The Biggest Banking Scandals Ever: Financial institutions continue to draw scrutiny and ire over controversial practices. How some entities got exposed and paid up.
Banks are really one of the most powerful institutes in the entire world. They control the world’s money and this gives them leverage over pretty much everyone and anyone. Some people actually believe that banks control the world. Whether or not this is true remains to be seen.
Nevertheless, it is indeed true that banks often find themselves on the wrong side of the media’s scorn. Some of the biggest banking scandals have shocked consumers across the globe. Within this guide, you’re going to learn more about the biggest banking scandals of all time.
The Moldova Scandal
First and foremost, you should take the time to learn about the banking scandal that took place in Moldova. In October of 2015, 20,000 individuals took to the streets to protest the country. Why? Well, it was revealed that roughly $1 billion had gone missing from the country’s three biggest banks.
The money equaled roughly 1/8 of Moldova’s gross domestic product. The central bank attempted to fix the chaos. Unfortunately, they were unable to stabilize the bank system. In fact, things only got worse. The actions taken by the central bank resulted in higher interest rates and more inflation. Suffice to say, both were detrimental to consumers in that specific country.
This might seem like a startling occurrence. Surprisingly, it happens more frequently than you might believe. In fact, if you were to play poker online, you should definitely bet on another scandal happening at some point in the near future.
Libor Scandals
Another big scandal that shocked and angered was the Libor scandal. The scandal resulted in global repercussions. Why? Well, Libor is very important to the short-term interest rates in the world.
This specific figure is nothing more than the average interest rate. It is calculated by utilizing submissions of interest rates from the biggest banks around the world. Well, this scandal was really one of a kind and it led to lengthy prison sentences for lots of people. Most notably, Tom Hayes suffered tremendously after attempting to rig the London interbank offered rate.
The former trader with Citigroup and UBS ended up getting a sentence of 14 years. And of course, the impact has been widespread. There is a good chance that the impacts are still being felt today.
PPI
PPI stands for payment protection insurance. Well, there was a scandal in the United Kingdom that was directly associated with payment protection insurance. And, that scandal ended up impacting millions of individuals.
Initially, PPI was designed to help individuals who were unable to continue work due to sickness. Unfortunately, it transformed into a nightmare after a short period of time. People who didn’t need the policies were still sold them. In 2006, FSA or the Financial Service Authority attempted to crack down on the problem. They put fines on companies that were improperly selling PPI to consumers.
The Wall Street Journal eventually concluded that more than $30 billion had been paid out in compensation. Suffice, this was one of the biggest banking scandals of all time. It gives insight into what can really go wrong in the banking industry.
Manipulation Of The Foreign Exchange
Finally, you should know that the foreign exchange has been manipulated numerous times. Unfortunately, this manipulation ends up hurting ordinary consumers the most. This scandal involved five big banks. They all agreed to plead guilty to criminal charges. And, they ended up paying more than $5.5 to settle the charges. The banks were accused of letting their traders manipulate the FOREX market to make a profit. Some of the biggest banks in the world were involved. They included JPMorgan Chase, Citigroup, the Royal Bank of Scotland, and Barclays.
The traders manipulated or rigged the prices of euros and dollars from late 2007 to early 2013.
Summary
Big banks are great for consumers and businesses alike. Nevertheless, giving people too much power is generally a bad thing. All you have to do is take a look at these scandals. Then, you will agree that some of these banks have too much power and control over the world. Still, nothing has been done about it. There is a good chance that there will be new scandals in the future. Will the world ever stop these villains in their tracks?
