https://docs.google.com/spreadsheets/d/1t0Tb5H7V_OkOuLM9kaiPmszXb3L5wS2g7Tc5dG7v 9yM/edit#gid=0 Further Info:
No Wrongdoing Here, Just 6,300 Corporate Fines and Settlements*
Posted on May 6, 2015 by Charles Hugh Smith Despite the PR about how corporate profits benefit widows and orphans, this vast wealth is concentrated in the top 1% and the top 5%.
I am honored to share a remarkable data base of Corporate Fines and Settlements from the early 1990s to the present compiled by Jon Morse. Here is Jon’s description of his project to assemble a comprehensive list of all corporate fines and settlements that can be verified by media reports:
“This spreadsheet is all the corporate fines/settlements I’ve been able to find sourced articles about, mostly in the period from the 1990’s up to today (with a few 80’s and 70’s). This is by far the most comprehensive list of such things online. At least that I could find, because the lack of any decent list is what made me start compiling this list in the first place.”
What struck me was the sheer number of corporate violations of laws and regulations–thousands upon thousands, the vast majority of which occurred since corporate profits began their incredible ascent in the early 2000s–and the list of those paying hundreds of millions of dollars in fines and settlements, which reads like a who’s who of Corporate America and Top 100 Global Corporations.
I encourage you to open one of the three alphabetical tabs at the bottom of the spreadsheet on Google Docs and scroll down to find your favorite super- profitable corporation.
Many have a long list of fines and settlements, and many of the fines are in excess of $100 million. Many are for blatant cartel price-fixing, not disclosing the dangers of the company’s heavily promoted medications, destroying documents to thwart an investigation of wrong-doing, etc.
In other words, these were not wrist-slaps for minor oversights of complex regulations— these are blatant violations of core laws of the land.
AS you can see in the chart of corporate profits, enormous wealth has been concentrated in the hands of corporate managers and owners since 2002. This alignment with the start of the Federal Reserve’s easy-credit policies is not coincidental.
Despite the PR about how corporate profits benefit widows and orphans, this vast wealth is concentrated in the top 1% and the top 5%:
I asked Jon for his views on the meaning of this mind-boggling list of corporate malfeasance, price-fixing and other wrongdoing in terms of the concentration of wealth: here is his response.
As for the connection to the concentration of wealth: I see two ways in which they are related, the first one is pretty direct and that is the increasing size of the settlements. You will notice that as the settlement date gets later the average size gets much larger. Corporate profits after tax (without IVA and CCAdj) from 1st quarter to 1947 to 4th quarter 2014 went from $21,900,000,000 to $1,837,500,000,000 which is a 8290% increase, even from 1st quarter 1980 to 4th quarter 2014 went from $211,600,000,000 to $1,837,500,000,000 which is a 768% increase.
The second link is less direct. With the increases in concentration of wealth there has been a culture of idolizing wealth, one example is how prosecutors no longer find it appropriate to put banker’s and CEOs in jail. I think one side- effect of the culture changing has been an increased willingness to break the law to increase profits.
The settlements with the banks along with the ongoing investigations have shown that virtually every market is being manipulated; the stocks, metals markets, LIBOR, FOREX, everything. The companies would only break so many laws if they felt they would have a reasonable chance of getting away with it; they would also need a reason to do it, which is provided by the infinite growth model our economy is based on.
Thank you, Jon, for compiling a tremendously important and valuable database of corporate fines and settlements, and for connecting this staggering list of violations to the cultural worship of maximizing private gains at any cost. I am reminded of socio-economist Immanuel Wallerstein’s description of the current world-system of central-state/private-corporation collusion as “a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success.”
Wallerstein and four colleagues explored the future of this wealth- concentration/maximizing private gain model in Does Capitalism Have a Future? (Oxford University Press, 2013).
Please consider these charts:
Five Big Banks Plead Guilty to Rigging Currency Markets and No One Goes to Jail: The $5.89 billion they are collectively required to pay in penalties won’t even get at 3% of their annual earnings.
…
PERIES: Explain the LIBOR scandal.
HENRY: Well, the LIBOR scandal was very similar to the foreign exchange scandal. You had traders who were involved in colluding on pricing financial securities and agreeing on what interest rate they would bid on the part of their banks, rather than compete on an arm’s-length basis. So this is a clear cut [inaud.] case of where the invisible hand was nowhere to be seen.
These are critical markets for all kinds of corporate investors, financial investors of all kinds, housing markets, you know. It’s trade–anyone involved in international trade. This is absolutely outrageous, and it’s an example of really bad behavior by essentially a cartel of very large institutions that have been behaving as if they are too big to jail, too big to penalize.
PERIES: Now, explain further in terms of what this pleading guilty actually means, and what is expected in terms of the next steps in this case.
HENRY: Well, they’ve agreed under this settlement to pay $5.89 billion in fines in disgorgement of profit. But they’ve also, the five institutions here, four of them have pleaded guilty. Which is a corporate plea submission. And that’s really unusual. The problem is that in advance of this settlement, essentially the collateral consequences that would have applied to a guilty plea by a corporate institution such as losing the right to be a prime dealer for Federal Reserve securities, or losing other rights to represent the pension funds and the U.S. pension fund system, those rights were all shielded, protected. So essentially this is a plea that has been deprived of any collateral consequences.
So we also see nobody going to jail here. The traders involved may have lost their jobs. But the profits from this activity were recorded by these banks years ago, and now finally after six or seven years, lots of litigation, they have finally come to this settlement.
You know, you have to ask whether the settlement has any real impact on their bottom lines. And I think the best answer to that is given by today’s stock market price. Which, for this bank group as a whole, their market capitalization actually rose. In the case of UBS the stock price rose 3 percent. In the case of Barclays it rose 3.7 percent.
PERIES: What’s the calculation there? Why is that happening?
HENRY: I think investors are looking at this as a light, as a kind of slap on the wrist. I mean, if you look at JP Morgan for example. JP Morgan is being fined under this agreement about a billion dollars. Little bit less than that. About $900 million. But JP Morgan in the first quarter of 2015, this largest U.S. bank, had net income of $5.9 billion. On a year basis–I mean, if they describe this penalty as less than 3 percent of JP Morgan net income last year, it would come off as a more realistic appraisal of how light the penalty is.
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http://accmag.com/five-big-banks-plead-guilty-to-rigging-currency-markets/
Poster Comment:
Charts and videos at source.