What a great article from Richard Magrann-Wells to explain what has become increasingly insulting to the intelligence of most Americans. Namely, that the handful of financial institutions that brought the U.S. economy to the brink of collapse and were saved by the government, at taxpayers' expense, with no adverse consequences could continue to violate banking regulations with virtual impunity.

While the 1999 memorandum Magrann-Wells cites explains why the Department of Justice refrains from prosecuting large financial institutions for their blatant regulatory violations, it does not explain why the process appears to stop there.

For example, it would not be difficult to identify all the HSBC employees who facilitated and supervised both the money laundering for South American drug cartels and the financial transactions for terrorist organizations. Yet, beyond fining the banks, the DOJ has not prosecuted any individuals.

At the banks that used fraudulent, "robo-signed" documents to pursue delinquent mortgage borrowers and credit card holders in court, former employees have identified those who managed the creation of these fictitious documents. The banks have paid fines and entered into a national settlement, yet the DOJ has not prosecuted any individuals.

In the manipulation of prices in the California and Midwestern electric power markets, virtually all the preliminary documents and media comments identified specific bank employees who conducted and supervised the activities and/or impeded the investigations. Yet in the final action, the DOJ did not prosecute any individuals.

Just this week, JPMorgan Chase and Assurant settled a class-action lawsuit for $300 million over their practice of forcing homeowners to purchase overpriced property insurance for which the bank received kickbacks from the insurance company. Neither the bank nor the insurance company was required to admit wrongdoing. And the DOJ is not prosecuting any individuals.

I can appreciate the DOJ's 1999 memorandum. I can understand that there is little benefit to the U.S. economy in driving one of the "too big to behave" banks out of existence. But the continuing stream of regulatory violations would appear to indicate that assessing monetary damages against megabanks does little or nothing to stop misbehavior.

And I believe that is because "banks" do not violate the law. Bankers do.

Bankers set up the process to launder the money for the drug cartels, including the design of boxes specially-constructed to fit through openings on teller counters. Bankers advised representatives of terrorist organizations on how to conduct their finances to avoid detection by authorities. Bankers designed the schemes and executed the trades that artificially inflated rates for electricity in California and the Midwest.  Bankers managed the creation of "robo-signed" documents and incorporated them into court filings.  And bankers directed delinquent homeowners to purchase specific insurance products from a specific company.

No matter how repulsive the thought, I can understand that there may be an economic rationale for the DOJ to issue "get-out-of-jail-free" cards to the monolithic financial conglomerates that both precipitated and benefited from the financial crisis. They violate regulations, pay token fines and continue to employ millions of Americans.  

What I cannot understand is why these institutions have an infinite supply of these cards and are allowed to distribute them to their employees who are violating U.S. laws. Employees who would be prosecuted to the fullest extent of the law, if they worked at smaller institutions.

Jim Wells is president of Wellspring Consulting International which designs financial products and services for non-traditional consumers who do not use traditional financial institutions.