, I gotta do that all over again."

Lapdogs Guarding the Gate

Kid-glove treatment for wayward bankers first became fashionable under George W. Bush. In the Orwellian world of conservative economics, he viewed fraud and racketeering statutes as little more than burdensome regulation—at least when it came to the executive crowd. Crimes against consumers were just a lucrative new profit center.

Obama was supposed to change that; he was anti-business, after all, a modern-day Karl Marx with better access to a barber. But this reputation was born of the prattling of Republicans and their televised subsidiary, Fox News. The evidence screams otherwise.

To be fair, the president did push through the Dodd-Frank Act, which includes too-big-to-fail legislation and other measures that hinder banks' ability to set depth charges across the economy. Obama also created the Consumer Financial Protection Bureau, whose mission was to return America to the same safeguards that existed under Reagan and the first Bush.

But when he appointed Eric Holder attorney general, it was like making John Dillinger's lawyer head of the FBI bank-robbery unit.

Holder, a former Wall Street defense attorney, would ramp up big-dollar settlements. But criminal charges quietly sputtered to a trickle.

Justice Department spokeswoman Dena Iverson disagrees with this interpretation.

"We understand there is desire by the public to put company officials behind bars who may be with firms that have committed fraud against the government," she says in a written statement. "We follow the facts and the evidence, and whenever and wherever we uncover evidence of criminal wrongdoing, we will not hesitate to bring prosecutions."

Iverson offers a list of people who have been convicted for insider trading, Ponzi schemes and mortgage fraud. But they're mostly the smaller fish of finance, people who've never slept in the Lincoln bedroom or golfed with John Boehner. Conspicuously absent are racketeering indictments or repeat-offender charges against the likes of Bank of America or JP Morgan.

In a sense, Holder has granted the industry its own version of juvenile court. No matter how pervasive the crime, no matter how many thousands of victims, the major players can be assured of walking away with little more than a fine, released to the custody of their parents.

"When it comes to Wall Street, Eric Holder couldn't prosecute a ham sandwich that sold itself as kosher," says Sam Antar. "The Obama administration's record has been abysmal."

He should know. As the chief financial officer of a retail electronics chain in the 1980s, Antar pleaded guilty to multiple charges of fraud and conspiracy. He now describes himself as a "retired criminal" with a safer career: teaching FBI and IRS agents how to catch people just like him.

"It's kind of like Wall Street has a different set of rules than other industries," Antar says. "It's almost like stealing a billion dollars with a pencil is not as bad. You have a lesser chance of going to jail than if you mug somebody on the streets of New York."

And if Mitt Romney's elected, he'll make Bush and Obama look like disciples of Eliot Ness.

Romney has vowed to rescind even Obama's most modest gains, including too-big-to-fail laws. After all, he's never had an aversion to snuggling up with corruption.

Take the case of Drexel Burnham Lambert, the grandest criminal empire in modern Wall Street history. In the 1980s, its CEO Michael Milken was being investigated in a massive insider-trading and stock-manipulation case. But Romney, then head of Bain Capital, refused to stop doing business with Drexel, claiming its chieftain had yet to be convicted.

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