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.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.