Banking's Black Eyes

2012 brought plenty of news that bankers — and sometimes their regulators — would be happy to forget. Here's a rundown of a year in tarnished reputations and fines.

(Image: Thinkstock)
Citigroup CDO Settlement Citigroup CDO Settlement Formidable jurist Jed Rakoff's refusal to sign off late last year on a settlement regarding the sale of an allegedly built-to-fail CDO embarrassed the government and Citi in 2012, though an appellate court turned the tables by ruling that Rakoff overstepped his bounds. The knocks kept coming for the SEC, though, which lost a civil suit against one of the alleged perpetrators this summer.

(Image: Bloomberg News)
Wells Fargo Settles Racial Steering Charges Wells Fargo Settles Racial Steering Charges In July, the bank paid $175 million to settle Justice Department allegations that it steered minorities into high-priced, inferior loans between 2004 and 2008. It was a brief but nasty bit of PR for a bank that largely sidestepped subprime notoriety.

(Image: Bloomberg News)
'Muppets' 'Muppets' Former Goldman Sachs employee Greg Smith started off strong in March, with a colorful catchphrase that summed up traders' scorn for their hapless counterparties. But this one fizzled without much to back it up.

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The DOJ settlement with St. Paul The DOJ settlement with St. Paul The September revelation that the Justice Department may have killed a civil lawsuit against St. Paul in exchange for the city dropping a Supreme Court challenge to the disparate impact theory of discrimination brought howls. It was a lot closer to a quid pro quo than looked good for the Justice Department.

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Lawsky Lays Down the Law Lawsky Lays Down the Law In 2012, New York's upstart financial regulator proved he could embarrass banks on an international scale. A probe and subsequent hearings turned commission payments by insurers to banks into the national news. Then Benjamin Lawsky blindsided the Feds and British bank Standard Chartered with a blistering money laundering case.

(Image: Bloomberg News)
The Breach at Global Payments The Breach at Global Payments The worst of a series of data breaches, the March disclosure that up to 1.5 million accounts had been hacked through an Atlanta-based processing vendor was a reminder that banks' information security is only as strong as its weakest link.

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Facebook IPO Facebook IPO What was supposed to be the year's hottest IPO soiled everything it touched in May. Morgan Stanley's advisory work, Facebook's cavalier approach, NASDAQ's trading problems, and an SEC probe of IPO disclosures - nobody came out looking good.

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Foreclosure Reviews Foreclosure Reviews Beset by questions of independence, cost, and efficacy, the foreclosure reviews haven't brought the industry or borrowers any closure. Responsibility for this one is shared among regulators, banks, and consultants. Welcome to the job, Comptroller Curry!

(Image: Bloomberg News)
Credit Card Payment Protection Credit Card Payment Protection Along with paying a $210 million settlement, Capital One killed its payment protection program to satisfy the CFPB. (Trial attorneys had challenged the products for years with little effect.) The allegations were nominally about vendor and marketing misconduct, not payment protection plans themselves, but other banks have been backing away from the product.

(Image: Bloomberg News)
HSBC Money Laundering HSBC Money Laundering HSBC wasn't the only international bank to get slapped for trading with the United States' enemy, but the scale of the behavior, Congressional hearings, and a $1.9 billion fine in December made it the most notorious of the money laundering and transaction "stripping" cases.

(Image: Bloomberg News)
Liborgate Liborgate This one's going to carry into 2013 and beyond. It's already turned into a billion dollar issue for UBS, cost Barclays CEO Bob Diamond his job, and tarnished the banks and their regulators. Who's next?

(Image: Bloomberg News)
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2012 brought plenty of news that bankers — and sometimes their regulators — would be happy to forget. Here's a rundown of a year in tarnished reputations and fines.

Comments (1)
Wonderful pictorial and photographic image of 2012. But could be grasped only by those who followed 2012 right through.
Posted by Yerramraju B | Thursday, December 20 2012 at 11:55PM ET
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