The embarrassing financial crisis is practically ancient history, but the country's banking titans are still finding ways to infuriate ordinary people
Once known as the Masters of the Universe, Wall Street's high-powered financiers were laid low by the financial crisis of 2008 and slammed for reckless risk-taking that pushed the economy into a wearying recession. Since then, the banking industry hasn't done much to convince ordinary Americans that it's repentant, even if its profits are at a five-year high. It seems as if a new controversy flares up every few weeks to remind everyone that Wall Street isn't exactly made of the toughest moral fiber. Here, 5 ways banks have shamed themselves over the past year:
1. Rigging the game
Morgan Stanley has been pilloried for botching Facebook's IPO last week, setting a sky-high price that plunged almost immediately. Worse still, shareholders are accusing the investment bank of withholding an internal report that suggested Facebook was overpriced. The kicker? Shareholders claim that Morgan Stanley shared the information with a handful of its biggest clients, cementing perceptions that Wall Street insiders stack the odds in their own favor.
2. Making risky gambles
JP Morgan Chase weathered the 2008 crisis fairly well and was one of the only mega-banks to emerge with an enhanced reputation. But its glow vanished in early May, when CEO Jamie Dimon announced that the bank had suffered a massive $2 billion loss on a risky, complex bet that bore some depressing similarities to the Weapons of Financial Mass Destruction that nearly killed the system four years ago. Infuriating irony: Dimon has been Wall Street's lead attack dog in the fight against government regulation of the industry.
3. Demanding enormous salaries
Banking behemoth Citigroup has been one of the slowest to recover from the crisis. The company needed a $45 billion bailout from the government, and its shares fell by 44 percent in 2011. That didn't stop the bank's board from suggesting a pay package of nearly $15 million for CEO Vikram Pandit this April. Citibank's shareholders rejected the deal in a stinging rebuke.
4. Ripping off clients
Goldman Sachs has probably taken the biggest public relations hit of any bank on Wall Street, going from the industry's golden boy to a "vampire squid wrapped around the face of humanity," in the now famous words of Matt Taibbi at Rolling Stone. Goldman Sachs' reputation was dealt another blow in March, when Greg Smith, a bank executive, publicly announced his resignation in an explosive New York Times op-ed. Assailing the company's "toxic and destructive" culture, Smith described a bank that routinely ripped off its own clients, whom staffers deride as "muppets," in an ethics-free pursuit of profit.
5. Squeezing customers
Bank of America triggered a huge public backlash last September when it announced plans to charge customers $5 a month for using their debit cards. The chintzy move enraged customers and lawmakers, and even President Obama chastised the bank for exploiting its customers. Bank of America dropped the idea several weeks later.
Other stories from this topic:
- Opinion Brief: JPMorgan's billion-dollar loss: Time to break up the big banks?
- Controversy: Did JPMorgan CEO Jamie Dimon break the law?
- Burning Question: JPMorgan's $2 billion loss: Time to fire CEO Jamie Dimon?