August 9th 2007 is a day that will live in something like infamy for all those who remember it — it was the day that the financial crisis and Great Recession were said to have officially kicked off. The date is picked because it was the official point France’s BNP Paribas barred investors from accessing money in funds with subprime mortgage exposure, citing a “complete evaporation of liquidity.”
And though much has normalized since then, according to the Financial Times, the public in some places remains concerned that the charges that were brought as a result of the crisis were civil in nature, not criminal. Banks paid fines — and lots of them — but few bankers went to jail.
Reports note that jailing bankers has turned out to be problematic because proving criminal intent in these matters is not easy — execs were not direct participants in the fraud and were insulated by corporate layering. Some have suggested that the DoJ is simply unwilling to take on high-risk cases.
The penalties and settlements were mainly aimed at a institutions which misled buyers of securities backed by mortgages. And the fines have been notable — BoA has paid more than one-third of all fines in the U.S. at $56 billion. JPMorgan Chase clocks in at number two with $27 billion in fines and relief.
These penalties are also ongoing as new cases relating to the financial crisis are still being filed and investigated.
“You can argue that the fines are too high or too low. Nobody would argue that the non-compliance behavior needs to be addressed,” said Gerold Grasshoff, a senior partner with Boston Consulting Group.
Prosecutors worldwide have also sought relief from banks on a range of financial crimes from money laundering to sanctions violations.
“We expect fines and penalties by regulators in Europe and Asia to rise in coming years,” noted a report by Boston Consulting.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More