Demonstrating a new resolve to punish bank misconduct, the European Union fined a group of global financial institutions a combined 1.7 billion euros ($2.3 billion) on Wednesday to settle charges that they colluded to fix benchmark interest rates.
The settlement was the largest combined penalty ever levied by the European competition authorities and is the first time that American banks have been fined in a set of interest rate scandals that have also drawn scrutiny from regulators in Britain and United States. Those regulators still have their own investigations underway.
“By European standards, it’s a large fine,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. “It signals that the time when only the U.S. can impose big fines is probably over.”
At a news conference in Brussels, Joaquín Almunia, the European commissioner responsible for competition policy, said an investigation had uncovered a collusive scheme by traders at some of the world’s largest banks. Citigroup, JPMorgan Chase, Deutsche Bank, Royal Bank of Scotland and Société Générale were found to have improperly influenced the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.
“There is a big need for better supervision of financial markets in Europe,” said Falko Fecht, a professor at the Frankfurt School of Finance and Management. “We don’t have a single supervisor for financial markets. This is a flaw in the design of the banking union so far.”
The announcement on Wednesday means that for the first time two American institutions, Citigroup and JPMorgan Chase, will pay penalties in the rate-fixing investigations. But they will pay only about $200 million, combined — hardly a significant financial hit to banks with tens of billions of dollars in revenue a year.
And the activity under question by the European Union against the American banks only covered short time periods, the longest lasted about three months — not the sort of long-term manipulation that investigators could point to as evidence of an entrenched pattern of corruption. By way of comparison, some of the European banks were engaged in activity that went on for about three years.
Note EU-Digest: this action by the EU is a step in the right direction, but certainly not satisfactory. When a person steals a package of gum in a grocery store they can be thrown into jail. The financial industry on the other hand has been able to steal and defraud the Government and the Public for billions of euro's and basically got away with it. It is high time these crooks are not only asked to pay fines, but also that some of the principals responsible get thrown into jail.
Read more: Europe Sets Big Fines in Settling Libor Case - NYTimes.com
The settlement was the largest combined penalty ever levied by the European competition authorities and is the first time that American banks have been fined in a set of interest rate scandals that have also drawn scrutiny from regulators in Britain and United States. Those regulators still have their own investigations underway.
“By European standards, it’s a large fine,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. “It signals that the time when only the U.S. can impose big fines is probably over.”
At a news conference in Brussels, Joaquín Almunia, the European commissioner responsible for competition policy, said an investigation had uncovered a collusive scheme by traders at some of the world’s largest banks. Citigroup, JPMorgan Chase, Deutsche Bank, Royal Bank of Scotland and Société Générale were found to have improperly influenced the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.
“There is a big need for better supervision of financial markets in Europe,” said Falko Fecht, a professor at the Frankfurt School of Finance and Management. “We don’t have a single supervisor for financial markets. This is a flaw in the design of the banking union so far.”
The announcement on Wednesday means that for the first time two American institutions, Citigroup and JPMorgan Chase, will pay penalties in the rate-fixing investigations. But they will pay only about $200 million, combined — hardly a significant financial hit to banks with tens of billions of dollars in revenue a year.
And the activity under question by the European Union against the American banks only covered short time periods, the longest lasted about three months — not the sort of long-term manipulation that investigators could point to as evidence of an entrenched pattern of corruption. By way of comparison, some of the European banks were engaged in activity that went on for about three years.
Note EU-Digest: this action by the EU is a step in the right direction, but certainly not satisfactory. When a person steals a package of gum in a grocery store they can be thrown into jail. The financial industry on the other hand has been able to steal and defraud the Government and the Public for billions of euro's and basically got away with it. It is high time these crooks are not only asked to pay fines, but also that some of the principals responsible get thrown into jail.
Read more: Europe Sets Big Fines in Settling Libor Case - NYTimes.com
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