So you thought the regulators were cracking down on banking criminality? They’re not, despite JP Morgan bank’s fine of $900 million (£559.8 million) by US and British financial regulators for falsifying its accounts over losses in its “London Whale” (real name, Bruno Iksil) trader accounts of 2012. Losses of over $6.2 billion were hidden from financial regulators – not hard to do, apparently.
It was the second-largest fine by British regulators. It sounds like a lot of money, and it is. But you can see how seriously finance capital takes these fines by the fact that JP Morgan’s shares dipped a minuscule 1.2 per cent on the news – against a background of a 20 per cent rise so far this year.
Financial irregularities and unregulated financial risk-taking are not one-offs but remain the norm. In the past three years British financial regulatory bodies alone have fined UBS £160 million, RBS £87.5 million and Barclays £59.5 million for rigging the Libor interest rates.
And what happens to the fines? Until this year, in Britain, they effectively went to other banks under an arrangement where fines went to reduce the fees they had to pay to regulators. Now they go straight to the Treasury – and presumably get handed back to the banks in other ways, such as quantitative easing.
In spite of clear law-breaking, how many bankers go to prison? Even the fines are smaller than they look: Barclays got a 30 per cent discount on its fine for “early payment”, though you won’t find too many headlines about that.
At the same time as these fines and exposure occur, an Office of Fair Trading report into the defined contribution section of the British pension industry, worth over £275 billion, has identified over £40 billion of pension schemes with poor governance and inexplicably high charges.
A report last year by the think tank RSA showed that 21 out of 23 pensions firms surveyed did not inform savers of the extent of their charges. Pension charges, it said, typically account for 40 (yes, 40!) per cent of a person’s retirement savings.
These schemes put over 5 million people at risk of their pensions failing, returning nothing near the sums promised in the sales blurb or even defaulting – another mis-selling scandal in waiting. Where are the pension scheme funds invested? With the banks and finance houses of Grand Theft City!
With the slump in the number of people who hold personal pensions (between 2008 and 2010 it fell by 400,000), the government has stepped in to direct yet more money to the bankers. It’s now compulsory for companies to seek to enrol all employees in pension schemes, with workers putting in 5 per cent of their earnings and the employer 3 per cent.
How much of these new pensions will workers actually see? Once all the charges have been skimmed off, not much, especially with the slump in annuity rates. Meanwhile, the City will have been handed a shedload of money to play with.
In the merry-go-round of the casino economy, the banks play with loaded dice. Whichever way the dice roll, they always win – and we lose. Until we take over the banks and run them for the people. ■