Article by Fr. Seamus Finn, OMI: Mea Minima Culpa
Originally published by The Huffington Post
There is more than a little irony in the long list of stories about the major CEOs of banks negotiating settlements with government regulators and agreeing to fines before going to court to settle other grievances. The photos of the top leaders of JPMorganChase entering and exiting the justice department this past week for a meeting with U.S. attorney general Eric Holder is a clear indication of the gravity of the matter at hand.
Forgive me for returning once more to this theme as we prepare to enter another World Series of baseball. It is hard to believe that we have completed four of these fall classics since the near catastrophic financial meltdown in September 2008. Of special note this year is the fact that going into this fall classic, the Red Sox have the best record in the AL. But I am straying from the story.
It was in late October 2008, nearly five years ago, when then Secretary of the Treasury Hank Paulson called the leaders of many major banks to Washington to inform them about an infusion of cash — for some it was $25 billion — that they would be receiving in an attempt to prop up capital and support new lending. By the way, for those looking for betternews, the Phillies won the World Series 4-1 over the Rays the next day, October 29.
There seems to be such little good news to go around when one contemplates the state of major U.S. banks, their continuous procession to the confessional and the inability of lawmakers and regulators to put the sector in order so that it serves the interest of all who seek credit, look for services and want a fair deal.
One crazy feature about the long list of grievances, fines and settlements is that they go back to activities that took place five and seven years ago and are mostly about financial settlements, with very few admissions of guilt by institutions and few admissions of wrongdoing by individuals representing these institutions. Just think about it as if you took a cookie from the jar five years ago and now you are being given a timeout for the behavior. Pretty hard to feel much of anything about something that took place five years ago lest some authority is reminding you.
What child or teenager would not be interested in such a postponed and lax scheme when explaining or negotiating appropriate disciplines with a parent? Of course they would all take such a deal. Wouldn’t you? It reminds me of a prayer that goes, “For all the sins of my past life I am truly sorry, beg pardon and forgiveness.” A great catch all before a compassionate and gracious God.
Wait a minute. I am not sure that the “I am truly sorry and beg pardon” part is part of the banker’s philosophy. At least, if it is, I have not heard it very often. As a matter of fact, instead of asking for forgiveness and accepting responsibility, I have more often heard pleas that we all move on from that contrition stuff and get back to normal banking business.
The records clearly indicate that they have spent millions on additional lawyers to defend themselves against those who have sought redress and to rebuff those who are hoping for their day in court. Furthermore they continue to set aside billions against future liabilities that could surface.
Needless to say, Jamie Dimon and other leaders were at the head of the line five years ago when they protested that they were not in need of any government help. Some actually took it as an affront to their financial stability, high business standards and clear ethical policies. The intervening five years has blown holes all over those assertions and the final reckoning for Chase could still be months away. Their most recent settlement was for $920 million and the forthcoming one is estimated to be closer to $10 billion.
We are told by the pundits that it only represents a couple of quarters of profits for the bank. While true I am reminded of the stories of many who have lost their jobs and are still unemployed in the midst of this anemic recovery. I am also reminded of the stories I have heard of people and families who have lost their homes since 2008. I continue to hear about the numerous pension plans and dreams that have been decimated because of the fraudulent mortgage backed securities that they were sold.
There is no amount of money, fines, settlements or payments that is commensurate with the hardship that the arrogance, unethical and fast dealing behaviors of banks and their leaders have caused. A reformed, stable and well-regulated system that serves the needs of the routine customer and restores confidence in the system must become their top priority not quarterly profits, bonuses and obstructing real reform.