Trump political appointees overruled recommendations from career prosecutors, drastically slashing the fines two big banks had to pay.
Rather than punishing big banks for misdeeds that led to the 2008 economic crash, Trump political appointees decided to go easy on them, according to a new investigation from ProPublica and American Banker published Friday.
Soon after the Trump administration came into power, career prosecutors were ready to seek massive fines from two U.K.-based banks, Barclays and Royal Bank of Scotland (RBS). But then Trump political officials intervened and dramatically reduced the fines the two banks had to pay, officials with knowledge of the process told reporters.
The cases against both banks were developed by prosecutors during President Obama's tenure and "involved accusations that the banks misled buyers of residential mortgage-backed securities before the 2008 financial crisis," according to the investigation.
In one instance, an RBS manager was caught describing mortgages put into securities as "total fucking garbage." In another instance, a Barclays banker said some of the loans they were dealing with scared "the shit out of me."
For RBS, prosecutors in Boston wanted both criminal charges and a fine of up to $10 billion, arguing RBS committed especially egregious crimes.
Then, Trump-appointed Deputy Attorney General Rod Rosenstein got involved and demanded the Department of Justice drop criminal charges and pursue merely civil charges. In the end, RBS paid less than half what prosecutors initially wanted: $4.9 billion.
For Barclays, DOJ prosecutors were aiming for "somewhere within a range in the high single digits of billions of dollars," investigators found. But then Trump officials intervened, and Barclays settled by paying just $2 billion.
The Trump administration's coziness with big banks should come as no surprise. Trump is enamored with the 2017 tax bill passed by Republicans in Congress. That law is a massive tax giveaway to Wall Street banks. Just one big bank — JP Morgan — received $3.7 billion from the law. Other Wall Street corporations saw their federal tax bill drop to nothing at all.
Meanwhile, the Wall Street Journal reports that many families are falling deeper into debt in an attempt to maintain a middle-class lifestyle.
Published with permission of The American Independent Foundation.