Escalating Penalties: The Ten Biggest Bank Fines In The Last Five Years

Photo courtesy of azartaz via Flickr

Corporate criminal penalties increased 647% between 2001 and 2012, and continue to break record highs well into 2014.

All too often, it’s big banks making the settlements for a variety of salacious misconduct. Here’s a countdown of the largest bank fines paid in the five years alone.

10. $550 million, Goldman Sachs
Year: 2010

Reason for bank fine: The SEC alleged that the bank packaged mortgages into Abacus without informing investors that one of the collateralised debt obligation (CDO)’s clients, the hedge fund Paulson, was trading to profit off of falling US house prices.

9. $619 million, ING Bank

Reason for bank fine: Similar to the current allegations against BNP, Dutch bank ING was accused of violating sanctions by illegally moving billions of dollars through the U.S. for Iran, Cuba, and other countries.

8. $1.9 billion, HSBC

Reason for bank fine: The London-based bank was fined a then record breaking 1.9 billion for failing to stop criminals from laundering money for drug cartels and terrorists.

7. $2.6 billion, Credit Suisse
Year: 2014

Reason for bank fine: The Swiss bank was accused and fined for helping Americans evade taxes by opening and keeping offshore accounts for them, concealing their assets from the IRS.

6. $6 billion, Société Générale, Deutsche Bank, Citi, JPMorgan, UBS, Barclays & more
Year: 2012

Reason for bank fine: In 2012, as many as 16 bank giants were investigated and fined by regulators for manipulating Libor — in other words, fixing the benchmarks for London’s interbank lending rates for extra profit.

5. $8.9 billion, BNP Paribas

Reason for bank fine: French bank BNP Paribas violated U.S. sanctions by doing business with Iran, Cuba, and Sudan. The bank pleaded guilty to federal and state criminal charges, and paid a record sum for sanction violations.

4. $9.3 billion, Bank of America (and other lenders)

Reason for bank fine: 13 banks were sued for foreclosure abuses, having charged illegal fees and grossly mishandled loan modifications. The banks settled instead of undergoing a costly review process.

3. $13 billion, JP Morgan Chase

Reason for bank fine: In what held until 2014 as the record for a single bank fine, JP Morgan overstated mortgage quality and sold risky loans, deceiving investors into a completely fabricated sense of security.

2. $16.65 billion, Bank of America
Year: 2014

Reason for bank fine: As the largest deal reached with a single entity in U.S. history, BofA’s settlement with federal and state authorities resolves civil claims over the bank’s sale of mortgage-backed securities in 2008.

1. $25 billion, Bank of America, Wells Fargo, Citi Bank, Ally Financial

Reason for bank fine: These five banks were accused of massive-scale foreclosure abuse, including forged signatures, denying customers foreclosure alternatives, improper documentation, and a general deception of homeowners throughout the country.

Are these fines fair? 

Most of the time, even these increasingly steep prices do minimal damage: penalties are designed just to hurt, while still allowing the offending companies to do business.

Some critics also say these settlements, many of which are deferred prosecutions, allow companies to buy their way out of admitting wrongdoing, where instead of bringing individuals to justice, white collar crime is incentivized.

Others say the escalating fines amount to extortion, hurting shareholders and employees rather than the executives that actually committed crime. But evidence has shown that the banks bounce back quickly. Perhaps too quickly? You tell us.

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Updated. Originally published 6.10.2014

Jennifer Markert