Financial Scandals Go On. And On

Nearly every week comes more evidence that the culture of the financial sector hasn't changed much since the crisis of 2008. Greed remains the norm, along with lax ethics.

Consider what's happened in the past year: MF Global collapsed amid a reckless drive to boost profits, but not before it managed to steal hundreds of millions of dollars of customer money that, by law, was supposed to be untouchable. JP Morgan Chase engaged in massively risky bets on derivatives and ended up losing as much as $9 billion. And, in what could be the mother of all scandals, Barclays and probably other banks manipulated LIBOR, affecting interest rates on trillions of dollars in lending.

And those are just the headlines. I was not exaggerating when I said that nearly week brings news of some kind of financial fraud or scandal.

Last week -- barely noticed, for some reason -- came a report that J.P. Morgan Chase (yes, them again) had been pushing its clients into poorly performing funds that the bank has a financial interest in. Ex-brokers, including Geoffrey Tomes, said that they knew that the funds were not the best choice for their clients, but were pressured and incentivized to promote those funds. "It was all about the money, not the client," said another ex-broker, Warren Rockmacher.

If that comment sounds familiar -- that banks increasingly view their customers as prey -- it's because Greg Smith made the same point about Goldman Sachs in his instantly famous Times op-ed piece published in March.

Today, meanwhile, brings yet another alarming story of fraud. The Iowa-based futures brokerage Peregrine Financial Group, or PFG, is under investigation by the CFTC for possibley misusing or stealing customer money. According to the Associated Press:

The CFTC said Peregrine falsely reported to the agency that it held more than $220 million in customer funds when it actually had only $5.1 million.

The firm's founder and chairman, Russell Wasendorf Sr., tried to kill himself on Monday, so it won't be surprising if this situation is as bad as it looks. Once again, this story is familiar because we just saw a larger version of it with MF Global.

It's hard to watch these scandals, as I have been doing for a decade, and not think of the movie Groundhog Dog. The same things keep happening again and again. Unfortunately, what also keeps happening again and again is that conservatives in Congress keep repeating anti-regulatory arguments, even as more frauds pile up.

And they keep trying to cut the budgets of the agencies charged with preventing these frauds. Among their targets is the CFTC, the agency that was supposed to keep customer safe at MF Global and at PFG. You would think that the agency's repeat failures is a hint that it needs more muscle.