County Treasurer Fred Keeley is taking a harder line with JPMorgan Chase and Bank of America starting right about now. “They rigged the marketplace,” says Keeley. “Apparently with big banks, there’s nothing they won’t do. I’m not going to do business with them anymore.”
Santa Cruz County Treasurer Fred Keeley is taking a harder line with both JPMorgan Chase and Bank of America starting right about now. “They rigged the marketplace,” says Keeley. “Apparently with big banks, there’s nothing they won’t do. I’m not going to do business with them anymore.”
Keeley eliminated both Bank of America and JPMorgan from the county’s approved list of investment broker-dealers yesterday. The decision came in response to findings from the Security and Exchange Commission and the Department of Justice that both banks were involved in bid-rigging schemes that hurt several city and state governments. According to two recent lawsuits, both of which have been settled, the banks kept interest rates on municipalities’ investments artificially low. “Some of those that are too big to fail are apparently also too big to be ethical, and I think that’s bad public policy,” says Keeley.
So, here’s how these broker deals are supposed to work: when a city or town wants to finance a bond project, it will invest the money from bond offerings in a special account to earn interest. The banks compete by submitting the best yield they can offer to city officials. But both Bank of America and JPMorgan eliminated competition to keep yields low and profits high, the lawsuits alleged, through a series of complex financial misdealings.
The developments, Keeley says, came on the heels of years of the big banking industry’s high fees, damaging lending practices and banks betting against their own investment products over the past three years.
But many these financial problems are nothing new. The latest action from the from the county treasurer almost looks like a nod to the Occupy Santa Cruz protesters chilling just outside the county government building—although Keeley says the sleeping bag hootenanny didn’t factor into his decision at all.
Regardless, financial distrust is certainly on a lot of people’s minds. “Everyone is re-evaluating their money, and where it’s going, or what what kind of horrible things you’re putting it into,” says Andy Moskowitz, who has been very involved in the Occupy movement in Santa Cruz. He expects the treasurer’s decision will be very popular in the crowd.
“I’m certain that the Occupy movement has raised awareness on the harms of consolidated banking both nationally and in Santa Cruz,” Moskowitz added via text message.
Keeley acknowledges his new neighbors’ presence on the courthouse steps. But says it didn’t factor into him into his new perspective on the two banks’ bad decisions. “I’d be making this same decision whether or not there was an occupy movement,” he says. “But I understand why there’s a movement when I see this happening.”
