US banks rack up $200bn in fines and penalties over 20 years

US banks rack up $200bn in fines and penalties over 20 years


The six largest US banks are close to hitting a milestone $200bn paid out in fines and penalties globally since the turn of the century, according to a new tally by advocacy group Better Markets.

The report card from the Washington-based group, founded to hold banks to account in the aftermath of the 2008 financial crisis, covers Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo. Together they have paid $195bn since 2000, disbursed among government agencies and the investors and consumers harmed by their conduct.

Better Markets chief executive Dennis Kelleher says the report also shows the banks’ behaviour is deteriorating, because it finds their conduct since the financial crisis has triggered more major legal actions than their behaviour before it. 

Banks were hit with 85 major legal complaints for activities between 2000 and the financial crisis and 110 cases for activities related to the crisis period of 2008-2012, including mega settlements for mis-selling mortgage bonds.

Another 204 legal actions have been concluded for activities that took place after 2012, Better Markets found. 

“They’re all major legal actions . . . It’s not like it was a ‘broken windows’ theory post-crash where prosecutors are fining every little violation,” Mr Kelleher said, adding that he doubted heightened regulatory scrutiny and tougher post-crisis rules fully accounted for the uptick.

“If they were held to higher standards they all would have been put out of business because the recidivism is really quite shocking.”

Some of the cases that arose in 2020 showed that banks were repeating past mistakes, Mr Kelleher said, among them October’s $920m fine and deferred prosecution agreement over JPMorgan Chase’s manipulation of metals and Treasuries markets. 

JPMorgan also entered into a deferred prosecution agreement in 2014 after admitting anti-money laundering failings linked to Bernard Madoff’s Ponzi scheme, and pleaded guilty in 2015 to criminal charges for manipulating foreign exchange markets. 

“It’s absolutely shocking that JPMorgan has now pleaded guilty to three separate criminal charges for egregious years-long criminal conduct,” Mr Kelleher said.

In many cases, banks do not admit or deny the wrongdoing alleged by prosecutors and regulators, although guilty pleas have become more common.

Bar chart of Penalties and fines incurred by top 6 US banks globally since 2000 ($) showing BofA has paid the most in penalties

JPMorgan has previously said that many of its settlements related to conduct at banks it acquired at the request of the US authorities.

The bank had the second-highest level of penalties over the 20 years, paying out just over $40bn in 83 different cases — although about $10bn relate to crisis-era activities at Bear Stearns and Washington Mutual, which it bought when they were in trouble in 2008. 

Bank of America paid $91bn in penalties for 86 legal cases, the highest of the group. It said the “vast majority” of its tally related to “mortgage-related issues that predated Bank of America’s acquisitions of companies more than 10 years ago”.

Countrywide, a mortgage lender BofA bought in 2008, was linked to more than $40bn of the fines and penalties. BofA also paid billions to settle cases linked to Merrill Lynch, the brokerage it bought during the crisis.

Mr Kelleher also highlighted Goldman Sachs’ multibillion-dollar settlements for its role in the looting of Malaysia’s 1MDB development fund as evidence of banks’ continued poor conduct. The settlements were agreed in 2020 but related to behaviour from 2009 to 2014 according to filings from the Department of Justice. 

Goldman Sachs referred to its statement when the 1MDB fines were handed down in October, which described “significant enhancements” to the bank’s compliance and internal controls processes.

The Financial Services Forum, an industry group that represents America’s eight biggest banks, said its members “have rigorous oversight and have made substantial improvements to their safeguards during the past decade”.

The six banks have collectively earned net income of about $1.3tn over the 20-year period of the fines and penalties, data from Capital IQ shows.



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