Santa Cruz County Decides To Do Away With Big Banks

The Board of Supervisors in Santa Cruz County, California, have taken a bold step.  The County has decided that they will not do business, including investment services or bond issuances, with five major banks that the Justice Department found to be associated with felonious acts in May of this year.
 

“I’m counting my money.” “The Global Financial Context James Dimon” by World Economic Forum – Flickr: The Global Financial Context: James Dimon. Licensed under CC BY-SA 2.0 via Wikimedia Commons –

Ryan Coonerty, Supervisor of the Third District of the County,proposed to Mary Jo Walker, (Auditor-Controller-Treasurer) and the rest of the Board of Supervisors that they immediately, and for the term of at least 5 years, cease relations in business with Citigroup, J.P. Morgan & Chase, Barclays, The Royal Bank of Scotland, and U.B.S.

 

Coonerty wrote:

“[These banks] have agreed to plead guilty to felony charges of conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange spot market… The behavior of these banks is offensive and signals a Wall Street culture in which several big banks broke the law even after years of strong criticism and increased regulation following the economic crisis.”

The probe of the five banks mentioned above also included Bank Of America. The banks agreed to pay a total amount of $5.8 Billion earlier this year in settlement of the LIBOR scandal.  Citigroup was fined the largest amount of $925 million by the DOJ, and $325 million by the Fed. JP Morgan & Chase was fined a total of $892 million.  The DOJ cites these banks for their employee’s having violated theSherman Antitrust Act, which expressly forbids coercive monopolizing any part of trade or commerce within several states or foreign nations.

 

Coonerty’s letter rounded off:

“There seems to be no limit to the greed in some our nation’s largest banks. I believe it is critical that the County only work with the most trustworthy institutions as we invest and protect the public’s tax dollars. Santa Cruz County should not be involved with those who rigged the world’s biggest financial markets.

It is important that we send a message that if you want to do business with the County, you need to play by the rules. Therefore I recommend that the Board direct that the County’s investment policy be modified to reflect that the County of Santa Cruz will not do new business with these felonious financial institutions for a period of five years and further that the County unwind existing relationships with these five banks to the greatest extent feasible.”

 

The words are sharp, and the idea behind it is razor edged. If every county in just CA followed suit with Coonerty’s idea, that could mean significant losses in revenue for these corporations. The $650 million municipal portfolio reported to be in these banks for Santa Cruz County is just chump change for banks like JP Morgan & Chase.

I for one will be contacting the Board and Treasurer in my own County to recommend that this action be taken local to me, and hope you will as well.