UK Regulator Shocked That Slapping Banker Wrists Achieves Nothing

It is not generally understood that Banksters don’t even suffer any financial penalty for their crimes. When penalties are applied to Banks, they are paid for from earnings, which otherwise belong to shareholders. So the proceeds of criminal activity go the criminals via higher bonuses and the cost of penalties gets picked up by shareholders. Nice work if you can get it……

Not a quarter passes without a bank announcing, as part of its earning statement, that – it just so happens – it has incurred a few hundreds million (or billion) in legal fees, expenses and charges for breaking the law and manipulating this market or that (recall that for banks “Crime Is Now An Ordinary Course Of Business“), but it’s ok, because it is a one-time, non-recurring thing, so please exclude it from the EPS calculation…. Until the next quarter when everything repeats once more. But the repetition of “one-time” events is not the only constant: the other one, of course, is that nobody ever goes to jail.

The latter is also the reason why, as the WSJ reports, British regulators are “getting exasperated with banks failing to clean up their act after repeated wrongdoings.”

No, really: the UK’s equivalent to the SEC truly can’t understand how banks, which have trillions in central bank reserves sloshoing around on their balance sheets as the replacement to trillions in taxpayer bailout funds, and which are delighted to use said reserves to pay for hundreds of billions in legal fees in order to avoid prison time for financial crimes, market manipulations and countless other legal transgressions which their executives were caught doing, refuse to stop breaking the law when the have a paid for by others – and quite literal – get out of jail card.

The FCA’s so-called quandary in a nutshell: “Following the £1.1 billion ($1.7 billion) of fines it doled out to five banks over misconduct related to foreign exchange rate rigging, Tracey McDermott, head of enforcement at the Financial Conduct Authority, said: “Is our action effective at all?

The answer, clearly, is no. But hey, maybe the next wristslap will fix everything and the New Normal criminal syndicate, i.e., bankers. will promptly fix their ways.

On Tuesday Ms. McDermott said she had recently looked though the slew of statements put out by punished banks dating back to 2002. They read like a  “PR paint by numbers,” she said. The press releases all state that the wrong doing is linked to a few employees, changes have been made and that it won’t happen again.


But “lessons are not being learnt,” she said.


She was speaking at a conference in London on legal enforcement.

Here is Tracey McDermott confused that
“Lessons are not being learnt.”

Surely, there were also hundreds of bankers at said conference, smiling gleefully at what the past 6 years have demonstrated beyond a reasonable doubt, is unconditional banker immunity from prison time. In perpetuity.

The recent foreign exchange debacle has cause particular consternation for the regulator. In 2012 and 2013 several banks paid fines for misconduct relating to rigging interbank lending benchmarks. At the time many pledged to reform their rate setting practices more widely.


But Barclays traders manipulated  gold prices the day after the bank was fined over efforts to rig interbank lending rates, according to the FCA. It is now clear that employees at some lenders, such as Royal Bank of Scotland Group RBS.LN +2.39% PLC, continued to try to rig foreign exchange markets even as these internal clean up operations were ongoing, the FCA found.

So what is the FCA’s solution? Well, just like central planners, central bankers, and clueless Princetonian economists, the FCA has a brilliant idea – let’s do more of the same and hope this time it’s different.

Ms. McDermott said that big fines must continue to be meted out to keep bank boards focused on changing their institution’s culture. She refuted claims that the FCA’s approach to fining was “like a soviet tractor factory” — referring to accusations that the regulator was just churning out fines to appease policitians — saying that London’s reputation as a financial center was at stake.


“Enforcement should not be written off as a trip to the headmaster’s office where you take your punishment and leave,” Ms. McDermott said.


Lessons are being learnt. Slowly. The FCA hopes that banks will change in the same way that attitudes to drink driving have altered over time. Ms. McDermott said her parents’ generation didn’t drink and drive for fear of getting caught. “For my generation it was presented as a moral issue… the impact on the lives of other people.”

So according to the FCA, the one thing that should stop banker crime is concerns over the loss of their pristine reputation. Yes, for those wondering, the FCA does resides on this world, a world where bankers at least in the eyes of the FCA, still have something called a “reputation” which is “at stake.”

Which also explains why said reputation will continue to get worse until even organized crime syndicates will bristle when compared to the most criminal, pardon, lucrative M&A bank or hedge fund du jour.

In the meantime, if the FCA, or SEC, or DOJ, or whoever, really wants to “fix” the rampant, criminal banker problem, here is a simple solution: throw someone in jail for a long, long time, and stop showing to the world that one can avoid prison if only one pays a large enough fee (out of other shareholders’ funds).

Better yet, take a clue from Iran:

A billionaire businessman at the heart of a $2.6 billion state bank scam in Iran, the largest fraud case since the country’s 1979 Islamic Revolution, was executed Saturday, state television reported…. A total of 39 defendants were convicted in the case. Four received death sentences, two got life sentences and the rest received sentences of up to 25 years in prison.

And guess what: nobody in Tehran has rigged the USDJPY, ramped the E-mini, or banged the close in gold in years.



7 Responses to “UK Regulator Shocked That Slapping Banker Wrists Achieves Nothing”

  1. Brian says:

    karen Hudes is still being paid at her banking job, proving she is a scam faker

    • sovereigntea says:


      Understanding financial criminals – Why ‘Shredded’ must become compulsory reading!

      Ian Fraser’s new book ‘Shredded – Inside RBS – The bank that broke Britain’ should become required reading for every civil servant at H.M.Treasury, for every apparatchik in the FCA, and for every politician whose brief engages with the City.

      Ian lashes out with fists crammed with facts, and his book leaves a wide variety of players badly bruised and with reputations seriously diminished!

      When I was a detective at the Fraud Squad at New Scotland Yard, I had many opportunities to investigate and evaluate the attitudes and business morality of City bankers and other financial practitioners.

      Between the years 1979 to 1986 I investigated the affairs of dishonest men (almost exclusively) who believed that their positions in the City hierarchy made them immune from the ordinary implications of the criminal law.

      I also had a lot of dealings with civil servants, mainly from the Department of Trade and Industry, and I was constantly appalled by the lack of practical knowledge of the ways of criminals that they brought to their role as regulators of the financial sector.

      I was shocked by their arrogance, their insouciance, and the way that they believed that they were an all-knowing source and fount of expertise, when in so many cases, they were totally incompetent.

      I rapidly came to the conclusion that one of the reasons that so much crime flourished in the financial sector was because the practitioners themselves believed that they were above the law and would not be prosecuted, while those who existed to regulate their activities, were largely useless and shockingly incompetent, but who knew that if they waited long enough, and didn’t rock the boat, a job would be found for them in the financial community in the longer term.

      Too many people in the DTI regulatory divisions had become subject to a phenomenon called ‘Regulator Capture’, in which a cosy relationship was allowed to develop between regulator and institution, and an unspoken agreement existed whereby both sides knew that in return for studied non-intervention, employment rewards awaited the compliant regulator!

      Anyone who has worked in the financial sphere for any time has known these features. Anyone who has worked in the regulatory environment has seen the corrupt and corrosive atmosphere they inculcate, and the wrong-doing that is allowed to proliferate.

      I have worked in this sphere for many years and I have seen all these phenomena and more, and, as each new bank scandal, criminal act, scam and rip-off went by unmolested, I had begun to despair that there would ever be a proper denouncing of the whole rotten edifice.

  2. eddy says:

    Hi Tap ,love the new site…Bankers (isn’t there a “w” missing somewhere ???) it should be noted that the uk govt allow these things to occur purely for financial reasons, more income, after all, all governments are corporations ,there only for profit. Big cash generators are : speeding fines , parking fines, congestion charges (even though your road tax is for ALL public highways)and of course so called criminal fines..WE the People will never win..thats a certainty..odds-on if your a gambler.I have a vast knowledge base within my head. seen it..done it not got a t-shirt type of thing,, but i know..supression wins. my epitaph will read: I KNEW A LOT, WHICH CHANGED NOTHING..A total new radical system is required..Hitler did it though and look what happened.defeated!!!! no chance for us is there..

  3. eddy says:

    see…even a controller…i’m awaiting to be MODERATED…LMFAO.. YET ANOTHER CONTROL MECHANISM ( YES..YES..IT IS..LOL)

  4. eddy says:


  5. Tapestry says:

    Not too well at the moment. Apologies if service goes slow.

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