Law Commons^™

Commentary: Why We Need To Stop Fining Big Banks Like Wells Fargo, Mehrsa Baradaran

Popular Media

When big banks behave badly, they know that the worst thing they’ll get is a fine; no one is going to end up in jail. Instead, shareholders end up paying the cost, not the bank employees responsible. Shareholders are a diffuse group of investors, many of whom hold shares as a part of a diverse portfolio. They are not the ones who commit such fraud, nor do they have much power to change the bank’s day-to-day operations.

Clearly fines don’t work to prevent misconduct. We should instead rely on the constitutional method of dealing with wrongdoing: the criminal justice system.

How The Poor Got Cut Out Of Banking, Mehrsa Baradaran

Scholarly Works

The United States currently has two banking systems — one for the rich, one for the poor. It wasn’t always this way. Throughout U.S. history, the government has enlisted certain banking institutions to serve the needs of the poor and offer low cost credit to enable low-income Americans to escape poverty. Credit unions, savings and loans and Morris Banks are three prominent examples of government-supported institutions with a specific focus of helping the poor. Unfortunately, these institutions are no longer fulfilling their missions and high-cost, usurious, and sometimes predatory check-cashers and payday lenders have quickly filled the void. These fringe …

The Ilc And The Reconstruction Of U.S. Banking, Mehrsa Baradaran

Scholarly Works

Since the Great Depression, bank regulators in the United States have endeavored to separate banking institutions from commercial firms, believing such separation was necessary for stability and growth. The recent collapse of our financial system indicates that this premise may be false, as Industrial Loan Companies ("ILCs") – the only institutions where commercial firms are permitted to own banks – remain sound. ILCs have persisted throughout U.S. banking history through exceptions and omissions in banking legislation, but the strength and resilience they have exhibited in the current financial collapse are worth investigating and even emulating. This article examines recent controversy …