By Isaac Cohen*
Once again, in three separate incidents, “too big to fail” banks have tested the limits of legality.
The most recent scandal took place in London, in the over $5 trillion a day foreign exchange market. Two weeks ago, Citi, JPMorgan, UBS, RBS, HSBC and Bank of America, were fined a total of $4.3 billion, by bank regulators from Switzerland, the United Kingdom and the United States. The main reason was the manipulation of a benchmark of foreign exchange rates.
Also last week, the US Senate Permanent Subcommittee on Investigations carried out hearings, to discuss the results of a report on price manipulation of commodities, with representatives of Goldman Sachs, JP Morgan Chase and Morgan Stanley, among others.
The 400 page report describes how big banks dominate the markets of nine commodities. Federal Reserve Governor Daniel K. Tarullo, in charge of regulatory policies, informed that the central bank is considering the approval of new regulations to deal with issues such as commodity trading by banks and the absence of a regulator of such activities.
Finally, as a result of leaks published last week in The New York Times, the relations between Wall Street banks, particularly Goldman Sachs, with the Federal Reserve Bank of New York were examined in hearings by the Senate Banking Committee. This time the issue was the revolving door and consequent coziness between the employees of these entities.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.