Page 56 - Monocle Quarterly Journal Vol 1 Issue 1 Q4

BANKING
“Undoubtedly there will be more nes to come this year – perhaps a signi cant ne against Wells Fargo after the recent debacle concerning the discovery of several million fake accounts they set up in a cross-selling initiative...”
beginning of 2007 and the end of 2015. is gure closely aligns with the information that can be garnered from the Financial Times database, which gave some comfort in terms of the overall magnitude of the values.
It is important to note that all nes levied or proposed since the 1st of January 2016 are excluded from the Monocle Research Team database, and would therefore naturally exclude the ne to be negotiated between the Department of Justice and Deutsche Bank. Undoubtedly there will be more nes to come this year – perhaps a signi cant ne against Wells Fargo after the recent debacle concerning the discovery of several million fake accounts they set up in a cross-selling initiative that led to the ignoble and sudden resignation of their CEO in October.
Key Conclusions Drawn from the Fines Database
e rst conclusion that can be drawn from the database of nes is that G8 authorities took an aggressive and stringent position against G8 banks after the Financial Crisis of 2007 and 2008, but oddly with a delay e ect of 4 to 5 years subsequent to the crisis itself.
Of the total nes in the Monocle database amounting to USD 138 billion – levied between the beginning of 2007 and the end of 2015 – over 95 percent were levied from the beginning of 2012 onwards. If one excludes the years of 2007 and 2008 – given that the crisis itself was underway and that regulators at the time would have been more concerned with saving the banks than ning them – the numbers are even more surprising.
In the three years from 2009 onwards, a total of USD 6.36 billion in nes were levied, whereas in the three years from 2012 onwards, a total of USD 120.1 billion in nes were levied. at represents a 1788 percent increase in G8 nes levied against G8 banks over three years.
ere are arguments that can be made that regulators and macro- prudential authorities needed time to fully understand the causes of the crisis, and thereby to apportion blame, and that that took several years. However, a far more likely argument – whilst somewhat speculative – is that the world of banking and the manner in which it is treated by G8 governments, but particularly by the United States government, changed forever after the London Whale USD 2 billion loss.
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