Corruption and Fraud in the Financial Industry Get Worse and Worse


Felix Salmon explains that we have only begun to plumb the depths of financial industry corruption:

You want to know why pretty much the entire financial sector is still trading at less than book value? This is why: the number of investors who trust the banks is now zero, and banking seems to have become a game of picking up fraudulent nickels in front of a relentless justice-department steamroller.

This is a reaction to the latest shoe to drop in the LIBOR scandal. UBS, it turns out, wasn’t just shaving its own submissions in order to manipulate the LIBOR rate (as Barclays did), it was actively bribing everyone in sight to do the same thing. “If Barclays was dreadful and UBS was much worse than Barclays,” says Felix, “it’s hard to imagine that anybody has clean hands here.” True. More to the point, if corruption around LIBOR was so widespread and extended so far into the executive suite, it’s a pretty good guess that similar corruption extended to practically every other operation on Wall Street too.

The mammoth profits of the financial industry are bad for the economy because they suck money away from other activities with actual value. They’re doubly bad because they were built on, and encouraged, vast amounts of fraud and corruption. That’s what happens when there are enormous pools of money sitting around for the taking. None of us will be safe until profits in the financial sector are permanently cut by about three-quarters from the go-go days of the aughts.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

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