Your Banks' Crimes Crashed the Economy

The financial sector's corruption must be recognized as systemic.

 

THE OATH

 

Harvard Business School graduates its 100th class of MBAs.

The student-led MBA Oath, pledging to "not advance my personal interests at the expense of my enterprise or society" and to "remain accountable to my peers and to society for my actions and for upholding these standards." According to student leaders, approximately 300 members of the HBS Class of 2010 have signed the Oath, joining over 3,000 MBA graduates at 15 schools in the U.S. and around the globe. (For the complete oath and further background, see www.mbaoath.org).

HOW BANKS DEFRAUD TAX PAYERS

SEC's Hawke, head of market abuse unit, to depart agency http://www.reuters.com/article/idUSKCN0Q32FA20150729  Daniel Hawke, a 16-year veteran at the Securities and Exchange Commission who helped lead major high-profile enforcement cases against stock exchanges and brokerages, is planning to leave the agency. Hawke, who heads the SEC enforcement division's market abuse unit, is a well-known figure among defense attorneys and on Wall Street, where for the last few years he has presided over a crackdown on violations of equity market structure rules and pursued new methods for detecting insider trading. Will go to Arnold & Porter law firm.

HOW BILLIONAIRE BANKSTERS GET MUCH BETTER DEALS THAN ORDINARY AMERICANS

ROLLING STONE

FREE MONEY. Ordinary people have to borrow their money at market rates. Lloyd Blankfein and Jamie Dimon get billions of dollars for free, from the Federal Reserve. They borrow at zero and lend the same money back to the government at two or three percent, a valuable public service otherwise known as "standing in the middle and taking a gigantic cut when the government decides to lend money to itself."
Or the banks borrow billions at zero and lend mortgages to us at four percent, or credit cards at twenty or twenty-five percent. This is essentially an official government license to be rich, handed out at the expense of prudent ordinary citizens, who now no longer receive much interest on their CDs or other saved income. It is virtually impossible to not make money in banking when you have unlimited access to free money, especially when the government keeps buying its own cash back from you at market rates.
Your average chimpanzee couldn't fuck up that business plan, which makes it all the more incredible that most of the too-big-to-fail banks are nonetheless still functionally insolvent, and dependent upon bailouts and phony accounting to stay above water. Where do the protesters go to sign up for their interest-free billion-dollar loans?

CREDIT AMNESTY. If you or I miss a $7 payment on a Gap card or, heaven forbid, a mortgage payment, you can forget about the great computer in the sky ever overlooking your mistake. But serial financial fuckups like Citigroup and Bank of America overextended themselves by the hundreds of billions and pumped trillions of dollars of deadly leverage into the system -- and got rewarded with things like the Temporary Liquidity Guarantee Program, an FDIC plan that allowed irresponsible banks to borrow against the government's credit rating.
This is equivalent to a trust fund teenager who trashes six consecutive off-campus apartments and gets rewarded by having Daddy co-sign his next lease. The banks needed programs like TLGP because without them, the market rightly would have started charging more to lend to these idiots. Apparently, though, we can't trust the free market when it comes to Bank of America, Goldman, Sachs, Citigroup, etc.
In a larger sense, the TBTF banks all have the implicit guarantee of the federal government, so investors know it's relatively safe to lend to them -- which means it's now cheaper for them to borrow money than it is for, say, a responsible regional bank that didn't jack its debt-to-equity levels above 35-1 before the crash and didn't dabble in toxic mortgages. In other words, the TBTF banks got better credit for being less responsible. Click on freecreditscore.com to see if you got the same deal.

 

Feds Replace Flawed Foreclosure Review With Vague $8.5 Billion Settlement 1/2013
Banking regulators admitted the Independent Foreclosure Review was a big expensive mess and shut it down. But many details about the $8.5 billion settlement that replaces it remain murky.
http://www.propublica.org/series/foreclosure-crisis

STUPIDITY INSURANCE. Defenders of the banks like to talk a lot about how we shouldn't feel sorry for people who've been foreclosed upon, because it's their own fault for borrowing more than they can pay back, buying more house than they can afford, etc. And critics of OWS have assailed protesters for complaining about things like foreclosure by claiming these folks want "something for nothing."
This is ironic because, as one of the Rolling Stone editors put it last week, "something for nothing is Wall Street's official policy." In fact, getting bailed out for bad investment decisions has been de rigeur on Wall Street not just since 2008, but for decades.
Time after time, when big banks screw up and make irresponsible bets that blow up in their faces, they've scored bailouts. It doesn't matter whether it was the Mexican currency bailout of 1994 (when the state bailed out speculators who gambled on the peso) or the IMF/World Bank bailout of Russia in 1998 (a bailout of speculators in the "emerging markets") or the Long-Term Capital Management Bailout of the same year (in which the rescue of investors in a harebrained hedge-fund trading scheme was deemed a matter of international urgency by the Federal Reserve), Wall Street has long grown accustomed to getting bailed out for its mistakes.
The 2008 crash, of course, birthed a whole generation of new bailout schemes. Banks placed billions in bets with AIG and should have lost their shirts when the firm went under -- AIG went under, after all, in large part because of all the huge mortgage bets the banks laid with the firm -- but instead got the state to pony up $180 billion or so to rescue the banks from their own bad decisions.
This sort of thing seems to happen every time the banks do something dumb with their money. Just recently, the French and Belgian authorities cooked up a massive bailout of the French bank Dexia, whose biggest trading partners included, surprise, surprise, Goldman, Sachs and Morgan Stanley.

Here's how the New York Times explained the bailout:

To limit damage from Dexia's collapse, the bailout fashioned by the French and Belgian governments may make these banks and other creditors whole - that is, paid in full for potentially tens of billions of euros they are owed. This would enable Dexia's creditors and trading partners to avoid losses they might otherwise suffer...

When was the last time the government stepped into help you "avoid losses you might otherwise suffer?" But that's the reality we live in. When Joe Homeowner bought too much house, essentially betting that home prices would go up, and losing his bet when they dropped, he was an irresponsible putz who shouldn't whine about being put on the street.
But when banks bet billions on a firm like AIG that was heavily invested in mortgages, they were making the same bet that Joe Homeowner made, leaving themselves hugely exposed to a sudden drop in home prices. But instead of being asked to "suck it in and cope" when that bet failed, the banks instead went straight to Washington for a bailout -- and got it.

UNGRADUATED TAXES. I've already gone off on this more than once, but it bears repeating. Bankers on Wall Street pay lower tax rates than most car mechanics. When Warren Buffet released his tax information, we learned that with taxable income of $39 million, he paid $6.9 million in taxes last year, a tax rate of about 17.4%.
Most of Buffet's income, it seems, was taxed as either "carried interest" (i.e. hedge-fund income) or long-term capital gains, both of which carry 15% tax rates, half of what many of the Zucotti park protesters will pay.
As for the banks, as companies, we've all heard the stories. Goldman, Sachs in 2008 this was the same year the bank reported $2.9 billion in profits, and paid out over $10 billion in compensation -- paid just $14 million in taxes, a 1% tax rate.
Bank of America last year paid not a single dollar in taxes -- in fact, it received a "tax credit" of $1 billion. There are a slew of troubled companies that will not be paying taxes for years, including Citigroup and CIT.
When GM bought the finance company AmeriCredit, it was able to marry its long-term losses to AmeriCredit's revenue stream, creating a tax windfall worth as much as $5 billion. So even though AmeriCredit is expected to post earnings of $8-$12 billion in the next decade or so, it likely won't pay any taxes during that time, because its revenue will be offset by GM's losses.
Thank God our government decided to pledge $50 billion of your tax dollars to a rescue of General Motors! You just paid for one of the world's biggest tax breaks. http://www.bloomberg.com/news/articles/2010-07-22/gm-agrees-to-buy-lender-americredit-for-3-5-billion
And last but not least, there is:

GET OUT OF JAIL FREE.

One thing we can still be proud of is that America hasn't yet managed to achieve the highest incarceration rate in history -- that honor still goes to the Soviets in the Stalin/Gulag era. But we do still have about 2.3 million people in jail in America.
Virtually all 2.3 million of those prisoners come from "the 99%." Here is the number of bankers who have gone to jail for crimes related to the financial crisis: 0.
Millions of people have been foreclosed upon in the last three years. In most all of those foreclosures, a regional law enforcement office -- typically a sheriff's office -- was awarded fees by the court as part of the foreclosure settlement, settlements which of course were often rubber-stamped by a judge despite mountains of perjurious robosigned evidence.
That means that every single time a bank kicked someone out of his home, a local police department got a cut. Local sheriff's offices also get cuts of almost all credit card judgments, and other bank settlements. If you're wondering how it is that so many regional police departments have the money for fancy new vehicles and SWAT teams and other accoutrements, this is one of your answers.
What this amounts to is the banks having, as allies, a massive armed police force who are always on call, ready to help them evict homeowners and safeguard the repossession of property. But just see what happens when you try to call the police to prevent an improper foreclosure. Then, suddenly, the police will not get involved. It will be a "civil matter" and they won't intervene.
The point being: if you miss a few home payments, you have a very high likelihood of colliding with a police officer in the near future. But if you defraud a pair of European banks out of a billion dollars  -- that's a billion, with a b -- you will never be arrested, never see a policeman, never see the inside of a jail cell.
Your settlement will be worked out not with armed police, but with regulators in suits who used to work for your company or one like it. And you'll have, defending you, a former head of that regulator's agency. In the end, a fine will be paid to the government, but it won't come out of your pocket personally; it will be paid by your company's shareholders. And there will be no admission of criminal wrongdoing.
The Abacus case, in which Goldman helped a hedge fund guy named John Paulson beat a pair of European banks for a billion dollars, tells you everything you need to know about the difference between our two criminal justice systems. The settlement was $550 million -- just over half of the damage.
Can anyone imagine a common thief being caught by police and sentenced to pay back half of what he took? Just one low-ranking individual in that case was charged (case pending), and no individual had to reach into his pocket to help cover the fine. The settlement Goldman paid to to the government was about 1/24th of what Goldman received from the government just in the AIG bailout. And that was the toughest "punishment" the government dished out to a bank in the wake of 2008.
The point being: we have a massive police force in America that outside of lower Manhattan prosecutes crime and imprisons citizens with record-setting, factory-level efficiency, eclipsing the incarceration rates of most of history's more notorious police states and communist countries.
But the bankers on Wall Street don't live in that heavily-policed country. There are maybe 1000 SEC agents policing that sector of the economy, plus a handful of FBI agents. There are nearly that many police officers stationed around the polite crowd at Zucotti park.
These inequities are what drive the OWS protests. People don't want handouts. It's not a class uprising and they don't want civil war -- they want just the opposite. They want everyone to live in the same country, and live by the same rules. It's amazing that some people think that that's asking a lot.

SECRETS

 

 

Wall Street Banks Earned Billions in Profits off $7.7 Trillion in Secret Fed Loans Made During the financial Crisis.
http://www.nationofchange.org/wall-street-banks-earned-billions-profits-77-trillion-secret-fed-loans-made-during-financial-crisis-
"The nation’s largest banks have turned more in profit in the last 30 months than they did in nearly eight years preceding the crisis, all while spending millions to derail significant reform legislation." In the lead-up to the financial crisis that crippled the American economy and plunged the country into a recession, the Federal Reserve made trillions in undisclosed loans to struggling banks and financial institutions, according to official documents obtained by Bloomberg News. Six of the country’s largest banks then turned those loans into more than $13 billion in previously undisclosed profits. The total cost of the Fed loans amounted to $7.77 trillion, and unlike the funds made available by the Troubled Asset Relief Program (TARP), the loans came with virtually no strings attached for the banks.

5/20/14 How Credit Suisse got a stiffer penalty than UBS
U.S. prosecutors said Credit Suisse helped clients deceive U.S. tax authorities by concealing assets in illegal, undeclared bank accounts, in a conspiracy that spanned decades, and in one case began more than a century ago. U.S. prosecutors first raised the specter of a criminal plea by Credit Suisse Group AG more than two years after starting an investigation into whether the Swiss bank had helped wealthy Americans evade taxes.  Credit Suisse on Monday became the largest bank in two decades to plead guilty to a U.S. crime and agreed to pay $2.6 billion in fines to prosecutors and regulators, a much more severe penalty than was dealt to rival UBS AG in 2009. While U.S. prosecutors insisted on getting at names of alleged U.S. tax cheats, the Swiss government steadfastly maintained it would not invoke emergency law in order to allow Credit Suisse to deliver data on any of its clients.  In Switzerland, breaking banking secrecy laws can mean fines and up to three years on jail, though the Swiss government has said it will loosen those laws and adopt data sharing agreements with its neighbors if it becomes a global standard.  Swiss authorities have aggressively pursued breaches of secrecy in the past, closing off that avenue to Credit Suisse. According to several sources, the bank - much like its Zurich rival UBS - refused to entertain the idea of its management risking jail by meeting U.S. demands for client data. Credit Suisse, which has a large business managing rich clients' money, helped them withdraw funds from their undeclared accounts by either providing hand-delivered cash to the United States or using Credit Suisse's correspondent bank accounts in the United States, the Justice Department said. Prosecutors said Credit Suisse had around 22,000 U.S. client accounts worth around $10 billion, which included both declared and undeclared accounts.  The bank was forced to plead guilty not only because of its complicity in tax evasion, but also because of its poor co-operation in the investigation, prosecutors said. It did not begin an internal probe until early 2011, and did not preserve some evidence of the wrongdoing, documents showed.  Still, the bank escaped a much worse fate. Lawsky, a former federal prosecutor who has extracted large penalties from other banks such as Standard Chartered Plc, by threatening to revoke its license to operate in New York, was looking into whether Credit Suisse had lied to New York authorities about creating tax shelters.  Sources said Lawsky's office was playing hardball in negotiations, knowing it held the ultimate leverage - the power to pull the bank's state license.

Everything
is Rigged

 

COLLUSION AMONG BANKSTERS

It's a big club and you ain't in it.

LIBOR  What is it and Why does it matter?

2/24/15 Banks face scrutiny over pricing of precious metals: WSJ
The U.S. Department of Justice (DoJ) and the Commodity Futures Trading Commission are investigating at least 10 major banks for possible rigging of precious-metals markets, the Wall Street Journal reported, citing people close to the inquiries. DoJ prosecutors are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the CFTC has opened a civil investigation, the newspaper said.  The banks are HSBC Holdings Plc, Bank of Nova Scotia, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, JPMorgan Chase & Co, Societe Generale, Standard Bank Group Ltd and UBS Group AG, the Journal said. The CFTC issued a subpoena to HSBC Bank USA in January seeking documents related to the bank's precious metals trading operations, HSBC said on Monday.  The DoJ also issued a request to HSBC Holdings in November seeking documents related to a criminal antitrust investigation it is conducting in relation to precious metals, HSBC said. Precious metal benchmarks have come under increased regulatory scrutiny since a scandal broke in 2012 over manipulation of Libor interest rates.  

HSBC was one of several banks named in lawsuits filed in U.S. courts last year alleging a conspiracy to manipulate gold, silver, platinum and palladium prices, as well as precious metals derivatives, during the daily precious metals fixes.

 The century-old gold fix is a standard price for the metal that banks set twice a day over the phone. Some gold traders claim they were harmed by a scheme to manipulate the fix.  The banks operating the precious metals benchmarks, known as the fixes, said last year they would no longer administer that process.  An electronic daily silver price benchmark is now administered by Thomson Reuters and CME Group, while the London Metal Exchange provides twice-daily benchmark platinum and palladium prices.  ICE Benchmark Administration will run an electronic gold price benchmark from March 20 to replace the London gold fix.  Switzerland's financial watchdog said in November it had found a "clear attempt" to manipulate precious metals price benchmarks.  An investigation by German regulator Bafin found no signs of attempted benchmark price manipulation in precious metals, newspaper Handelsblatt reported last month.

Gangster Bankers Broke Every Law in the Book

Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix.
Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.
You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."
That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.
Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.
It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

JPMorgan is investigated, by at least eight federal agencies but this isn't bank reform. Mr. Jamie Dimon is the most influential banker in the U.S. FERC Federal Energy Regulatory Commission, Treasury Department’s inspector general and the comptroller’s office.

MORTGAGE FRAUD

 

PDF AUDIT OF THE DEPARTMENT OF JUSTICE’S EFFORTS TO ADDRESS MORTGAGE FRAUD
U.S. Department of Justice Office of the Inspector General Audit Division Audit Report 14-12 March 2014

12/26/14 New York's Top Cop Scores as Credit Suisse Faces $10 Billion Mortgage Fraud Suit
Credit Suisse Group AG (CSGN) was ordered to face a $10 billion lawsuit by New York’s attorney general accusing the Swiss bank of fraud in the sales of mortgage-backed securities before the 2008 financial crisis. New York sued Credit Suisse in November 2012, claiming Switzerland’s second-largest bank misrepresented the risks of investing in mortgage-backed securities. Last year, the bank argued that New York missed a three-year deadline for suing. The state countered that it had six years to file its complaint. Armed with the Martin Act, New York’s powerful anti-fraud statute, Schneiderman has pursued banks while introducing programs to relieve struggling homeowners and stem a rise in foreclosures. He claimed Credit Suisse knew about “pervasive flaws” in the screening of residential loans underlying mortgage securities it sold, but assured investors they were safe because it wanted to expand its business. Under the Martin Act, “false promises” by sellers of securities are against the law. Earlier Settlements JPMorgan Chase & Co. (JPM), also sued by Schneiderman’s office, agreed to settle that case along with federal claims over mortgage-backed securities in a landmark $13 billion accord last year. The state got $613 million in the settlement, the first in a string of payouts it has received in legal agreements over the financial instruments. In July, Citigroup Inc. (C) agreed to pay $7 billion in fines and consumer relief to resolve claims by the federal government and states including New York. The following month, Bank of America Corp. agreed to pay about $17 billion, including almost $10 billion in cash, to resolve civil investigations by federal and state prosecutors, including Schneiderman. Warning Signs In New York’s suit against Credit Suisse, Schneiderman claimed the bank ignored warning signs about the quality of loans it was packaging and selling. One example cited was its use of New Century Financial Corp. mortgages after that firm’s 2007 bankruptcy.
The case is People of the State of New York v. Credit Suisse Securities (USA) LLC, 451802-2012, New York State Supreme Court, New York County (Manhattan).

6/20/14  Euribor is a cousin to Libor, which is used to set trillions of dollars of financial contracts from complex financial transactions to car loans.  In December, the Commission imposed fines totalling 1.04bn on Barclays, Deutsche Bank, RBS and Societe Generale as part of the same investigation.  Barclays escaped a fine as it had notified the Commission of the existence of the cartel, and the others were granted a 10% reduction in their fine for agreeing to a settlement.​ The Commission's investigation has centred around concerns that the banks may have manipulated the pricing of interest rate derivatives - financial products which are used by banks to manage risks associated with interest rate fluctuations.  The products derive their value from "Euribor", a benchmark interest rate which is the eurozone equivalent of Libor.  In March 2013, the Commission opened proceedings regarding Credit Agricole, HSBC and JPMorgan, and the investigation as whether they were part of a Euribor rate-rigging cartel is continuing.​

6/30/14 BNP Paribas' $8.8bn fine shows it's time to break up the banks 
Large financial institutions seem to routinely violate US securities laws, with such reliable frequency that plenty of observers have questioned whether these institutions can ever be properly managed. Headlines about these crimes chronically dip out, like a leaky faucet that never gets fixed: about rigged commodities, energy and currency markets, manipulated interest rates, illegal money laundering, abuse of homeowners. The business pages read like a police blotter. Even former Treasury secretary Timothy Geithner acknowledged in a recent interview that the run-up to the crisis featured “an appalling amount of fraud and abuse”, and since 2008 the crime wave has apparently run unabated.
Today, banks finance their operations mostly through debt – by borrowing money every day – with a small amount of capital in reserve to absorb any losses. The plan, which has its roots in the post-Depression “Chicago Plan” of the 1930s, is simple. Under Cochrane’s proposal, everything a bank does would get backed 100% with stock or cash. Other variants on this theme would separate two core functions of the banking system – taking customer deposits and financing loans. Deposit-taking banks would exist as public utilities, managing our savings and checkings accounts backed by government-issued assets. They wouldn't be allowed to effectively create money through their activities. Meanwhile, lending companies would risk their own money to finance mortgages, small business loans and the like. In the most optimistic telling, this course would eliminate the "too big to fail" problem, the persistence of boom-and-bust credit cycles, the need for deposit insurance and a whole raft of banking regulations.

6/30/14 US slaps nearly US$9b fine on BNP Paribas
FRENCH bank BNP Paribas is expected to pay a record US$9 billion fine and admit its guilt for years of dealing with US-blacklisted Sudan and Iran, in a case that has strained ties between Paris and Washington. US justice authorities could announce the hefty penalty as early as today, capping months of haggling which saw French President Francois Hollande pressing US counterpart Barack Obama to step in and lighten the punishment.
The record US fine of a foreign bank will also come with a guilty plea from BNP, according to a person close to the situation. France’s largest bank is accused of breaching US sanctions against Iran, Sudan and Cuba between 2002 and 2009 by handling US$30 billion worth of transactions with them. BNP has a strong enough capital base to handle the penalty, but the size of the fine and the temporary suspension of parts of its dollar-handling business in the United States — key to any major bank’s US operations — will mean a significant hit on its earnings. BNP chief executive Jean-Laurent Bonnafe reportedly wrote to employees conceding the bank will be “punished severely,” but stressing: “But this difficulty we are facing will not impact our roadmap.”
US authorities have already forced BNP to dismiss three senior officials allegedly linked to the sanctions violations, including its chief operating officer. Many more lower bank officials could also be kicked out as part of the settlement with the US Department of Justice. Sources say the settlement could also include a year-long suspension of the bank’s dollar clearing for oil and gas trading activities in Switzerland, Singapore and France, and suspension of dollar clearing on behalf of other banks and some clients. That would likely add significantly to the costs of the settlement, hitting the bank’s bottom line.
In 2013 BNP reported total profits of 4.83 billion euros (US$6.59 billion) on revenues of 38.8 billion euros. It has already set aside US$1.1 billion to cover losses from the case. The bank has been largely quiet about the allegations and potential penalties during months of negotiations during which Washington has been accused of taking an extremely heavy hand against foreign banks, and BNP especially, while treating the transgressions of US banks much more lightly.
In punishing US banks for violations related to the financial crisis, negotiated fines have run into the billions of dollars, but none has had to plead guilty, an act which potentially could lead to the loss of a banking license. Moreover, for similar sanctions-busting, in 2012 Dutch bank ING paid a relatively paltry US$619 million and Britain’s Standard Chartered US$670 million. HSBC, which was also accused of complicity in money laundering, paid US$1.9 billion.
None of them was forced to plead guilty or give up certain banking operations. But US authorities have become much tougher with banks that are allegedly less cooperative in investigations. In May, Credit Suisse pleaded guilty to helping Americans evade taxes and was fined US$2.6 billion, over three times the US$780 million fine the US imposed on fellow Swiss bank UBS for the same charges in 2009. <more>

LIBOR

 

In the Libor case, notably, a major crime has not been greeted by much demand at the top for criminal prosecutions. That asymmetry is one of the insurance policies of power. Another is to crack down on citizens' protest.

12/3/13 Banks braced for huge EU fines over Libor rate-rigging scandal
UK's RBS believed to be among at least six banks facing record fines for manipulating European and Asian interest rates
The 81% taxpayer-owned bank is reported to be among at least six major players in the financial markets, including Deutsche Bank in Germany and Citigroup in the US, caught up in the cartel investigation. The EU is said to be ready to impose record-breaking fines for alleged collusion for rigging key benchmark rates.  Brussels is thought to have focused on yen Libor, based on Japanese interest rates and priced out of London; Euribor, the Brussels equivalent to Libor; and the Tokyo rate known as Tibor. Almunia has been in discussions with banks for weeks and the resulting penalty is expected to surpass the record €1.5bn (£1.24bn) imposed on a cartel.  Each cartel could face combined fines of as much as €800m,. The fines are the latest to be levied on banks and financial firms for manipulating key benchmark rates. Five firms have already been fined by market regulators on both sides of Atlantic in an ongoing investigation into the manpulation of the rates, used to set interest rates on loans granted around the world. Barclays was fined £290m in June 2012 in a move that led to the resignation of its chairman, Sir Marcus Agius, chief executive, Bob Diamond, and other senior managers. Other banks who have since been fined by US or UK regulators RBS, UBS of Switzerland and the Dutch bank Rabobank. The money broker Icap has also been fined and the FCA's investigations are ongoing.

Former Barclays exec admits false LIBOR submission http://ow.ly/cidbV

RBS accused of pushing small businesses to the edge to boost profits
Dossier claims business assets were seized cheaply amid call to end turnaround arm's 'conflict of interests'

 

Bank data crucial in Libor probe to obtain the truth Mark Whitehouse and Paula Dwyer

THE global investigation into the manipulation of Libor has so far done a good job of exposing how bankers corrupted one of the world's most important financial indicators. Now authorities need to take a giant step further: Make banks release the data needed to determine how much damage was done and who should bear the most responsibility.
For those still not familiar with the London interbank offered rate, it's an array of benchmarks designed to provide an objective assessment of banks' borrowing costs ' information that is used to set the payments on hundreds of trillions of dollars in loans, securities and derivatives worldwide. The rates are calculated by asking banks, every workday morning in London, how much they would pay to borrow money in 10 currencies and at 15 time periods, from overnight to a year.
Investigators are focusing on two kinds of manipulation. In one, bankers submitted false data to push Libor in a direction that would benefit their own traders. In the other, bankers intentionally lowered the reported rates, which are published daily, to make their institutions' financial positions look better than they really were. In June, for example, Barclays Plc paid about US$450 million in fines after confessing that, during the 2008 financial crisis, it lowered its quotes below its true borrowing rates to keep them in line with those of other banks, which Barclays thought were fudging even more.
How long the lying went on, and how systematic it was, matters a lot. If, for example, underreporting caused Libor to be artificially depressed by 0.1 percentage point for only a few months, payments on more than US$300 trillion in mortgages, corporate bonds and derivatives tied to the benchmark might have fallen short by about US$75 billion or so. If the problem lasted a few years, the shortfall could be close to US$1 trillion.
Such manipulation would represent a big gift to payers of Libor, such as financially stretched US homeowners whose interest costs on floating-rate mortgages would have been lower. But for bond investors, municipalities, hedge funds and others on the receiving end of Libor, it would mean major losses. Many are already trying to recoup suspected underpayments through litigation.
How much Libor was off, then, could be a trillion-dollar question. So far, researchers have managed only partial estimates. A 2008 Wall Street Journal analysis suggested that 3-month and 6-month US dollar Libor "two of the most widely used rates" were understated by an average of about a quarter percentage point in the first four months of 2008. A separate study by economists at the New York Federal Reserve used 2007 to 2009 data on interbank loans made through the Fed's wire-transfer system. It found a smaller average discrepancy, but estimated that dollar Libor rates could have been understated by more than 0.2 percentage point in the two weeks after the bankruptcy of Lehman Brothers Holdings Inc in September 2008.
It's worth noting that the pressures on banks to understate their borrowing rates didn't end with the darkest days of the financial crisis. Concerns about their creditworthiness flared up with the European debt crisis in 2010 and 2011. In June, Moody's Investors Service downgraded a number of banks that report Libor rates on the grounds that their trading activities could threaten their solvency. Big financial institutions typically borrow US$10 or more for every dollar in equity provided by shareholders, so managing the market's perceptions of their borrowing costs is crucial to their profitability and at times to their survival.
To give a more complete picture of the misbehavior, and to establish what share of the compensation burden each Libor- reporting bank should bear, researchers need access to better data on actual borrowing costs. If they could get records of observable transactions, they could produce an independent estimate of how much the banks Libor quotes were off on any given day. Such an authoritative benchmark would have many benefits: Plaintiffs, for example, could use it to reach settlements with banks, avoiding legal wrangling that could weigh on the financial sector for years.
Good data, though, are hard to find. The Fed hasn't made information from its wire-transfer system public.

The Libor panel banks, for their part, closely guard information on the interest rates they pay on actual short-term loans. This is an odd habit, given that they are supposedly publishing their borrowing rates in great detail every day for the purpose of calculating Libor. If they're not lying, there should be no news in the transactions.

It's up to the authorities investigating Libor to break the information blockade. In the US, for example, the Office of Financial Research, set up by the Dodd-Frank financial reform act, has the subpoena power needed to get the data and the brain power required to crunch the numbers. Ideally, it would also make the data public, so independent academics and journalists could check its work. Shedding light on the extent of Libor manipulation is essential to restoring the market's integrity. The point of justice, after all, isn't only to punish the guilty. It's also to establish the truth, so we can draw the right conclusions, fix what needs fixing and move on.
shanghaidaily.com/article/?id=510521

global financial fraud and its gatekeepers

 

Groups From at Least Nine Institutions Allegedly Banded Together to Rig Key Global Interest Rates

Several groups of traders are under investigation by regulators around the world for allegedly banding together to rig interest rates, people close to the probe said. The continuing criminal and civil scrutiny includes more than a dozen traders from at least nine banks, often allegedly working together in small groups to target different interest rates on separate continents, the people said. The emerging details about traders suggest to investigators a widespread conspiracy that continued for several years and cascaded around the world. As a result, the banks where the traders worked are under growing pressure to explain what they knew.

Former Barclays exec admits false LIBOR submission by Robert Barr - Jul. 16, 2012 02:45 PM

Former Barclays Bank Chief Operating Officer Jerry del Missier leaves Portcullis House in London after giving evidences on interbank rates fixing, to the government Treasury Select Committee, Monday, July 16, 2012.
LONDON -- A former top Barclays executive admitted ordering staff to submit false interest rates during the credit crisis in 2008 because he believed his action had been sanctioned by the Bank of England. Barclays kept reporting false rates, seeking to boost its profit. The bank agreed to pay $450m to US and UK authorities for manipulating the Libor and other key benchmarks, upon which great swaths of the economy depended. This manipulation is alleged in numerous lawsuits to have defrauded thousands of bank clients.
"The entire financial system was hanging in the balance and in the grand scheme of everything that was going on, it didn't seem a significant event, given the number of significant events that were transpiring at that time." Del Missier said that the LIBOR rate at the time was "hugely, hugely subjective." Other witnesses have said that there was very little interbank borrowing going on, either because banks were well capitalized or had just been bailed out by the government.

"The Bank of England, as the institution that is responsible for the stability of the system and has the expertise and visibility across the entire market, I mean, their views are extremely relevant here," del Missier said. The false rates reported at this time were only part of the investigation. Investigators also found that individual traders at Barclays had persuaded colleagues to submit false rates in the hope of manipulating LIBOR to their advantage.

This global financial fraud and its gatekeepers.

We're seeing systemic corruption in banking – and systemic collusion. The entire global financial system is riddled with systemic fraud – and that key players in the gatekeeper roles, both in finance and in government, including regulatory bodies, know it and choose to quietly sustain this reality. Congressmen and women are legislating their own companies' profitsis less widely known – and if the books were to be opened, they would surely reveal corruption on a Wall Street spectrum. Indeed, we do already know that congresspeople are massively profiting from trading on non-public information they have on companies about which they are legislating – a form of insider trading that sent Martha Stewart to jail.
The New York Times business section on 12 July shows multiple exposes of systemic fraud throughout banks: banks colluding with other banks in manipulation of interest rates, regulators aware of systemic fraud, and key government officials (at least one banker who became the most key government official) aware of it and colluding as well. In the New York Times business section, that the HSBC banking group is being fined up to $1bn, for NOT preventing money-laundering (a highly profitable activity not to prevent) between 2004 and 2010. In another article that day, Republican Senator Charles Grassley says of the financial group Peregrine capital: "This is a company that is on top of things." The article goes onto explain that at Peregrine Financial, "regulators discovered about $215m in customer money was missing." Its founder now faces criminal charges. Later, the article mentions that this revelation comes a few months after MF Global "lost" more than $1bn in clients' money. Wells Fargo was profiting from overcharging minority clients and profiting from products based on the higher-than-average bad loan rate expected. The piece discreetly ends mentioning that a Bank of America lawsuit of $335m and a Sun Trust mortgage settlement of $21m for having engaged is similar kinds of discrimination. "Geithner Tried to Curb Bank's Rate Rigging in 2008".

The story reports that when Timothy Geithner, at the time he ran the Federal Reserve Bank of New York, learned of "problems" with how interest rates were fixed in London, the financial center at the heart of the Libor Barclays scandal.

Did Geithner, presumably frustrated that his warnings had gone unheeded, call a press conference? No. He stayed silent,

as a practice that now looks as if several major banks also perpetrated, continued. And then what happened? Tim Geithner became Treasury Secretary. At which point, he still did nothing. rewarded by promotion to ever higher positions, ever greater authority. If you learn that rate-rigging and regulatory failures are systemic, but stay quiet, well, perhaps you have shown that you are genuinely reliable and deserve membership of the club.

Former Barclays exec admits false LIBOR submission

Frontline: Money, Power & Wall Street
The inside story of the global financial crisis. Frontline documentary lays out in disgusting detail how the Obama administration deliberately gave a pass to blatantly criminal behavior on Wall Street.

Money, Power and Wall Street: Part Three on PBS.

 

The Bank of England, and the London banking houses ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York.

 

Federal Reserve directors, a study of corporate and banking influence : staff report for the Committee on Banking, Currency and Housing, House of Representatives, 94th Congress, second session, August 1976.

Federal-Reserve-1976-study

 

Market Savior? Stocks Might Be 50% Lower Without Fed
A report from the Federal Reserve Bank of New York suggests that the bulk of equity returns for more than a decade are due to actions by the US central bank.

Plunder: the Crime of Our Time

 

Economics and Greed:

Oddly, most economists see their subject as divorced from morality. Gary Becker pioneered the economic study of crime. Employing a basic utilitarian approach, he compared the benefits of a crime with the expected cost of punishment (that is, the cost of punishment times the probability of receiving that punishment). While very insightful, Becker's model, which had no intention of telling people how they should behave, had some unintended consequences. A former student of Becker's told me that he found many of his classmates to be remarkably amoral, a fact he took as a sign that they interpreted Becker's descriptive model of crime as prescriptive. They perceived any failure to commit a high-benefit crime with a low expected cost as a failure to act rationally, almost a proof of stupidity.
In other words, if teachers pretend to be agnostic, they subtly encourage amoral behavior without taking any responsibility. True, economists are not moral philosophers, and we have no particular competence to determine what is ethical and what is not. We are, though, able to identify behavior that makes people better off.
THE scandals at Barclays Plc, JPMorgan Chase & Co, Goldman Sachs Group Inc and other banks might give the impression that the financial sector has some serious morality problems. Unfortunately, it's worse than that: We are dealing with a drop in ethical standards throughout the business world, and our graduate schools are partly to blame.
Consider, for example, the revelations about two top executives at the elite consulting firm McKinsey & Co, which has avoided public vilification despite the transgressions of its former employees. McKinsey director Anil Kumar - a graduate of the University of Pennsylvania's Wharton School - pleaded guilty to providing insider information to hedge-fund manager and fellow Wharton alumnus Raj Rajaratnam. Rajat Gupta, a graduate of Harvard Business School who served for nine years as McKinsey's worldwide managing director, was convicted of insider trading in the same case. Although Gupta had long left McKinsey when the actions leading to his conviction took place, it would be shortsighted not to take the problem seriously.
Where did Gupta, Kumar and others get the idea that this kind of behavior might be OK?
Most business schools do offer ethics classes. Yet these classes are generally divided into two categories. Some simply illustrate ethical dilemmas without taking a position on how people are expected to act.

 

I work in Wall Street and work in hedge fund analysis.

I'm the only person in my office who supports OWS. (self.occupywallstreet)
The NYT reports former CEO Ken Lewis admits shareholders got bad information By Ryan Chittum
How Bank of America fooled shareholders into approving its ill-fated merger with Merrill Lynch.
Former CEO Ken Lewis, the business genius who drove his bank into quasi-nationalization with two of the worst acquisitions of all time in Countrywide and Merrill Lynch, has testified in a civil suit that he and his executives misled shareholders on the Merrill deal, Morgenson reports. Lewis says that before shareholders voted to approve the deal, he and other executives knew Merrill's losses had intensified dramatically and intentionally failed to inform them. He didn't even tell his board of directors until after the vote.
Worse, Lewis, despite knowing that internal estimates predicted the deal would dilute 2009 earnings by 13 percent, told shareholders at the vote that it would be just a 3 percent dilution, and misled them that 2010 was expected to be accretive (add to profits) when he now knew it would not be.

It appears that if you can get a lawyer—any lawyer to bless something, you can get off the hook. Recall how Lehman Brothers shopped around until it found a London law firm willing to sign off on its Repo 105 book cooking. So no prosecutions.
Lewis says he didn't inform shareholders "because he had been advised by the bank's law firm, Wachtell, Lipton, Rosen & Katz, and by other bank executives that it was not necessary," in the NYT's words. I'd like to see some follow stories focus on just how lawyers could advise that not disclosing billions of dollars in new losses was okay. And do executives have to follow the law themselves even when given bad legal advice? Why should that allow Lewis to stand up at the shareholder meeting and knowingly give false numbers to voters?

Fortunately there's a complication here on the launder-it-through-the-lawyers front for Lewis and Bank of America:
Its own top lawyer, Timothy Mayopoulos, was left out of the loop at first and then when informed, tried to get the loss disclosed. He couldn't even get a meeting with the CFO, Joe L. Price. Then: The next day, the filing noted, Mr. Mayopoulos was "fired without explanation and immediately escorted from the premises, without being given the opportunity to collect his personal belongings."

Not only that, but the company's treasurer, Jeffrey J. Brown, told Price the CFO that he had to disclose the bigger losses. Not doing so "could be a criminal offense, stating that he did not want to be 'talking through a glass wall over a telephone' if no disclosure was made."

Morgenson, rightly, points out up high that this will raise—yet again—the question of why there has been so little accountability for executives. But she doesn't mention that this scandal has already been investigated by the SEC, which levied its usual slap on the wrist: A mere $33 million fine.
It's revealing then that it's taken private lawsuits to get this critical information when the government (which you should note urged Lewis to do the Merrill deal) has already supposedly investigated it."
http://www.cjr.org/the_audit/bank_of_americas_merrill_scand.php

 

A Battle Control of Over Tens of Billions of Dollars in Government

Mandated "Community Reinvestment" funds. In 2008, the US Treasury handed Goldman Sachs a check for $10bn from the Troubled Asset Recovery Program (Tarp), the bailout funds given to desperate commercial banks. A few eyebrows were raised: Goldman was not desperate, and it certainly was not a commercial bank. Yet - abracadabra! - Secretary of the Treasury Henry Paulson transformed investment bank Goldman into a commercial bank overnight. (Paulson's prior post was chairman of Goldman Sachs. Just saying.)
But: Goldman would have to return a chunk of the public's billions in  the form of loans for low-income customers and members of its  "community", as required by the Community Reinvestment Act (CRA) of 1977. Problem: Goldman has, it seems, no low-income customers, nor a "community". Goldman was directed to find poor people and a community  and hand over some cash.On condition of recieving t bail out loan money Goldman Sachs (assets $933bn) must give millions away to needy low income people and the banks who serve them. They have only given eyedropper amounts so far because their seems to be no oversight in making them really give the money out.
For the big money-center banks, the CRA is good deal. They pay some money into community banks and offload their low-income customers. Indeed, bank branches often hustle would-be customers from housing projects out the door with an admonition to take their undesirable business to Lower East Side Peoples. When the credit union's management appeared in Zuccotti Park to  endorse Occupy Wall Street's call to "Move Your Money" from commercial banks to community credit unions. Heeding Peoples' and Occupy's call, 23 protesters marched to their local Citibank branches to close their accounts - and were promptly arrested. guardian.co.uk/

 

SECRECY

THE INSURANCE POLICY OF POWER

The World is sleepwalking in a march toward total email surveillance, even as the US brings forward new proposals to punish whistleblowers by extending the Espionage Act. In an electronic world, evidence of these crimes lasts forever – if people get their hands on the books.

Current List of Failed Banks vs. Good Bank IRA Bank Ratings

WALL STREET OBSCENE ARROGANCE AND GREED

Foreclosure/robo-signing settlement concluded in 2013
The upshot of this story is that in advance of that notorious settlement, the government ordered banks to hire "independent" consultants to examine their loan files to see just exactly how corrupt they were.
Now it comes out that not only were these consultants not so independent, not only did they very likely skew the numbers seriously in favor of the banks, and not only were these few consultants paid over $2 billion (over 20 percent of the entire settlement amount) while the average homeowner only received $300 in the deal – in addition to all of that, it appears that federal regulators will not turn over the evidence of impropriety they discovered during these reviews to homeowners who may want to sue the banks.
In other words, the government not only ordered the banks to hire consultants who may have gamed the foreclosure settlement in favor of the banks, but the regulators themselves are hiding the information from the public in order to shield the banks from further lawsuits.

EXPORT IMPORT BANKS

 

The bank was originally organized as a District of Columbia banking corporation by Executive Order 6581 from Franklin D. Roosevelt on February 2, 1934, under the name Export-Import Bank of Washington. Its the 1% pipeline to hack the public's money and cover their ass if their greedy deals go south!!

Fred P. Hochberg​  currently chairman and president of the Export-Import Bank of the United States: "This important work is done at no cost to the American taxpayer. Since 1992, Ex-Im has returned more than $4.5 billion to taxpayers."​
Doug Bandow a forbes contributor writes, “The agency piously claims not to provide subsidies since it charges fees and interest, but it exists only to offer business a better credit deal than is available in the marketplace. The Bank uses its ability to borrow at government rates to provide loans, loan guarantees, working capital guarantees, and loan insurance.”​

During a time of giant budget deficits, while Congress is cutting spending on defense and food stamps, can the government justify keeping a program that transfers money from taxpayers to Boeing?  It’s Robin Hood in reverse. It's always hard to justify an agency that exists primarily to subsidize large corporations. When you use honest accounting, it's impossible.

Export-Import Bank costs taxpayers $2 billion a decade 5/24/14 
Ex-Im is a federal agency that subsidizes U.S. exports through direct loans and loan guarantees to foreign countries. Ex-Im’s charter expires this fall, and conservative Republicans want to let the agency die. In its defense, officials at Ex-Im and the White House — joined by lobbyists for manufacturers and banks — typically assert that Ex-Im is free. False: The Congressional Budget Office reported May 22 that if Ex-Im used proper accounting methods, it would be budgeted as a $2 billion cost to the taxpayers per decade. Top Democratic donor is also top recipient of Export-Import Bank subsidies. Before 1990, the federal government completely obscured the costs of loan-guarantee programs, such as student-loan subsidies and Ex-Im guarantees. Under the pre-1990 rules, when Wells Fargo loaned money to Air China to buy some Boeing jets, and Ex-Im guaranteed the loan, that guarantee would be budgeted as costing zero dollars -- unless and until Air China defaulted and Ex-Im had to pay Wells Fargo. The Federal Credit Reform Act fixed that -- kind of. The 1990 FCRA said that agencies like Ex-Im had to account for expected losses, such as foreign defaults that it would have to cover. The CBO and many other accounting experts point out that the FCRA's rules omit a crucial part of the cost of a loan guarantee: something economists call “market risk.”

THE SNEAKY SNAKES
Private banks include market risk in the price of loans and guarantees they issue. Ex-Im doesn’t, but it should, experts agree.  “The government is exposed to market risk when the economy is weak,” the CBO wrote in its recent study, “because borrowers default on their debt obligations more frequently and recoveries from borrowers are lower.”  The CBO and other experts argue that Ex-Im should switch to “fair-value accounting,” which includes market risk.
When you use fair-value accounting, you see that Ex-Im costs taxpayers $200 million a year, the CBO found last week. That cost comes overwhelmingly from the agency’s long-term loan guarantees, which mostly go to subsidize Boeing jets.  The CBO isn't alone in calling Ex-Im's accounting method flawed. The Wharton Business School's Financial Economists Roundtable in 2012 found that the accounting process Ex-Im uses “results in the systematic understatement of the cost of federal credit programs.” The Roundtable wrote: “This deficiency occurs because of the failure to capture all of the risks associated with federal credit programs, which must ultimately be borne by taxpayers.”  This bogus federal accounting, the Roundtable wrote, has “sometimes resulted in the budgetary illusion that government credit programs reduce the government budget deficit.”  That “budgetary illusion” is the central argument for Ex-Im’s existence.​

 

Ex-Im Bank is Welfare for the One Percent written by Ron Paul 5/ 31/2015

[ . . . Some Ex-Im Bank supporters claim that Ex-Im Bank promotes free trade. Like all other defenses of Ex-Im Bank, this claim is rooted in economic fallacy. True free trade involves the peaceful, voluntary exchange of goods across borders — not forcing taxpayers to subsidize the exports of politically powerful companies.  Ex-Im Bank distorts the market and reduces the average American's standard of living in order to increase the power of government and enrich politically powerful corporations. Congress should resist pressure from the crony capitalist lobby and allow Ex-Im Bank's charter to expire at the end of the month. Shutting down Ex-Im Bank would improve our economy and benefit most Americans. It is time to kick Boeing and all other corporate welfare queens off the dole. ] 
http://ronpaulinstitute.org/archives/featured-articles/2015/may/31/ex-im-bank-is-welfare-for-the-one-percent/

 

DATA THEFT

 

2/14/14 Whistleblower exposes Barclays customer data theft Up to 27,000 customers could be affected.
​Exposed: Barclays account details for sale as 'gold mine' of up to 27,000 files is leaked in worst breach of bank data EVER. Up to 27,000 files of personal information that has been sold on the black market for up to £50 a file, enabling rogue traders to carry out investment scams.  The stolen information includes passport and national insurance numbers, customers’ earnings, savings, mortgages, insurance policies and health issues.

 

Clients taken advantage of banking secrecy to dodge taxes.

SWISS private bank Julius Baer has suffered another theft of data pertaining to clients who may have taken advantage of banking secrecy to dodge taxes in Germany. Switzerland and Germany have been locked in a dispute over tax cheats for years, with officials in Germany repeatedly paying for stolen bank account information, to the anger of their Swiss counterparts. The two countries have signed an agreement to end the dispute and impose a retroactive levy on undeclared funds while preserving secrecy. Yet the agreement must still clear Germany's parliament, where the opposition Social Democrats say it is too lax on tax cheats. 2011 Julius Baer agreed to pay German tax authorities 50 million euros (US$63 million) to close a tax probe. Germany has promised to stop buying leaked bank data naming suspected tax cheats if the tax deal comes into force. Baer said on August 13 it planned to buy the overseas wealth management business of Bank of America Merrill Lynch.

During February 2008, WikiLeaks released allegations of illegal activities at the Cayman Islands branch of the Swiss Bank Julius Baer, which resulted in the bank suing WikiLeaks and obtaining an injunction which temporarily suspended the operation of wikileaks.org.^[115] The California judge had the service provider of WikiLeaks block the site's domain (wikileaks.org) on 18 February 2008, although the bank only wanted the documents to be removed but WikiLeaks had failed to name a contact. The website was mirrored instantly by supporters, and later that month the judge overturned his previous decision citing First Amendment concerns and questions about legal jurisdiction.^[116][117]

 

2012 How to Pay No Taxes: 10 Strategies Used by the Rich

For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax rate—what they actually pay—fell from almost 30 percent in 1995 to just over 18 percent in 2008, according to the Internal Revenue Service.

And for the approximately 1.4 million people who make up the top 1 percent of taxpayers, the effective federal income tax rate dropped from 29% - 23% in 2008. It may seem too fantastic to be true, but the top 400 end up paying a lower rate than the next 1,399,600 or so. The use sophisticated tax-avoidance strategies. Several of those techniques involve some variation of complicated borrowings that never get repaid, netting the beneficiaries hundreds of millions in tax-free cash, typically fund their lifestyle through lines of credit and loan proceeds secured by their assets, and using tax code provisions to defer income, while paying little or no personal income taxes.
The ‘No Sale’ Sale
Cashing in on stocks without triggering capital-gains taxes.
The Skyscraper Shuffle
Partnerships that let property owners liquidate without liability
The Estate Tax Eliminator
How to leave future stock earnings to the kids and escape the estate tax
The Trust Freeze
“Freezing” the value of an estate, so taxes don’t eat up its future appreciation
The Option Option
Stock options allow executives to calibrate the taxes on their compensation in a big way
The Bountiful Loss
Using, but not unloading, underwater stock shares to adjust your tax bill
The Friendly Partner
With this deal, an investor can sell property without actually selling—or incurring taxes
The Big Payback
So-called permanent life insurance policies are loaded with tax-avoiding benefits
IRA Monte Carlo
Tax advisers recommend converting traditional IRAs to Roth IRAs—soon
HERES HOW http://www.businessweek.com/articles/2012-04-17/how-to-pay-no-taxes-10-strategies-used-by-the-rich

 

​banks launder money

 

HOW BANKS LAUNDER MONEY
 

Lethal Weapon 2 Explains Money Laundering Leo Getz tells us one way to launder 500 million dollars.

BANKSTERS' PRETENSE TO SOCIAL CONTRIBUTION

Money, Beauty and Bankers
Relationship between Art and Money
How to sidestep biblical prohibitions on usury.

The reason that the church was so anti-usury, was because it opened the door to the idea of money for money’s sake rather than as an emblem of what it can create and do in the world.

The Renaissance at its height was underpinned by the support of bankers. Vast amounts of wealth concentrated in the hands of the few, Social chaos, corruption of the clergy at the highest levels. Back then, as now, it resulted in strife and discord, as the art world struggled to reconcile its independence with its reliance on capital. The first golden florin was minted in Florence in 1237. Pure gold, it had the lily of Florence on one side; and an image of John the Baptist on the other, “politics and piety fused in gold” ~Tim Parks. Money and Beauty works its way through the emergence of MODERN BANKING and the magnificent Medici as secular patrons of art, via the discovery of how to sidestep biblical prohibitions on usury (lending money at interest).
 

Usury itself – the use of money to make money – with no production or transformation of goods; and currency exchange, the Florentine solution to church bans on it, are at the heart of today’s financial systems, and those who creatively practise it were until recently lauded as geniuses and feted as heroes in society. From the creation of the gold florin on, the symbols of wealth – richly dyed clothes, golden accessories and jewels – became widely available and threatened to disrupt the rigidly segregated social class systems and the teachings of the church. Sumptuary laws were brought in to ban brazen displays of wealth. People naturally got around these, the wealthiest by simply paying the fines, which further enriched the coffers of Florence. Florentine bankers may have found loopholes in church law to enable their money-making, but they were still ambivalent about where that left them in the eyes of both God and society – and salved their consciences by commissioning art.
On the face of it, money is more democratic; anyone can buy art, and anyone with sufficient wherewithal can become part of the art-world elite by spending huge amounts of cash.

Sandro Botticelli, the artist who had raised Christian painting to divinity but then threw his own paintings on Savonarola’s Bonfire of the Vanities and who sacrificed his own later career to his belief that the values of money were destroying the values of spirituality and art.

 

The area where money bought the most beauty was in art. Today, everything, including one’s reputation, has a price (as demonstrated in libel awards), and that price has become indistinguishable from its value. “We don’t have art movements any more,” writes the influential US critic Donald Kuspit. “We have market movements.”
“Never,” declared Cosimo de’ Medici, “shall I be able to give God enough to set him down in my books as a debtor.” Nevertheless, gold haloes adorned saints in religious paintings, the Virgin’s cloak was painted ultramarine, the most costly pigment in the paintbox, and Medici faces appeared in religious frescoes, such as the Procession of the Magi in the Medici Riccardi Chapel. Botticelli’s Madonna and Child, Two Angels and the Young St John (1468) sees the Virgin wearing what were then contemporary clothes.

The pursuit of money as an end in itself has muddied one of our reasons for pursuing it, and that is the idea of legacy. You can’t take it with you, but art lets you at least attempt to leave something behind.

BANKERS
Buy beauty:

 

1675 Johannes Vermeer dies in debt. His wife, Catharina, sells two of his paintings to pay what they owe to the local baker. In 2004, a Vermeer, Young Woman Seated at the Virginals , which had long been considered a fake, is authenticated and sells at auction for £16.2 million.

1888 Vincent Van Gogh’s The Red Vineyard sells for 400 francs. It is the only painting to sell during the artist’s lifetime. Van Gogh wrote in that year, “Why, a canvas I have covered is worth more than a blank canvas. That – believe me my pretensions go no further – that is my right to paint, my reason for painting”. In 1990, his Portrait of Dr Gachet sells at auction for $82.5 million.

1994 On the Scottish island of Jura, Bill Drummond and Jimmy Cauty of the K Foundation burn £1 million as an art project. In 2001, having failed to sell a Richard Long photograph that he had previously bought for $20,000, Drummond cuts it into 20,000 pieces, to sell for $1 each.

2006 Casino owner Steve Wynn and hedge fund manager Steve Cohen are about to make history as Wynn sells Cohen Picasso’s Le Rêve . The $139 million price tag will make it the most expensive work of art ever sold. In an exuberant accidental gesture, Wynn put his elbow through the painting. The sale is called off and, following restoration, the painting is valued at $85 million. It is claimed that Wynn’s insurance payout is more than the original price he paid for the painting.

2007 Damien Hirst’s platinum and diamond skull, For the Love of God , which cost £14 million to produce, sells (according to Hirst) to a private consortium for £50 million. The consortium is revealed to include Hirst himself.

2011 The Australian artist Denis Beaubois sells his work Currency for 15,500 Australian dollars at auction. With the 22 per cent buyer’s premium, the price is 21,350 Australian dollars. The work consists of a wad of 20,000 Australian dollars in cash – so it both costs more and is worth less than the sum of its parts. According to the auction notes, Currency “explores the tension between the economic value of the material against the cultural value of the art object”.
irishtimes.com 2011 12 03 1224308506066

AUDITS: HOW THEY GET AWAY WITH IT

 

Study: External audits a poor tool for fighting fraud

Investors, analysts and corporate directors rely on external audits to keep companies honest. But a new study says audits are woefully ineffective at uncovering fraud. In fact, the study says more than twice as many frauds are uncovered by accident.  That is among the findings in the "Report to the Nations on Occupational Fraud and Abuse" study released Tuesday by the Association of Certified Fraud Examiners, which bills itself as the world's largest anti-fraud organization.  "You can't put the onus on somebody else to keep your place clean," said ACFE faculty member Evy Poumpouras, a former U.S. Secret Service agent. She said internal controls can be much more effective in uncovering fraud—and preventing it in the first place. The study examined 1,483 cases of fraud as reported by the Certified Fraud Examiners who investigated them.
"Getting people to confess to financial crime is more difficult than getting them to confess to murder," she said, which may help explain why audits can be so ineffective.  The study says auditors detected just 3 percent of the fraud cases reported last year, compared to 7 percent uncovered by accident.  "While independent audits serve a vital role in organizational governance," the report says, "our data indicates that they should not be relied upon as organizations' primary anti-fraud mechanism."  Instead, the study recommends what it calls "proactive detection measures" including internal hotlines that allow employees to report fraud anonymously and keep their co-workers honest.  "Most employees don't want to rat on someone," Poumpouras said. "They want to do it anonymously."  The study appears to bear that out.

BANKS CHEAT CAUGHT ON FILM

Top 8 Documentaries on Financial Crime and Fraud Finance has received a bad reputation through the financial crisis, and while not all that went on around the crisis was outright fraudulent, there have been through history some notable episodes. Be it from incompetence, poor governance, or deviousness; through history several figures have achieved noteriety for their sometimes spectacular misdeeds. This article lists the top 8 documentaries on financial crime and fraud. While these cases are extremely interesting and appalling, they are also very informative in terms of equipping yourself to notice some of the warning signs.

1. The Madoff Affair
This one takes the number one spot due to the scale of the fraud and the temerity of the perpetrator. Indeed Madoff has become the word to describe ponzi schemes and investment scams. Madoff was ultimately responsible for losing billions and billions of dollars in a phony investment scheme that suckered in famous people, other financial institutions, and many individual investors. Watch and learn!

The Madoff Affair

In the depths of the financial crisis an insidious scheme was revealed, billions of dollars were involved, and some of the biggest names came to shame. How did everyone miss it? Why didn't the regulators follow the trail of warning signs? Why didn't fund-of-fund managers do proper due dilligence? People were blinded by reputation, and more importantly people were blinded by greed. This documentary, The Madoff Affair, offers a fascinating and detailed insight into the workings and story behind Madoff's big scam.

On Dec. 11, 2008, Bernard L. Madoff confessed that his vaunted investment business was all "one big lie," a Ponzi scheme colossal in volume and scope that cost investors $65 billion. Overnight, Madoff became the new poster child for Wall Street gall, greed and corruption. ( more »)


2. Enron: The Smartest Guys in the Room
This list would be incomplete without this one. In fact this documentary has become a key tool for classes that teach on corporate governance. What you had with Enron was a complete failure of corporate governance, where greed took over and rogue executives ran wild, serving their own selfish interests and dooming a company that employed thousands of people and was invested in by thousands.

3. Bigger Than Enron
Who was bigger than Enron? The auditors - the guys who should have picked up on the games they were playing over at Enron, but instead chose to cover up and hide the fraud. This lead to the demise of a once highly esteemed, 89 year old major accounting firm. A good case study on ethics and corporate responsibility.

4. Masterminds - Crazy Eddie
Remember Crazy Eddie? Eddie Antar cooked the books, faked inventory and sales, committed insurance fraud, and stock manipulation. The company's financials were doctored to present a booming profitable business, and of course, when the company listed on the stock exchange in an IPO, Antar got rich,while investors were duped into buying a shoddy company. Here's how he did it.

5. American Greed - Hedge Fund Manager
Here's another version of Madoff - this is on a smaller, but by no means trivial scale. Samuel Israel set out to start a hedge fund, he started with the best of intentions, but one mistake lead to another. In the end he was dipping into client funds, making stupid investments, and ultimately falling for a scam himself as he tried desperately to make the money back. Warning: check your investment manager very carefully!

6. 25 Million Pounds
Ever heard of Barings Bank? Or a guy called Nick Leeson? Or have you seen the movie "Rogue Trader"? Basically this is a case where a young up and comer rose to management, started trading on the bank's book, initially making large profits, before losing billions, and hiding it through his having control over back office functions. This is a lesson on why you need good controls and processes!

7. Frontline - Black Money
This PBS documentary investigates the influence of money in politics. Remember the saying "money is power"? Well here's how it works. Corruption, graft, blackmail, bribes, and other shady dealings dilute the proper functioning of democracy and add costs and inefficiency to doing business. This is financial crime on a larger scale.

8. Tricks of the Trade: Outsmarting Investment Fraud
The final documentary focuses more on how you can avoid investment fraud. This is a great documentary to cap the list off with, because it is important to realise what's a scam and what's a good opportunity. You shouldn't be discouraged by fraud and scams, rather you should learn from them so you can make the right financial moves.

Thanks to www.financedocumentaries.com for finding all these documentaries (and others!)
alleconomists.com/2012/07/top-8-documentaries-on-financial-crime.html

 

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