THE BANKERS BALL CONTINUES ... THEIR PRIVILEGED POSITION MAKES THEM TOO BIG TO JAIL

A few years back I wrote about the special exemptions that privileged groups had in Latin America before its independence from Spain in 1810.  As I wrote then, these exemptions of privilege were called fueros, and were granted to members of the nobility (pre-independence), the clergy, certain government officials, and the military.

These privileged exemptions, as you can imagine, contributed to a culture of impunity and established a history of hierarchy and status. Apart from enabling the elites of Latin America to live a life of privilege and, in many cases, charmed luxury these privileges did much to skew Latin America's economic development on many levels. 

I then discussed how a Morgan Stanley wealth manager - in fuero-like fashion - was given the option of not facing felony charges for a hit-and-run case in Colorado because prosecutors didn't want him to face a career backlash (that would inhibit his ability to pay restitution). The fund manager, Martin Erzinger, struck a cyclist while driving, and - in spite of the wishes of the injured cyclist - was allowed to plead guilty to misdemeanor charges. 

Fast forward to 2013 and we get Matt Taibbi's most recent piece on our dysfunctional financial system from Rolling Stone magazine. In fuero-like fashion Taibbi writes of a banking system that has become "Too big to jail." Taibbi makes it abundantly clear that "gangster bankers" in America enjoy an emerging fuero financiero in America because of their extortion-like capability (threat?) to bring down the entire economy if they are punished according to their crimes. 

Here's U.S. Assistant Attorney Lanny Breur explaining why he refused to pursue criminal charges against banking giant HSBC:

“HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized."

Sounds like too big to jail to me. Breur didn't want the bank to lose its banking license, with the now standard threat of collapsing our financial system. So he fined them $1.9 billion (or about 5 weeks of HSBC profits). Not only is no one at HSBC punished for catering to drug dealers and terrorists, but HSBC will probably find a way to write off the fine as a business expense. 

Then we have Bank of America gaming the system to prevent investigations into their predatory and negligent foreclosure practices, for which they paid $1.2 billion in fines (part of a larger $8.5 billion settlement). Sigh ...

There's more, but you get the point. The special exemptions are so strong for the big banks that they are literally having a financial ball, at our expense. Call it the Bankers Ball.

As I've pointed out over and over, the arrogance and greed of the industry is going to collapse the economy some time down the road. Banks are neither following the most basic rules of capitalist markets, and are aided by favorable legislation that props up their bottom line but is killing America's middle class. The privileges and immunities they now have will only speed up the next market meltdown. 

We need to start prosecuting the criminality as it happens. 

That we are not prosecuting the banks, and the bankers who sign off on the illegality, tells the world that the banks have become a privileged class in America. Worse, they have become too big to jail, or even take to court.

- Mark