Chronic Lawlessness in the Banking Industry, the Harm It Inflicts on American Consumers, and the Administration’s Role in Making the Problem Worse

Below is the Summary of the Rap Sheet Report. Read the full report here.

SUMMARY

The Continued Lawlessness. The largest banks in the U.S. have a shocking but largely overlooked track record of violating the law. It spans decades and includes every conceivable type of financial crime. Actions against the banks that have come to light over the past two years show that this pattern is continuing, with violations ranging from facilitating sex trafficking to manipulating markets, discriminating against customers, and engaging in fraud and theft. Consumer complaints and violations under the consumer protections laws have risen substantially in recent years, providing further evidence of the banks’ persistent misconduct.

The Harm. The banks’ recidivism has caused, and continues to cause, widespread and sometimes devastating financial harm to millions of everyday Americans who have been gouged by illegal fees, had their cars towed away in unlawful repossessions, or suffered other abuses. Illegal conduct by banks and their executives also inflicts broader harm: Market manipulation hurts countless investors; the failure to comply with anti-money laundering rules facilitates a host of sordid crimes; and when smaller banks fail due to illegal or risky behavior, bank shareholders and depositors can suffer huge losses.

The Administration’s Role. The Trump Administration (“Administration”) is making the problem vastly worse by weakening the rules that help curb illegal behavior and by making it more difficult for supervisors to detect bank misconduct. The Administration is also dramatically downsizing the agencies charged with enforcing the law, walking away from pending and even settled enforcement actions, and handing out pardons for those who have committed egregious financial crimes. The Administration’s indefensible retreat from strong banking oversight and enforcement threatens a new surge in illegal conduct as banks are emboldened to violate the law. That means more harm to American consumers, more bank failures, and more systemic instability that threatens the entire financial system.

The Solutions. Reversing the trend will require halting the Administration’s relentless effort to weaken the bank regulation framework; re-establishing strong banking supervision rules and practices; and above all, making aggressive enforcement of those standards a top priority.

This Report. In this report, we take a fresh look at the issue of bank misconduct, with a focus on four topics: 1) evidence of the continued pattern of lawlessness among banks; 2) the harm this enduring failure inflicts on everyday consumers and potentially the financial system; 3) the federal government’s historically weak approach to enforcement against illegal conduct by banks, now being made worse by the Administration’s retreat from white collar crime enforcement; and 4) solutions to help address banks’ illegal behavior.

Read the full report here.