Every week seems to bring news of another big bank paying a huge penalty for some misdeed or another. Some are calling it the "new normal." Maybe it is, but any shock at the amounts paid to settle the cases seems to bother everyone but shareholders.
A little research does indeed show that all of the record-high bank penalties have been levied in the last decade, with most of them since the financial crisis started in 2008. Before that, there were some catastrophic bank failures (think of Barings Bank in 1995 and the closures in the Great Depression), but penalties on the scale of today apparently were rarely, if ever, levied.
If 2012 looked like the worst year for bank fines, 2013 started off with the promise that there is always room for bigger. Less than a week in to the year, 10 institutions, with Bank of America leading the way, agreed to pay billions to settle charges stemming from mortgage misdeeds.
Twenty billion is a staggering sum; still, we're not sure anyone would bet that that sum will remain at the top of the list for long.
For the record, here's AdvisorOne's look at the Top 7 Biggest Bank Fines, from smallest to largest.
——–
(Check out which of these banks, oddly, were also ranked in Top 10 Biggest U.S. Banks With Best Reputations.)
7. Credit Suisse First Boston—2002
Penalty: $100 million
Misdeed: Charging, according to the SEC, extraordinarily high fees to big customers in 1999 and 2000.
Fallout: Little beyond the penalty, which was split evenly between the SEC and NASD. The New York Times quoted Jay Ritter, a finance professor at the University of Florida, as saying about the enforcement action: "I would categorize it largely as a slap on the wrist."
6. Citigroup—2003
Penalty: $400 million
Misdeed: Analysts created reports that minimized the risks in investing in certain telecom companies. This led investors to be overconfident in investing in such companies.
Fallout: Citigroup agreed to a $150 million fine, returned $150 million of ill-gotten gains, and paid $100 million to provide clients with independent research and investor education.
5. JPMorgan Chase and Credit Suisse—2012
Penalty: $417 million
Misdeed: Packaging and selling troubled mortgages to investors. As is often the case, the banks neither admitted nor denied guilt.
4. Goldman Sachs—2010
3. Bank of America, Fleet Boston—2004
2. UBS—2012 
1. Bank of America and nine other lenders—2013 
