The U.S. government has levied some billion-dollar fines on banks for offenses tied to the financial crisis, but bank officers have avoided the shackled frog-walk and time behind bars, humiliations dealt out routinely to criminals who make off with much less money, says ex-U.S. diplomat William R. Polk.
By William R. Polk
Permit me to put on a different hat. Admittedly, it is moth-eaten and worn with age, but it may still rank as a hat. It dates back to the late 1960s when I became a member of the board of directors of a small bank near the University of Chicago where I was then teaching.
The Hyde Park Bank was both “progressive” in that it lent money to a variety of “minority” (that is mainly black-owned) enterprises and successful in that it acquired several other Chicago-area banks and founded two more. It was ultimately “sold down the river” to become through various mergers a part of the Chase system. But I made enough money from it — despite the fact that it was both progressive and honest — to put my children through college.
Let me address that issue of honesty. I served as chairman of the audit committee of the Board and so was schooled in what might be termed the ethics or at least the legalities of banking. I was sternly told that I was the “point man” of the Board and that if bank employees engaged in illegal or even imprudent activities, I was both legally and morally bound — and commercially wisely guided in my own interests — to report them. Otherwise, I was personally culpable. It would not be the bank that was guilty but I.
It is from this background that I have watched the various Treasury and Justice Department agreements to punish banking irregularities and/or felonies. Some of these abuses have been huge. As William K. Black points out in his book The Best Way to Rob a Bank is to Own One, the old fashioned way, hiding behind a bandana and waving a pistol, was not very efficient. People like John Dillinger and Slick Willie Sutton were amateurs. They made off with just the small change.
What they didn’t know was that banks keep little more than the change physically in their buildings. The really big money is in their distant accounts. But that, of course, is well known to the truly professional bank thieves. They would not bother threatening the clerks who cash the checks and accept the deposits.
The serious thieves would go where the big money is. Which is what they did, making off with the real stuff through various kinds of market and exchange manipulations, abuses which have brought fines of about $100 billion in the U.S., about a quarter of that amount in Europe and more than $4 billion more in the UK .
Staggering figures, but what do they indicate? First, of course, that means some people have been stealing the world blind and at least a few got caught. That should be horrifying to us all because their behavior caused or at least greatly intensified the world financial crisis in which so many people were grievously hurt.
But some of us sigh with relief, knowing that the fines show that “the system works” and that bad actions bring retribution on the guilty. But wait a minute. Is this really so?
As we all know from the media, not a single bank officer has been put into prison for actions that cost the United States an almost unimaginable amount of money and cost many of our fellow citizens their homes and jobs. To the best of my knowledge none of the culprits has even been charged.
Rather, what the government has done is to fine the banks. But even if we accept the legal fiction that corporations are “persons,” that is a rather curious action for three reasons:
First, whether banks are or are not legally “persons,” they do not make decisions. It is the officers who make the decisions and the directors who either allow them to do so or do not prevent them from doing so. In other words, putting it bluntly, there are identifiable human beings who are making the decisions and are responsible for those decisions. Banks do not act; bank officials act.
Second, if a bank is fined, who pays the fine? The answer is simple: the stockholders. Some of them will be officers and directors, admittedly, but most are not. Some of the stockholders, no doubt, are public entities — pension funds, colleges and universities, foundations while many others are simply private citizens who have no hand in the illegal or immoral activities. That is to say, in the current policy of our government, many of them are being punished for what they did not do.
The third reason why I find the government reaction curious is proportionality does the punishment, even if it were correctly directed, fit the crime? It seems to me ludicrous to suggest that it does. If a druggie can be sent to prison for being caught with a few ounces of heroin in his pocket or if a robber who holds up a filling station for $50 is imprisoned for five years, what should happen to the person who “steals” a billion dollars or whose violation of the law causes millions of people to lose their houses and jobs?
It seems to me that we urgently need to rethink the relationship of our financial institutions and those who run them to the law and demand that the government stop evading its evident, logical and legal responsibilities. It needs to enforce the law or the financial world, on which we obviously so heavily depend, will be just a jungle, red in tooth and claw, where the strong eat the weak.
Or, is the power of the money already too strong? Is the law just a scrap of paper applied disproportionately to people without money or power? Obviously, the fountainhead of our legal system, Congress, almost to each man or woman in it, is for rent or for sale. Indeed, Congress no longer makes even a pretense of making the national wellbeing as its guide.
But, from my former days in the U.S. government, I was sure that officials in the Executive Branch were more honorable — or perhaps just more fearful of being caught. Today, I am less sure. Are they now, too, “on the take?” If not, why do the people in charge of the Departments of the Treasury and Justice close their eyes to illegal actions by bank officers responsible for financial crimes?
Doing so is, in effect, to give our financial system a poison pill from which our Republic may not be able to recover. Almost worse: Why do so few citizens seem to care?
William R. Polk is a veteran foreign policy consultant, author and professor who taught Middle Eastern studies at Harvard. President John F. Kennedy appointed Polk to the State Department’s Policy Planning Council where he served during the Cuban Missile Crisis. His books include: Violent Politics: Insurgency and Terrorism; Understanding Iraq; Understanding Iran; Personal History: Living in Interesting Times; Distant Thunder: Reflections on the Dangers of Our Times; and Humpty Dumpty: The Fate of Regime Change.
Excellent article. I do not think the US population does not care-they feel powerless, for the obvious reason that over 99% of them are. All surveys show that large majorities support health care for all, more taxes on the rich, much less aid to Israel, stricter environmental controls etc, but the laws, more and more, do exactly the opposite and are designed and paid for to do what the very rich desire.
To call the USA a democracy, and the “Reps” and Senators, let alone the SCOTUS, for the people, is false.
True, the people in an oligarchy have the option of feeling powerless and beaten, or to pretend that they agree with their overlords, that they are somehow serving the people. The more obvious the abuses, the more they must grab at the excuses offered them. They do the same in recognition that the US economic system is purely a gangster operation. They simply join in the rationales for unethical conduct, all the way to murder of innocents, seeing that morality means poverty and everyone else is stealing. I have seen liberals go the same route, because the burden of emotional oppression and discrimination collapses their will to be good citizens.
The US is a disease mechanism and nothing more, its erstwhile democracy digested entirely, an empty suit of armor waiting to be toppled by another corrupt power.
You saw President John F Kennedy reel backwards as his head exploded in broad daylight.
Do you really believe that the Secret Service, FBI, CIA, NSA, NSC, and all the military branches along with their corresponding intelligence agencies believe in ‘MAGIC BULLETS’?
A ten year old who has plinked cans off of a fence with a BB gun could tell you for certain that JFK was NOT shot from behind.
Go look up Dan Rathers description of the assassination film that he himself witnessed over a decade before the public had a chance to see the film. But you can’t blame ol’ Dan for misleading us…because we all know the truth, but we would rather pretend that we didn’t know the truth.
Kennedy’s death is a bit out of place on a thread about overlooking banking crime.
But since you’ve brought it up, the answer to the ‘backward head snap’ comes from physics. Quoting from Luis Alvarez’s book, there were three intersecting masses involved: the bullet, the head, and the jet of pulverized brain matter. The jet carried forward more momentum than was brought in from the rear by the bullet, hence the head recoiling backwards. Call it a rocket effect.
Ref: Alvarez – Adventures of a Physicist 1987 p. 244
Magic bullets and rocket effect…you have to have TWO PHDs to be that stupid.
Folks, welcome to the world of people who Know Everything About Guns.
On page 245 Alvarez described the scene at a firing range when a deer-hunting Radiation Laboratory associate (and scientist) prepared to shoot at melons wrapped with glass-fiber tape. Local ‘experts’ in attendance told him “you must be out of your mind to believe something you hit with a bullet will come back at you.” Six of seven melons clearly recoiled towards the gun.
But sad to say, when the minds of certain types are made up, change is unthinkable.
I think I now know where the term ‘Melon head’ originated.
Alvarez’s explanation has been thoroughly debunked. He fired test shots at several objects, including coconuts and melons. Only the soft shelled melons were kicked back toward the gun by the jet of forward moving tissue. Coconuts, which resemble a human bone skull much more closely, were kicked in the same direction as the bullet and the tissue. The melon was the only item tested which moved back toward the gun. Alvarez was dishonest in his report. A talk on this –
While on this topic, Robert F. Kennedy’s autopsy, which was done by true autopsy professionals, showed conclusively that RFK was shot from behind at a distance of 2 inches. That fact is unknown to the public because it never came out during the trial. At 30:00 in –
These facts have enormous implications for how our system currently functions.
The executive branch is on the take as are both parties. They feel some sense of obligation for the huge corporate derived campaign contributions that get them elected – as well as the fact it is a symbiotic criminal relationship between the two – they benefit and we lose. The press is also guilty to some degree and also benefits from the status quo through corporate advertising income. The Supreme Court’s Citizens United decision gives an automatic advantage to the interests of wealthy corporations over the interests of “We the People”. The USA in all reality at this time is “We the Corporations” who have more rights than people. Many still don’t believe we’ve arrived at corporate-fascism because nothing has changed for them personally. With the US government and corporations cooperate together in spying on citizens and prepare to disrupt and combat dissent that could become ugly with all things considered. As stated in the Declaration of Independence it is now the duty of “We the people” to throw off such a tyrannical government.
another excellent article mr. polk. thank you