Bernie’s Right. Wall Street’s Business Model Really Is Fraud.
(COMMON DREAMS) Richard Eskow, March 29, 2016 — Our nation’s largest and most powerful banks have repeatedly engaged in widespread fraud, causing both individual suffering and a recession that millions of Americans are still living through today.
They continued to commit the same frauds after the American people rescued them, and after they promised to stop as part of some major settlement agreements. There’s no reason to believe they’ve stopped today, and every reason to believe they haven’t.
Fraud is an essential part of Wall Street’s DNA. A 2015 survey, commissioned by law firm Labaton Sucharow, found that a deeply immoral culture had taken root among British and American bankers.
The survey showed that bankers’ ethical behavior is bad and getting worse. The percentage of bankers who believed their own colleagues had engaged in illegal or unethical behavior has nearly doubled since 2012. More than one-third of those earning $500,000 or more annually said they had first-hand knowledge of wrongdoing in the workplace.
It also showed that financial institutions seem to condone, encourage, and protect illegal behavior. The survey found that “nearly one-third of respondents (32 percent) believe compensation structures or bonus plans in place at their company could incentivize employees to compromise ethics or violate the law.” And it found “a proliferation of secrecy policies and agreements that attempt to silence reports of wrongdoing …”
William Dudley, president of the Federal Reserve Bank of New York, said in 2013that there was an “important problem evident within some large financial institutions—the apparent lack of respect for law, regulation and the public trust,” adding: “There is evidence of deep-seated cultural and ethical failures …”
Which gets us to Bernie Sanders’ often-repeated refrain that “the business model of Wall Street is fraud.” A “business model” is a plan for making money. Is fraud really an essential part of the way Wall Street banks make money?
When it comes to retail banking – serving ordinary customers – they’ve already all but admitted it. After Congress moved to restrain some of the banks’ cheating and overcharging, a JPMorgan Chase executive said that customers with less than $100,000 in investments and assets would no longer be “profitable” for the megabank.