Andrew Dewson: Bernie Madoff must be kicking himself as the banks carry on regardless

US Outlook

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One of the great challenges of modern financial journalism is finding yet another way to describe criminal behaviour at Wall Street investment banks. Corrupt, immoral, illicit, scandalous – words used so often, they have lost meaning. Wall Street is an Augean stable, now more than ever before, and there is no Hercules to muck it out.

So another week goes by with another group of fines getting dished out, this time for colluding over exchange rates and running a cartel that abused a market where $5trn (£3trn) changes hands every day.  This week’s identity parade had some of the usual suspects lined up: UBS, Barclays, Royal Bank of Scotland, JP Morgan and Citigroup.

It was another $5bn in the bank for the US Justice Department after all five pleaded guilty and paid fines, almost half of it stumped up by our very own Barclays. Doing Britain proud there.

Handily for this bunch of repeat offenders, the Securities and Exchange Commission granted all of them waivers to continue trading currencies as if nothing had ever happened – and continue is exactly what they have done. Individual traders could still face criminal charges, as a dozen are over the Libor-fixing scandal, but others are unlikely to be deterred even if a 20-year sentence for wire fraud is handed down to the guilty.

And here’s the worst of it – all of these institutions will probably claim, with straight faces, that they are being persecuted. Jamie Dimon, JP Morgan’s chief executive, is so far into deep space that his next conference call will sound like a five-year-old deprived of his favourite toy. Just like his last conference call.

The strange thing is that his company keeps on pleading guilty and paying fines – now approaching a mind-boggling $36bn and covering at least 15 major violations of securities law since he became chief executive. Repeatedly paying fines and repeatedly pleading guilty is not a sign of persecution, it’s a sign of guilt. Mr Dimon either understands why the business he runs is in trouble with the authorities and he just needs to vent some spleen, which is fair enough – or he genuinely doesn’t get it, which is infinitely scarier.

Bernie Madoff must be kicking himself black and blue in whatever low-security prison he is spending what remains of his life in. Why didn’t he just become a currency trader? Running a Ponzi scheme isn’t all that different from what these traders have done. Madoff stole from fewer people, all of whom were rich, and so they got real justice. These bankers colluding over foreign exchange rates stole from millions of ordinary people, so real justice is unlikely.

The new US Attorney General Loretta Lynch has the opportunity to change the rules of the game, permanently, by pressing for criminal charges against the traders involved. It goes without saying that she should do that, with all of the haste she can muster. The same goes for whoever replaces New York’s retiring Attorney General, Benjamin Lawsky, who deserves credit for fighting the good fight but who must also bear some responsibility for the lack of convictions against the traders involved in numerous scandals.

When nobody goes to jail – and let’s face it, nobody does apart from the odd extremely ill-favoured sacrificial wage slave – there is precisely zero incentive for banks to tackle illegal behaviour properly.

The perception, rightly or wrongly, is that banks allow almost any kind of malpractice so long as it makes a profit. Make more money than the fine, rinse, repeat. For justice to prevail, bankers and traders must be punished personally for their crimes, just as anyone in any other walk of life would be.

Exxon waiting with open arms when BP gets out of the mire

BP has let Halliburton and Transocean off the hook, and in doing so may have guaranteed that its days as an independent company are numbered. This week’s $212m settlement with Transocean is literally a drop in the ocean – less than  1 per cent of the amount that BP will end up shelling out to cover costs arising from the Deepwater Horizon disaster in 2010. Oh, and BP is paying Transocean $125m to cover legal fees, which is nice.

The amount settled with Halliburton was not disclosed, which with any luck means it is an awful lot more. BP issued the kind of bland statement that companies make when a minor executive retires – it is “pleased to have resolved the final remaining disputes stemming from the Deepwater Horizon accident”. Which of course it hasn’t. The US courts will see to that.

Sadly, all it really means is that someone, most likely Exxon, will feel ready to bid for BP sooner rather than later. Another great British company, no matter what your opinion on BP is these days, could become just another subsidiary of a larger foreign predator. The one silver lining is that Exxon seems to have an uncanny ability to avoid blame in the US courts, so at least BP might finally be able to settle Uncle Sam’s exorbitant bills.

That Exxon is looking at a big acquisition is hardly news. It has no shortage of cash, despite the fall in the oil price, and a market capitalisation roughly three times larger than BP. With Shell gobbling up BG, Exxon needs to move. It will move, and BP is a high-risk but high-return target. Assets including a 19.75 per cent stake in the Russian oil giant Rosneft (sanctions have forced Exxon out of Russia) are very tempting, particularly now that BP’s list of legal woes is finally a little shorter.

 The British Government will protest of course, weakly and meekly, and then give in once it realises that there is practically nothing it can do about it. Our pathetic politicians will insist that we played the game fairly, old chap – unlike those dastardly French who don’t let anyone buy their strategic national assets. Well, what do the French know about the rules of capitalism …

Depressing. Just when BP might, just might, have clawed its way out of a horrible mess, it’s going to walk straight into a fire sale with itself as the primary target. That means there will be some short-term respite for long-term BP shareholders, who have held on through thin and thinner, but it’s nothing short of a national disaster.

Well, David Cameron is likely to be the prime minister who loses Scotland; might as well be the prime minister who loses BP as well.