Or, How the Smalls Pay for the Sins of the Bigs
A quick check of the records reveals that since the financial crisis began in 2008, Bank of America has been assessed at least $23.4 BILLION in fines, penalties and settlements! Not to be outdone, JPMorgan Chase, Citi, Wells Fargo, and Morgan Stanley have been assessed a combined $13 BILLION during the same time frame.
It is ironic, and a bitter footnote for community bankers, that BofA’s $23.4 billion in various financial punishments alone could have made every undercapitalized community bank in the nation WELL CAPITALIZED at the height of the financial crisis! And it would have knocked hundreds of banks off the FDIC problem list AND saved scores of banks from outright failure.
So while BofA and the other too-big-to-fail firms were paying relatively light (for their size) penalties and fees, community banks were paying for those megabank sins with their banks! And now the same folks that brought you the financial crisis want community bankers to just forget all about that and act like nothing happened. And, by the way, now that we are all one big kumbaya family, let’s get rid of all those pesky rules that bring the systemic-risk banks to account.
And that, ladies and gentlemen, is the destructive nature of allowing financial firms (or any firm for that matter) to become so big that the government can’t fail them. And it is something that ICBA will continue to speak out about until policymakers stop allowing a handful of firms to dictate the course of America’s economy to the detriment of all of the rest of us.