Officials in Santa Cruz county, California, have cut all ties with Bank of America and JP Morgan Chase after an examination of both organizations' histories of cash settlements over fraud allegations.
Santa Cruz Treasurer-Tax Collector Fred Keeley said Thursday evening that the banks, which were handling some of the county's bond investments, had engaged in unacceptable practices that should alarm any official charged with handling public dollars.
"There seems to be no limit to the greed of some of our nation's largest banks," Keeley said, according to The San Jose Mercury News. "Whether it has been unjustifiable fees, collateralized debt obligations, betting against their own investment products through the purchase of credit default swaps, or now bid rigging. Local, state and federal governments should not be involved with those who have abused the trust of their customers, especially in the case of public agency investments."
JP Morgan Chase, along with Bank of America and Swiss bank UBS, paid lofty settlements earlier this year for a bid-rigging scheme that shortchanged cities, counties and school districts that issued municipal bonds.
U.S. investigators said the three organizations conspired to manipulate the bidding process for the right to handle the proceeds of billions of dollars in municipal bond auctions between 2001 and 2006.
The settlement for JP Morgan Chase came to $228 million, while Bank of America paid just $137 million. UBS, similarly, settled for $160 million. Each bank avoided the most serious criminal charges, admitting to the lesser charge of anti-competitive practices.
The U.S. Securities and Exchange Commission said the scheme, which defrauded public institutions of millions in fees, took place in at least 31 states.
Photo: Flickr user Fibonacci Blue.