The Staggering Numbers Your Bank Doesn't Want You to See

Editor's note: Last time Shah revealed who regulates the TBTF banks and how those various agencies' rules and regulations are administered to try to keep the banksters in line. Today Shah is going to shed light on the banks' abuses and just how much they've paid up for them.

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Many of us may have a small share of the country's largest banks in our wallet: a debit card, a credit card, or for the old-schoolers, a checkbook.

And each month we get a statement showing our account activity, not the banks'…

That's because there's a staggering number that the banks will never show you, or even reference, on the statement…

Yet it directly impacts what you're paying them… this month… and for years to come.

It's the staggering amount of fines that they've paid out for a litany of misdeeds.

They're all here, in one place. You'll be shocked to see how colossal they are…

The "Gang of Six" Are the Biggest Offenders

The sheer number of abuses the six largest banks in the U.S. have committed – and I'm talking about the giant too-big-to-fail, too-big-to-jail banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley - is enormous.

But not as enormous as the sums they've paid in fines and settlements…

Or to buy back bad mortgages they put into mortgage-backed securities, and the huge legal tab they've run up in dealing with the fallout. 

None of the alleged violations or charges were criminal; they were all civil allegations and charges. So, no one from any big bank has gone to jail, and only a few executives have lost their jobs.

Because it would be such a lengthy read to delineate every individual charge, every settlement, every fine, restitution payment, or other monetary toll banks have paid, and what they didn't admit to but agreed to not ever do again, I'm going to take some liberties and do some condensing.

But don't worry, there's enough here for you to come to your own conclusions.

A Sad, Shocking Scorecard

Let's start with just the numbers the six banks have paid through the end of November 2013.

That includes all third-quarter financial results for credit and mortgage-related settlement costs.  These figures were compiled by SNL Financial and their breakdown is available on their   website.

  • Bank of America has paid out $43.9 billion;
  • JPMorgan Chase has paid out $26.4 billion;
  • Wells Fargo has paid out $9.5 billion;
  • Citigroup had paid out $4.7 billion;
  • Goldman Sachs had paid out $920 million; and
  • Morgan Stanley has paid out over $329 million

Again, these figures are for credit crisis, mortgage-related settlements starting in 2010 paid up to the end of the third quarter of 2013. The tolls continued in the fourth quarter and will continue into 2014, so they are only going to grow.

In addition to settlement monies, since 2008 the six banks have also had to repurchase ("buyback") $98.9 billion worth of bad mortgages they stuffed into collapsed mortgage-backed securities they sold to investors around the globe.

And, in addition to buybacks and settlement fines, there are restitution and other compensation charges paid out to meet government regulations implemented in response to the housing crisis.

The regulations supposedly help underwater homeowners and foreclosed owners wrongly thrown out of their homes. For all this litigation, the six banks have had to pay their attorneys.

There are no credible breakdowns of what banks call "legal and litigation" expenses that breaks out the cost of their outside counsel. We can only presume those charges are well into the tens of billions of dollars.

But credit crisis and mortgage-related settlements aren't the only measure of banks' misbehavior.

Join the conversation. Click here to jump to comments…

About the Author

Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Short-Side Fortunes, Shah shows the "little guy" how to make massive size gains – sometimes in a single day – by flipping large asset classes like stocks, bonds, commodities, ETFs and more. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.

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  1. Bernard B | February 7, 2014

    Who gets the money, a good question? And is it for not prosecuting them? After all, they pay the fine, but do not have to ever admit any wrongdoing. And then they get a bonus on top of that to boot. Ain't America's justice system great?

  2. mosso09914 | February 7, 2014

    Dear Shah, Your knowledge is far above mine, but I've had one simple question that hasn't ever been answered to my satisfaction. With all of the BILLIONS that have been paid in fines, by banks and other companies, to my way of thinking this money is stockholders money!! The stockholders didn't have a thing to do with the 'illegal' acts of the Boards of Directors of the Cos. It would seem to me that the Board Members should be held accountable and not the shareholders!! In this way the Boards would 'get their act together' and the shareholders would benefit. Thanks for your comments.

    Felix

    • David Zeiler | February 7, 2014

      Felix,

      Thanks for being a Money Morning reader. Shah does have answers to these questions, and they are coming in the next two installments of this four-part series. The third installment will discuss where the settlement money goes and how banks account for it; and the final installment will discuss the costs to banks, shareholders the economy and society and who should pay and how payments should be accounted for.

      Please stay tuned!

      • fallingman | February 10, 2014

        Thanks for providing this information. It's a public service.

        And let's not lose sight of the crimes JPM is yet to be charged with….manipulation of the gold and silver, platinum and palladium markets. Overt, brazen manipulation.

        Crime just keeps paying.

  3. mike blum | February 7, 2014

    what about the class action suit that citigroup still has not paid. eventhough this suit has been settled there is little coverage given to their deceit.

  4. Jeff P. in Canada | February 7, 2014

    Isn't there a law in the U.S. that allows the government to seize all of the assets of a criminal enterprise? Just sayin'.

  5. A Harrington | February 7, 2014

    Large corporations justify paying exorbitant salaries and perks supposedly because such executive talent is so hard to find and the competition so fierce. I guess I can understand just how good you have to be to plan and execute such extensive criminal operations and avoid prison. This obviously must be the number one criteria because after these kind of performance reviews, instead of going to prison, they get HUGE bonuses! Where can I apply?

  6. ellis d. | February 7, 2014

    The fines are not as onerous as they seem. They are considered expenses and deductible from taxable profits thus recouping a good portion of the fines in lower taxes.

  7. Donald Richmond | February 7, 2014

    I now know why the banks bought off the California Legislature and exempted themselves
    from the finance charges that individual can charge for loans. We can charge 7.7% to 10%.
    Over that amount is considered 'usurious'. Interesting that banks can charge 30% on their
    credit card balances and be home free. It tells me who 'owns' both the state and federal
    legislatures.

  8. Eric Langan | February 7, 2014

    There is a movie INSIDE JOB that was never released to the general public do google search to find it well worth watching

  9. H. Craig Bradley | February 7, 2014

    ALL ARE COMPLICIT

    The banks have too much power and the Government does not use what they do have if its against the rich, powerful, and influential. The regulators are actually afraid of them. That is probably why Bernard Madoff got away with his ponzi scheme for over 20 years until he was finally caught at it by authorities. Everybody looked the other way and covered for him, including JP Morgan Chase bankers. He made them money and profits.

    Bernand Madoff simply made everyone connected with the system too much money and they are all involved, hence have their own "skeletons in the closet". The same thing continues to happen today in so many areas concerning government oversight. Could you call it systemic corruption?

    Today's stock market valuations are built upon Central Bank QE and liquidity ( billions of dollars created for financial assets). Its all a kind of ponzi scheme which everyone has accepted and Bill Gross coined the term: " New Normal". Fact is, its anything but. So, we rationalize and continue on. We are all therefore, complicit.

  10. H. Craig Bradley | February 7, 2014

    DECLINE

    All the financial games ultimately eats away at investor confidence and our global reputation, without which, we can not sustain our system or maintain our standard of living.

  11. Allan Bremner | February 7, 2014

    Shah
    Another acronym for you TBTBH – Too Big To Be Honest.
    Allan

  12. Rauol | February 7, 2014

    these fines are laughable. How much did they make in their fraudulent processes? If you feel like justices has been served due to these fines then they got you…us all

  13. Ayoola Rasaq | February 8, 2014

    what about the class action suit that Citigroup still has not paid. even though this suit has been settled there is little coverage given to their deceit.

  14. yngso | February 8, 2014

    Are traffic fines there in the US tax deductible? Where I come from they are definitely not.
    Fines at a very small fraction of the value of the damage done by the banks – and tax deductible, if that´s really so – are an insult to the victims. There needs to be full restitution, and not one that lawyers can mooch off at the victim´s expense. In my country the plaintiff often has to pay the legal expenses of the victim(s), also in civil cases. The fines – and part of that should be given to victims – need to be a much bigger percentage of the money stolen.
    The reason this doesn´t happen is that the banks are in control.

  15. Brad M | February 12, 2014

    They say crime doesn't pay. Looks like it pays very well for some. These fines are not nearly what these institutions have made in profit or what their brazen acts have cost the people. They have manipulated markets blatently, they have destroyed faith in some investing, they have destroyed wealth and made us look a bit less stable to the world as a whole. They should be fined at least 5X what they have already paid, with that money being used in some way to benefit all of us. Maybe in checks mailed out to many.

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