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Before Drexel collapsed and Milken was sent to prison, Romney made $175 million with the company.
Bank of America, the Nation's Largest Crime Family
So bad has the leniency become that the feds are allowing bankers to keep much of what they steal. Ask Morgan Stanley.
In August, it settled with the Justice Department over its role in fixing New York City's electricity rates. The bank played middleman in a deal between two energy providers, KeySpan and Astoria Generating, which then colluded to withhold electricity from the market, artificially driving up prices and costing consumers an estimated $300 million.
Morgan Stanley was paid $21 million for arranging the scheme. But the ever-generous Holder let the bank settle for $4.8 million.
It marked a stunning new low in federal prosecutions, akin to forcing a bank robber to return just $2,500 after stealing $10,000. With no jail time, of course.
"It's a good business deal for Morgan Stanley," he says. "They could break the law and get away with almost $17 million in profits for it, so why not do it again? If they get caught — and that's a big if — they still get 70 percent of the profits."
Peter Vallone Jr., a Queens councilman and former prosecutor, has never seen such tender handling of criminals. "It didn't deter a company this big, because it sort of amounts to their lunch budget," he says. "And most of all, it didn't return the money to the people it was stolen from. I was a prosecutor for six years, and I've never seen someone being fined less than they made."
Unfortunately, it's been happening for years.
Take the widespread scheme of reordering debit-card purchases to push customers into overdrafts. When it began, Bush's attorneys general, John Ashcroft and Alberto Gonzales, refused to prosecute. Private lawyers stepped into the breach with class-action suits.
California attorney Barry Himmelstein was among them. He noticed how bankers had become so entitled, they began to complain that getting caught chopped into their profit margins.
"We got that argument from Wells Fargo," he says. "It's a ridiculous argument. The fact that you can't make millions of dollars by screwing your customers is not an excuse to keep screwing them."
But even in class-action cases, the banks were getting off light. Himmelstein objected to one settlement involving Bank of America, which was also involved in the overdraft scam. By his calculations, the Charlotte company had ripped off its customers to the tune of $4.5 billion.
Yet the settlement allowed Bank of America to repay just 10 percent of its ill-gotten gains. The average victim was eligible for a $27 refund — less than the cost of a single overdraft.
Four years ago, American taxpayers kept Bank of America afloat with a $45 billion bailout. It repaid them by becoming a veritable crime family. Let's return to the highlight reel:
• Last year, BofA paid a $20 million settlement for illegally foreclosing on soldiers' homes over a three-year period. (Bank spokesman Larry Grayson declined comment for this story.)
• But it wasn't until this summer that the bank achieved frequent-guest status in American courtrooms. In June, it was fined for overbilling 95,000 customers over an eight-year period. Total revenue: $32 million. Total fine: $2.8 million
• A month later, it paid $20 million more to settle a class-action suit. This time it was caught deceiving customers — or simply enrolling them without their knowledge — in worthless credit-card protection programs.
• In August, BofA paid another $738 million in a price-fixing case with Visa and MasterCard. It was accused of conspiring to keep merchant credit-card fees artificially high.
• The bank returned to court again in September, this time paying $2.4 billion for deceiving investors over its purchase of Merrill Lynch.
In less than two years, Bank of America had chalked up six major fraud cases. But there was no talk of three strikes. No indictments for racketeering. Not one executive charged with a crime.
Triage for Cowards
The time to break balls was four years ago, believes Ed Mierzwinski of the U.S. Public Interest Research Group, a nationwide federation of consumer advocates. The banking industry was on the verge of collapse. American taxpayers showed up with a $125 billion life preserver.
Yet government officials were so worried about imminent carnage, they forgot to ask a simple favor in return: You have to stop ripping us off.
"We could have brought them to heel," says Mierzwinski. "The bailout was done so fast that they didn't put in clauses for better behavior."
Bankers, quite naturally, kept doing what they'd always done. This presented one of those only-in-government ironies: While the taxpayers had plenty of money to bail them out, we found our pockets empty when it came time to throw them in prison.
Mierzwinski empathizes with the Justice Department. Banks can field armies of lawyers, who are more than happy to stall and obfuscate as long as the meter's ticking. The feds cannot, so they retreat to triage, agreeing to settlements that present a mirage of victory.