Phil Mattera

European Union blacklists big banks

The European Union is shaking up the financial world by excluding a group of large banks from participating in the marketing of bonds being floated to help in the economic recovery of member states.

According to reports in various business publications, the 10 banks are being singled out because of their involvement in cases in which they were accused of manipulating bond and currency markets. In other words, they are being punished for misconduct.

These moves may not have a major bottom-line impact on the banks—which include U.S. giants JPMorgan Chase, Citigroup and Bank of America. But the EU is sending an important message about corporate wrongdoing.


Large companies have come to assume they can essentially buy their way out of legal jeopardy by paying fines and settlements that have grown larger but arein still far from seriously punitive. As Violation Tracker documents, the big banks are Exhibit A for this phenomenon.

The database shows that the financial sector overall has paid more than $300 billion in U.S. penalties in the past two decades, far and away more than any other part of the economy.

Bank of America is at the top of the list of penalty payers, with $82 billion; JPMorgan, second with $35 billion; Citigroup, fourth with $25 billion.

Deutsche Bank on the List

Non-U.S. banks being singled out by the EU have also accumulated substantial U.S. penalties, apart from what they have paid elsewhere. For example, Deutsche Bank paid $18 billion and NatWest (formerly the Royal Bank of Scotland) $13 billion.

The EU's move is focused on a particular set of scandals in which these banks were alleged to have colluded to rig markets.

Among these are cases involving the manipulation of currency markets. In 2015, Citigroup, JPMorgan, Barclays and Royal Bank of Scotland each paid hundreds of millions of dollars in settlements to resolve criminal charges brought by the U.S. Department of Justice.

Unlike many other situations in which large corporations are offered deferred prosecution or non-prosecution agreements, the banks in this case had to plead guilty to the felony charges.

Yet there was little in the way of consequences beyond the penalty payments. The banks were put on probation, on the assumption this would cause them to cease their bad behavior. Yet all the banks continued to rack up regulatory violations in subsequent years.

€86 Million Hit

Reuters estimates that the blacklisted banks will lose out on about 86 million euros in syndication fees. This is a lot less than what the banks have paid in penalties. Yet, if banks begin to see that misconduct will cause them to be excluded from business opportunities, that may be more of an inducement to avoid corrupt behavior.

The dilemma for policymakers is that misconduct is so widespread in the financial sector that it is difficult to find service providers with clean hands. While excluding the 10 banks, the EU turned to a group of others to handle the debt issue. Those included the likes of HSBC and BNP Paribas, which have their own substantial corporate rap sheets. Perhaps a larger blacklist is needed.

This article is from Dirt Diggers Digest.

Corporations take a back seat as Joe Biden readies government takeover

Among the many challenges Joe Biden's administration will have to confront after Donald Trump ends his temper tantrum is deciding what posture to take toward big business.

There will be a battle for the soul of the new president as corporate Democrats vie with progressives to influence policy in areas such as regulation and antitrust.

Initial signs are encouraging.

The Biden transition just released a list of some 500 individuals who will be staffing the Agency Review Teams charged with preparing the way for a transfer of power in all parts of the executive branch.

Most of the people are from academia, state government, law firms, non-profits, unions, think tanks and foundations.

Surveying the list of affiliations, I found only about 20 for large corporations. Most of the people are from academia, state government, law firms, non-profits, unions, think tanks and foundations.

It is likely some of the law firms are there to represent specific corporate interests, but the numerous representatives from progressive public interest, environmental and labor groups should serve as an effective counterweight.

Unions in Labor Department

In the Labor Department list there are no law firms or corporations; in their place are representatives from five different unions along with people from the National Employment Law Project and other progressive groups.

What is particularly significant is the near absence of people affiliated with Wall Street banks.

The Defense Department list has someone from JPMorgan Chase; Homeland Security has a representative from Capital One; and the International Development group includes someone from U.S. Bank. There is no one from Bank of America, Goldman Sachs, Citigroup, Wells Fargo or Morgan Stanley.

The Treasury Department group is led by someone from Keybank, which is based in Cleveland and ranks about 29th among U.S. banks. Fortunately, the Treasury group also includes representatives from places such as the Center for American Progress, the American Economic Liberties Project and the AFL-CIO.

Environmentalists at EPA

Other balancing acts include the list for the Environmental Protection Agency, which includes a representative from Dell Technologies but also from Earthjustice (the lead person) and The Sierra Club.

Some of the corporations show up in surprising places. Walt Disney is represented on the Intelligence Community list. The cosmetics firm Estee Lauder has someone on the State Department list. Someone from Airbnb is in the National Security Council group.

Tech Companies at OMB

Looking at current corporate villains, the one that stands out is Amazon.com. It shows up on two lists—the one for the State Department and the one for the Office of Management and Budget.

Lyft and Airbnb are also on the OMB list, along with some academics, a consultant, state officials and someone from Meow Wolf, a Santa Fe-based non-profit that produces immersive art experiences.

Given that OMB oversees regulatory policy, the absence of public interest, union and environmental people raises a concern. Otherwise, it appears that the Biden team is limiting corporate influence in the emerging administration.

Let's hope it stays that way.

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