If you or I were convicted of a felony crime, we would almost certainly lose our freedom. We’d be facing prison time. We’d likely lose our job. We would also no longer have the right to a host of civil liberties, including the right to vote.
But we are not large financial institutions. If we were, we might expect far different treatment for felony convictions.
A recent New York Times report details how the process is unfolding for five of the world’s biggest banks, which are expected to plead guilty to a lengthy list of charges, including fraud and antitrust violations. What type of penalties are they likely to face?
Probably not much. No one is going to jail. There may be some fines and restitution payment, but that isn’t likely to impact the individuals who perpetuated these acts. And most probably, life will go on as usual.
To be fair, these guilty pleas do have some value. They are considered a black mark on institutions of this size, and they do indicate there has been some value in the broader effort to hold these companies accountable for misdeeds. But the problem is these banks are “too big to jail.”
Prosecutors say they want to hold institutions accountable, but they don’t want to imperil companies central to the U.S. economy. That means whatever punishments are meted out are almost certain to be merely symbolic.
The Times’ reported attorneys for the banks are trying to wrangle guarantees from federal regulators that the guilty please aren’t going to hinder their ability to engage in certain business practices. The Securities and Exchange Commission was one such agency, though its commissioners haven’t yet voted on the requests. Several insiders stated, however, they were likely to grant waivers to the banks to carry out business as usual, in spite of the criminal convictions. That would mean they could still oversee mutual funds, keep their special status as “well-known seasoned issuers” and maintain their safe harbor status for security documents – privileges they would otherwise lose with a felony conviction.
It’s worth noting a number of institutions previously received non-prosecution agreements, wherein the government doesn’t push forward with charges in exchange for a fine or other requirements. There is a big difference in terms of reputation between a deferred prosecution agreement and a criminal conviction. But what does that mean in practical business terms? Probably not much, especially if regulators are willing to grant these banks a pass on the kinds of consequences they would otherwise face.
Legally, federal agencies can issue these waivers under provisions like, “For the public good.” But it seems counterintuitive to apply that to agencies that have done the public so wrong.
Prosecutors have begun to favor non-prosecution agreements in recent years, citing the potential “collateral damage” to innocent workers and shareholders.
But failing to take any meaningful action against corporations that have so blatantly broken the law, violated public trust and inflicted such damage on the economy hardly seems fair. Consider the consequence for an individual robbing a bank is up to 20 years in prison under federal law.
Here again, our Miami foreclosure attorneys note banks are very unlikely to be held accountable in such a way that would deter them from engaging in the kind of actions that led to the financial crisis – especially considering how lucrative it was for these firms.
If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Tuesday at 6 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.
5 Big Banks Expected to Plead Guilty to Felony Charges, but Punishments May Be Tempered, May 13, 2015, By Ben Protess and Michael Corkery, The New York Times
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Banks Argue for Reduced Fines for Zombie Foreclosures, Feb. 17, 2015, Miami Foreclosure Defense Lawyer