Summer months here in Washington, D.C. are generally characterized by the slower pace that is associated with southern cities and the rush of Congress and government employees to get in some vacationing with their families before Labor Day. Even the traffic reporters usually sprinkle their reports with comments about the decreased traffic flows or the early exits for the eastern shore that usually start on Thursday afternoon.
Unfortunately, if you are on the House Financial Services Committee or the Senate Banking committee or one of the regulators for the numerous corporations that operate in the financial services sector, there has been very little down time since the famous early May JPMC announcement about the huge trading loss in their Chief Investment Office in London. Since then the amount of the loss has more than doubled and numerous investigations into the actions of individuals involved in the loss have been opened. All of these activities promise to keep a number of folks at their desks for longer than expected.
Barclay's LIBOR manipulation admission continues to drag a number of regulators and supervisory agencies on both sides of the Atlantic into the spotlight and promises to implicate a number of other banks before the dust settles. Those old familiar questions from the historic Watergate investigation are now a staple in nearly every new report on the issue. "What did they know" and "When did he know it" and the obvious follow on "What did they do about it?"
Officials from the venerable Asian Bank HSBC have now joined the drama as they try to explain to a U.S. Senate Permanent Subcommittee on investigations how they failed to put in place measures to prevent the laundering of money by drug cartels and terrorists both in the U.S. and in other parts of the world. The record of enforcement by one of the bank's regulators, the OCC, was described by a senator as resembling "a lap dog rather [than] a watchdog that we sorely need.
In the meantime Capital One has agreed in a settlement with the Consumer Financial; Protection Bureau (by the way that is the agency created under Dodd Frank that some in Congress are starving for resources so that they will not be able to do their job), to pay $150 million to reimburse more than 2 million customers who bought aggressively marketed payment protection and credit monitoring services. They have also agreed to pay an additional $460 million in penalties. The president of Capital One said that the bank was "accountable for the actions that vendors take on our behalf." Such a candid admission of responsibility is indeed refreshing.
The trial of a former Citigroup executive, who managed a $1 billion securities deal that was sold to investors even though they knew the mortgage-backed securities package was toxic, began this week in New York. "This was legal gambling" the executive's lawyer told the jury and the investors knew the risks they were taking.
In recent days I was reading the June-August copy of the newspaper from the Houston Catholic Worker community. Right there on page seven they have reprinted one of Pater Maurin's Easy Essays that sums up very neatly the desperate situation that we have allowed to happen in the banking sector. He correctly shines the spotlight on the lapses in judgment and action by bankers, technicians, politicians, educators and clergymen that have contributed to this crisis. His concise analysis and advice should motivate all of us to a deeper examination of a culture that sees everything in terms of dollars and cents and loses sight of the values and relationships that are the essential building blocks of communities that are caring, compassionate and hospitable.
When Bankers Rule
Peter Maurin, 1877-1949
Modern society has made the bank account the standard of values.
When the bank account becomes the standard of values
the banker has the power.
When the banker has the power
the technician has to supervise the making of profits.
When the banker has the power
the politician has to assure law and order in the profit-making system.
When the banker has the power
the educator trains students in the technique of profit making
When the banker has the power
the clergyman is expected to bless the profit-making system or to join the unemployed.
When the banker has the power
the Sermon on the Mount is declared unpractical.
When the banker has the power
we have an acquisitive, not a functional society.
Peter Maurin was the brain trust behind Dorothy Day. (Not to say that she needed more brains!) A French philosopher, he wrote simple essay/poems that are punchy for their pith and still relevant.