When the banking crisis hit, many cried out demanding justice against the bankers who had used the public good as collateral for their increasing risks. Unfortunately, due to deregulation, there was little that the federal government could do. New regulations were passed with the Dodd-Frank financial reform bill,
giving the government authority to begin regulating the banks. But, what people had been waiting for, to see bankers go to jail, had not happened.
The wait is finally over. A report by the
New York Times states that the feds have called for the United Kingdom to turn over the two men behind the JP Morgan multibillion dollar losses last year in what has been termed the “
London Whale.” Javier Martin-Artajo, a manager who oversaw the trading strategy, and Julien Grout the trader who enacted the strategy, now face extradition to the United States, and a waiting jail cell when they arrive, much like
Larus Welding who, as CEO of Glitnir Bank in Iceland, was arrested and convicted for his role in the financial crisis.
This is not enough, however, for the Securities and Exchange Commission, which is
pressuring the financial giant to admit its role in the trading scandal. This is on top of the
public apology given earlier this year. The
evidence is damning and only by admitting wrongdoing will JP Morgan avoid the worst penalties which the federal government can bring to bear. JP Morgan alone is facing scrutiny from a reported eight different federal agencies over its behavior, along with various state and extra-national agencies.
And this is just the beginning. HBSC was just hit with almost
$2 billion in fines, and other banks are scrambling to divest themselves of the risk which they are now facing. And with two of JP Morgan’s now facing jail time, the pressure is on to behave, and fast.
Will the top execs at the Wall Street financial giants go to jail? Not likely, they did their acts during a period of deregulation, so despite the incredible levels of damage they did to the economy, it was not illegal. But the strengthening of the federal government’s regulatory muscle is what we as a nation need to ensure that this does not happen again. And with the US Senate poised to
reintroduce Glass-Steagall, the banks are, smartly, weighing their options and hedging their bets.
These are but two men, but they are an important symbol. It is a sign that there is a change happening, a new sheriff is in town. Empowered by new regulatory strength, there is new hope in Washington that another financial crisis will be averted, before it ever begins.
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