2. Foreign Exchange Manipulation
In May five large banks agreed to plead guilty to criminal charges and pay a total of more than $5.5 billion to settle charges that their traders manipulated the foreign exchange market in order to profit, USA Today reported. U.S. and European authorities said that units of Citigroup, JPMorgan Chase (JPM) , Barclays and Royal Bank of Scotland (RBS) admitted that their traders rigged prices of dollars and euros from December 2007 to January 2013, USA Today said.
Large banks are also paying significant money in civil cases. In August nine banks, including Barclays, Goldman Sachs (GS) and HSBC (HSBC)
agreed to a $2 billion settlement with investors in New York related to the rigging of currency markets, the Financial Times reported.
That settlement could open the doors to civil claims elsewhere related to foreign exchange rigging, the FT noted, so this story is far from over.
3. PPI Scandal (Payment Protection Insurance)
The scandal over payment protection insurance in the U.K. affected millions of people. PPI was started with an intention to help those who lost their jobs or remained too sick to work. But over the course of two decades it became a growing nightmare as millions of policies were sold to people who didn't need them.
The Financial Services Authority (FSA) began imposing fines for PPI mis-selling in 2006. Lloyds (LYG) is among the worst offenders as it is the biggest lender in the Britain. Closure of this banking debacle may come sometime in 2018, as the Financial Conduct Authority wants to end the U.K.'s largest mis-selling scandal. According to The Wall Street Journal, $30.3 billion has already been paid in in compensation and "the scandal has become an industry unto itself."
The aforementioned are only some of the many banking scandals that occured around the time of one of the worst financial crises in history. Such big scandals not only tarnish the reputation of the banks involved but can have wide-ranging repercussions for an economy and for consumers. Clearly, ethics in the banking industry still leave something to be desired, and there is a lack of transparency and not enough accountability.
Firmer criminal prosecution of the bankers behind these scandals and stricter reforms demanding greater transparency may help prevent future actions that improperly influence markets and hurt consumers and retail investors.As the Economist recently put it, "Most of the recent banking scandals have ended not in the courtroom, but in opaque settlements and large fines."