Major Banks Agree To Pay More Than $5 Billion Over Currency Fixing

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Five major banks, including Citigroup and JPMorgan Chase, have agreed to plead guilty and pay fines to charges that they manipulated the foreign currency market.

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Transcript

MELISSA BLOCK, HOST:

Five of the world's largest and most powerful banks pleaded guilty today to charges they manipulated the currency markets. The banks will pay fines totaling more than $5 billion. Regulators from the United States and Britain say traders at the banks concocted a scheme to affect the exchange rate between the dollar and the euro. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: The scheme involved traders from JPMorgan Chase, Citigroup, RBS, Barclays and UBS. U.S. Attorney General Loretta Lynch says that over a five-year period, these traders found a way to manipulate currency rates. She says they did this to protect each other's trading positions despite the fact that they were ostensibly competitors.

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ATTORNEY GENERAL LORETTA LYNCH: Their actions inflated the bank's profits while harming countless consumers, investors and institutions around the globe.

ZARROLI: U.S. officials say the traders acted by secretly withholding bids and offers at particular times of day when currency rates are set. Because the banks are so huge and typically held such large trading positions, these maneuvers could have a tangible effect on exchange rates. Andrew McCabe directs the FBI's Washington Field Office.

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ANDREW MCCABE: The criminality occurred on a massive scale as individual traders at the bank communicated in code in exclusive chat rooms to set price fixing on a daily basis.

ZARROLI: The banks agreed to plead guilty to criminal charges, which is highly unusual. But regulators agreed not to place any restrictions on their banking activities. They will pay fines of more than $5 billion. But Jimmy Gurule, a former Treasury Department official who now teaches at Notre Dame Law School, says that doesn't amount to much.

JIMMY GURULE: To the average American, it is a lot of money. But when you're dealing in the kinds of numbers and profits that these banks are generating every year, it's not really that significant.

ZARROLI: Although U.S. officials say the investigation is continuing, Gurule notes that none of the traders involved face charges so far.

GURULE: They knew what they were doing was wrong. They knew what they were doing was criminal, and no individual is being held accountable for that criminal wrongdoing.

ZARROLI: The Justice Department also decided to tear up the non-prosecution agreement it had with UBS. In 2012, the U.S. agreed not to prosecute the Swiss bank in connection with its efforts to manipulate the London Interbank Offered Rate, or LIBOR, which is used to set interest rates around the world. In exchange, UBS agreed to a series of banking reforms. These non-prosecution agreements are widely used by regulators to allow defendants to avoid criminal charges, which can easily drive a company out of business. But Attorney General Lynch said UBS's participation in the currency scheme suggests the bank didn't live up to its side of the bargain.

LYNCH: UBS promised in other resolutions not to commit additional crimes, but it did.

ZARROLI: Now UBS and the other banks face criminal charges. That's pretty unprecedented for a big bank, even if the impact on their bottom line is less than severe. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.