Archive

Archive for the ‘Ticket clippers’ Category

Bankers who aren’t cheating aren’t trying

May 21st, 2015 Comments off

Some words of truth remembered by London’s Financial Times this morning in a report on six banks being fined $5.6bn over rigging of foreign exchange markets.

Repeated efforts by traders to manipulate daily fixings of currencies and interest rates as outlined by the regulatory actions announced on Wednesday illustrate the dark underbelly of many of the trading operations run by global banks.

Or in the words of one Barclays trader from 2010, who was quoted in a settlement document: “If you ain’t cheating, you ain’t trying.”

The thread that runs through three solid years of benchmark rigging cases is the assured way in which traders pushed around the prices of a whole series of financial products. They all seem to have believed they were immune from being rumbled for abusive behaviour.

Categories: Ticket clippers Tags:

A renewable energy nightmare

April 17th, 2015 Comments off
  • American Companies Are Shipping Millions Of Trees To Europe, And It’s A Renewable Energy Nightmare – With climate change already contributing to the frequency and intensity of forest fires and associated loss of forest, the addition of a profitable, extensive, and poorly overseen biomass industry could push the forests further into disrepair.
  • Renewable energy – Not a toy – Plummeting prices are boosting renewables, even as subsidies fall
  • Abbott government’s energy white paper fails to face reality – By failing to take global warming seriously, the white paper discourages solar power, encourages doomed coal investment, hobbles the RET, and misses the chance to raise petrol taxes.
  • Bali tourist areas exempt from beer ban – The Trade Ministry’s new regulation on alcoholic beverages, scheduled to take full effect on Thursday, will not be enforced on Bali as the ministry has decided that tourism areas would be exempted from the ban.On Thursday minimarkets, small vendors and beachside beverage vendors across the country were to stop selling beer. Bali administrations, retail associations and vendors had expressed opposition against the beer ban
  • The Jakarta Post | Editorial – Stop drinking? – Simple solutions are appealing, a fact that politicians here and everywhere know well. As such, it has not only been moralists pushing for legal instruments to regulate behavior at the local and national levels. The latest evidence is a bill that seeks to ban liquor, which has received backing from almost all political parties that control the House of Representatives. It is appealing to millions of citizens concerned over violent drunks and long-term excessive consumption of liquor. Though we share the concerns, which, along with smoking, contribute to the ruin of poor families, we oppose the bill, which is driven not only by the Islamist political parties.
  • The Westminster museum of artless bullshit: a look inside the post-debate spin room – Spin doctors scurry around trying to parrot the same scripted observations to as many hacks as possible – frankly, the whole thing is crying out for infiltration by a telly satirist

choice on anz

Are big banks just licensed thieves? A ticket clippers update

April 16th, 2015 Comments off

Earlier this week it was just the National Australia Bank fessing up that its UK arm had cheated customers. Today the NAB is among the financial institutions that the Australian Securities and Investment Commission is investigating for charging clients for financial advice that was never given.

Not that the update by ASIC named those helping it with its enquiries. The corporate cop still seems strangely diffident about naming and shaming. You have to look elsewhere to discover that it is the wealth arms of the Commonwealth Bank, National Australia Bank, ANZ Bank, Macquarie Group and AMP that is being investigated.

Still, I suppose a semi-silent investigation is better than no investigation.

The ASIC statement:

ASIC today provided an update on its Wealth Management Project which is focusing on the conduct of the largest financial advice firms.

ASIC is investigating multiple instances of licensees charging clients for financial advice, including annual advice reviews, where the advice was not provided.  Most of the fees have been charged as part of a client’s service agreement with their financial adviser.

Deputy Chairman, Peter Kell said: ‘ASIC will consider all regulatory options, including enforcement action, where we find evidence of breaches of the law relating to fees being charged where no advice service has been provided. We will look to ensure that advice licensees follow a proper process of customer remediation and reimbursement of fees where such breaches have occurred.’

The ASIC Wealth Management Project was established in October last year with the objective of lifting standards in major financial advice providers. Under this project ASIC is carrying a number of investigations and is conducting a range of proactive risk-based surveillances with particular focus on compliance in large financial institutions.

ASIC’s investigations are continuing.

Categories: Ticket clippers Tags:

Corporate traders aren’t exactly saints, either – FT.com

April 4th, 2015 Comments off

Every few months now, it seems, another price manipulation scandal emerges. First, it was bank traders fixing Libor, the interbank lending rate, in exchange for steak dinners and bottles of Bollinger. Then, many of the same banks were accused of doing much the same thing to foreign exchange rates. From there, the investigations have spread to traders of precious metals. Critics say the burgeoning probes are proof positive that banks have a cultural problem.

Now comes a complaint from the US Commodity Futures Trading Commission that accuses Kraft Foods Group and Mondelez, the sister companies created by the 2012 break-up of Kraft Foods, of manipulating the price of wheat. According to the CFTC, while still combined as Kraft Foods, the group bought a “huge” wheat futures contract in order to push down the prices of actual wheat for sale in Ohio, near the mill that made flour for the group’s cookies and crackers.

While Kraft routinely bought wheat futures contracts as a price hedge, it almost always closed them out in favour of buying wheat on the local market, the complaint said. That is because futures wheat is lower quality and costs much more to transport to the mill. But, in late 2011, Kraft bought $90m in contracts, 87 per cent of the market for that particular date, and then took delivery of some of the wheat. Prices in the local wheat market fell as farmers reacted with fear to Kraft’s new source of grain. The company then sold most of its futures, netting more than $5.4m on all the price moves.

via Corporate traders aren’t exactly saints, either – FT.com.

Categories: Ticket clippers Tags:

Another day and another probe into another bank

March 23rd, 2015 Comments off

Hardline New York regulator Lawsky targets Deutsche Bank over Libor – FT.com.

Benjamin Lawsky, the New York regulator known for taking a hard line against overseas banks, has shouldered his way into the long-running Libor scandal, investigating Deutsche Bank for alleged manipulation of the benchmark borrowing rate, according to people familiar with the matter.

The probe by New York’s Department of Financial Services adds to a litany of US regulatory problems for Germany’s largest lender.

 

Categories: Ticket clippers Tags:

Explaining electoral gerrymanders

March 2nd, 2015 Comments off

2-03-2015 gerrymandering

  • This is the best explanation of gerrymandering you will ever see – Gerrymandering — drawing political boundaries to give your party a numeric advantage over an opposing party — is a difficult process to explain. If you find the notion confusing, check out the chart above — adapted from one posted to Reddit this weekend — and wonder no more.
  • Protecting Fragile Retirement Nest Eggs – A new study by the White House Council of Economic Advisers has found that financial advisers seeking higher fees and commissions drain $17 billion a year from retirement accounts by steering savers into high-cost products and strategies rather than comparable lower-cost ones. The report has rocked the financial services industry — not because it is news but because the industry sees it, correctly, as a forceful statement of the Obama administration’s determination to do something about the problem.
  • Australia’s top 20 greenhouse gas emitters
  • Food Waste Grows With the Middle Class
  • That ugly fruit and veg –  EndFoodWaste.org believes at least 20% of all produce is wasted just because of it’s size, shape, color, or appearance.
  • Despicable Us –  Maybe those of us who write about politics and campaigns should adopt a bristly uniform of hair shirts, so that we’re constantly atoning for our sins. Maybe we should wear targets, the better for our critics to take aim at us. Oh, how we’re hated.
  • Is the Junk-Food Era Drawing to a Close?
  • Brazil – In a quagmire: Latin America’s erstwhile star is in its worst mess since the early 1990s

Clipping the hidden fees of the ticket clippers

February 24th, 2015 Comments off

Reuters reports that President Barack Obama is proposing new rules to protect Americans from being steered into costly retirement investments that produce high commissions for brokers but low returns for investors preparing for retirement.

The proposed rules, which the Department of Labor is expected to submit formally in the coming months, will inject political pressure into an already intense debate over brokers’ obligations.

They would have an impact on thousands of brokerages, from large players such as Fidelity, Wells Fargo , Charles Schwab  and Raymond James, to smaller, independent shops.

Brokers would be held to a higher “fiduciary standard,” requiring them to put their clients’ financial interests ahead of their own.

The White House said the proposals target fees and payments that on average lead to a full percentage point lower annual return on retirement savings at a cost to Americans of $17 billion a year.

In particular, Obama called for new rules preventing retirement brokers from steering clients’ savings into funds with higher fees and lower returns, or advising clients to roll their funds over into higher-cost plans.

 

Categories: Ticket clippers Tags:

Case against Abbott Government builds at The Hague

February 13th, 2015 Comments off
  • Case against Abbott Government builds at The Hague – “The Independent Member for Denison, Andrew Wilkie, and human rights advocate and lawyer Greg Barns have taken the next step in their formal request for the Prosecutor at the International Criminal Court (ICC) to investigate crimes against asylum seekers by members of the Abbott Government.”
  • How Tony Abbott came within 11 votes of oblivion – “This is the story of a leadership spill missing brilliant strategy, cunning organisation or sophisticated internal machinations that brought a Prime Minister within 11 votes of oblivion.”
  • This time the random walk loses – “Notwithstanding the progress made in the field of exchange rate economics, we still know very little of what drives major currencies. This column argues that the best that one can do is to assume that currencies move to gradually restore (relative) purchasing power parity. Contrary to widely held beliefs, this is in general a much better strategy than to just assume that the exchange rate behaves like a random walk. “
  • Do derivatives make the world safer?

cleaner air

  • Stopping at red lights could be slowly killing you – “The average UK commuter spends about 1.5 hours a day at the wheel. While not great for stress levels in general, there are other ways that the daily churn through traffic can negatively affect health. Research by my team at the University of Surrey has shown how drivers and pedestrians are being exposed to very high levels of air pollutants at traffic lights.”
  • Justice Deferred Is Justice Denied – Review of Too Big to Jail: How Prosecutors Compromise with Corporations by Brandon L. Garrett – “At bottom, corporate fraud amounts to little more than executives lying for business purposes, and prosecution depends on proving that the lies were intentional. Are the changes forced upon companies by deferred prosecution agreements likely to materially change the decision of these individuals to lie when it suits their goals?”
  • Author Sono calls for racial segregation in op-ed piece – “A prominent Japanese author and columnist who advised the government has called for Japan to adopt a system to force immigrant workers to live in separate zones based on race. In a regular column published in the Feb. 11 edition of the conservative daily Sankei Shimbun, Ayako Sono said immigrants, especially those providing elderly care, would ease the difficulties in Japan’s nursing sector. She also said that, while it was fine for people of all races to work, do research, and socialize with each other, they should also live apart from each other. “Since learning about the situation in South Africa 20 or 30 years ago, I’ve come to think that whites, Asians, and blacks should live separately,” Sono wrote. Sono, who was appointed by Prime Minister Shinzo Abe to an education reform panel in 2013, cited an unspecified whites-only apartment complex in Johannesburg that black South Africans moved into after apartheid ended. She said there was a problem because black people tended to bring large families into small apartments.”
  • Labor’s first test: putting integrity before politics in Queensland

The multi-billion dollar cost to shareholders of bad behaviour by bankers

January 4th, 2015 Comments off
The CCP Research Foundation data shows that rolling conduct costs and provisions for 12 of the most-fined banks in 2009 to 2013 were £166.63bn ($261bn), compared with £154.96bn for 2008 to 2012. Shareholders are understandably starting to complain that they are paying the price for misconduct by executives, often of banks that no longer exist but have instead been taken over. Regulators have some sympathy with this argument, and the UK began consultations in July 2014 on a new senior managers’ regime, which would require executives to certify that they had done everything possible to prevent illegal activity in their bank. Bonuses would be subject to seven-year clawback provisions in the event of misconduct or heavy losses emerging in the bank. The response from the City was very critical ...

The CCP Research Foundation data shows that rolling conduct costs and provisions for 12 of the most-fined banks in 2009 to 2013 were £166.63bn ($261bn), compared with £154.96bn for 2008 to 2012. Shareholders are understandably starting to complain that they are paying the price for misconduct by executives, often of banks that no longer exist but have instead been taken over. Regulators have some sympathy with this argument, and the UK began consultations in July 2014 on a new senior managers’ regime, which would require executives to certify that they had done everything possible to prevent illegal activity in their bank. Bonuses would be subject to seven-year clawback provisions in the event of misconduct or heavy losses emerging in the bank.
The response from the City was very critical …

  • 2014: the year of banks behaving badly – “Growing geopolitical risk and the rising toll of misconduct fines overshadowed what should have been a year of strengthening economic recovery.” (Free registration required for this review by The Banker)
  • Hillary Versus History – “When Hillary Clinton thinks about running for president, do you think she contemplates the fact that no Democrat has been elected to succeed another Democrat since James Buchanan in 1856? … What do you think this means? Actually, there weren’t all that many Republicans who were elected to succeed Republicans either. “
  • How Fox News Covered Pope Francis’ Action On Climate Change – Skepticism, Fearmongering, And Comparison To “Widespread Population Control”
  • Tensions Mount as Israel Freezes Revenue Meant for Palestinians – “Israel is withholding $127 million in tax revenue it collects for the Palestinian Authority in response to its move last week to join the International Criminal Court, further escalating tensions with a step that could have serious repercussions for both sides.”
  • Understanding the Issues in the 2015 Nigerian Presidential Election – “In the past few years, several separate, regional political parties merged into the All Progressive Congress, creating the opportunity for a credible opposition to pose a real challenge to the ruling People’s Democratic Party, which has been in power since the transition to civilian rule in 1999. Tensions in the country are high: Regional economic inequality has exacerbated the long-standing north-south, Christian-Muslim divides. Similarly, President Goodluck Jonathan’s decision to run again has disrupted traditional power-sharing agreements among the regions and religions. Boko Haram continues to threaten security around the country, especially in the north. The post-election violence of 2011 also continues to cast a shadow over the country.”

The rewards of ticket clipping

January 1st, 2015 Comments off

The Daily Mail reports today that 121 UK staff of banker Goldman Sachs have picked up £3m packages – a total £367m pay bonanza for the London staff.

fat cats

The salary packages equate to nearly £60,000 a week – more than 120 times the average wage.

Deborah Hargreaves of the High Pay Centre said: ‘This is a classic case of trying to bury bad news. This behaviour just underlines the breathtaking arrogance of the banking industry which thinks it can get away with anything.’ John Mann, a Labour MP on the Treasury committee in the Commons, said: ‘Goldman Sachs will struggle to find a biblical justification for this greed. They obviously wanted to sneak this out when everyone was celebrating New Year’s Eve, hoping no one would notice. This just reinforces the message that the bankers that caused us so many problems are out of control and out of touch.’

The Goldman Sachs pay and bonuses, which are for 2013, were handed out just in time to beat a cap introduced by the European Union 12 months ago.

 

Categories: Ticket clippers Tags:

And even the banking regulators were in on the act

November 22nd, 2014 Comments off

Bank of England to probe whether staff helped rig money auctions – FT.com.

The Bank of England has opened a formal investigation into whether its officials knew of – and even facilitated – the possible manipulation of auctions designed to inject money into the credit markets to alleviate the financial crisis.

The probe, which started in the summer, has been revealed just a week after the UK central bank published a report that criticised its own response to the foreign exchange rigging scandal.

Lord Grabiner QC, a senior British advocate who led the separate forex inquiry, has been asked by the BoE to head the new investigation. He is to probe whether a series of money-market auctions held by the central bank in late 2007 and early 2008 were rigged, and whether officials were party to any manipulation, according to people familiar with the issue.

Categories: Ticket clippers Tags:

When they put on a banker’s hat otherwise honest people become dishonest

November 20th, 2014 Comments off

Readers of my Ticket Clippers postings will not be surprised by this latest piece of academic research. A new study by Alain Cohn, Ernst Fehr, and Michel Maréchal from the Department of Economics at the University of Zurich shows that bank employees are in principle not more dishonest than their colleagues in other industries. The findings indicate, however, that the business culture in the banking sector implicitly favors dishonest behavior.

The scientists recruited approximately 200 bank employees, 128 from a large international bank and 80 from other banks. Each person was then randomly assigned to one of two experimental conditions. In the experimental group, the participants were reminded of their occupational role and the associated behavioral norms with appropriate questions. In contrast, the subjects in the control group were reminded of their non-occupational role in their leisure time and the associated norms. Subsequently, all participants completed a task that would allow them to increase their income by up to two hundred US dollars if they behaved dishonestly. The result was that bank employees in the experimental group, where their occupational role in the banking sector was made salient, behaved significantly more dishonestly.

A very similar study was then conducted with employees from various other industries. In this case as well, either the employees’ occupational roles or those associated with leisure time were activated. Unlike the bankers, however, the employees in these other industries were not more dishonest when reminded of their occupational role. “Our results suggest that the social norms in the banking sector tend to be more lenient towards dishonest behavior and thus contribute to the reputational loss in the industry,” says Michel Maréchal, Professor for Experimental Economic Research at the University of Zurich.

Social norms that are implicitly more lenient towards dishonesty are problematic, because the people’s trust in bank employees’ behavior is of great importance for the long-term stability of the financial services industry. Alain Cohn, who recently joined the Booth School of Business at the University of Chicago as a postdoctoral scholar, suggests concrete measures that could counteract the problem: “The banks could encourage honest behavior by changing the industry’s implicit social norms. Several experts and supervisory authorities suggest, for example, that bank employees should take a professional oath, similar to the Hippocratic Oath for physicians.” If an oath like this were supported with a corresponding training program in ethics and appropriate financial incentives, this could lead bank employees to focus more strongly on the long-term, social effects of their behavior instead of concentrating on their own, short-term gains.

The full article Business culture and dishonesty in the banking industry is published in the journal Nature behind a paywall but here is the abstract:

Trust in others’ honesty is a key component of the long-term performance of firms, industries, and even whole countries1. However, in recent years, numerous scandals involving fraud have undermined confidence in the financial industry. Contemporary commentators have attributed these scandals to the financial sector’s business culture but no scientific evidence supports this claim. Here we show that employees of a large, international bank behave, on average, honestly in a control condition. However, when their professional identity as bank employees is rendered salient, a significant proportion of them become dishonest. This effect is specific to bank employees because control experiments with employees from other industries and with students show that they do not become more dishonest when their professional identity or bank-related items are rendered salient. Our results thus suggest that the prevailing business culture in the banking industry weakens and undermines the honesty norm, implying that measures to re-establish an honest culture are very important.

Categories: Ticket clippers Tags: ,

Just another bank and another fine

November 19th, 2014 Comments off

And they only lied while they were confessing!

Bank of Tokyo-Mitsubishi to pay $315 million over whitewashed report | Reuters.

Bank of Tokyo-Mitsubishi UFJ has agreed to pay $315 million to New York’s banking regulator for submitting a whitewashed report about its improper handling of transactions involving countries subject to U.S. sanctions, the regulator said on Tuesday.

The report formed the basis for a $250 million settlement the bank reached last year with New York’s Department of Financial Services (DFS) for stripping information from wires that would have helped authorities police transactions involving Iran, Burma and Myanmar from 2002 to 2007.

And let’s not forget that minor set of ticket clippers – the international audit firms. The Reuters story noted:

PricewaterhouseCoopers (PwC), which produced the 2008 report for the bank, agreed in August to pay $25 million and refrain from certain work in New York for two years after the regulator accused the consulting firm of altering its findings under pressure from bank lawyers and executives.

A Bank of Tokyo-Mitsubishi statement on Tuesday said the bank settled “to resolve issues relating to instructions” given to PwC and “disclosures made” to the New York regulator in connection with its voluntary investigation.

And if you believe this statement from a banker you would believe anything:

The bank said it was committed to doing business with “the highest levels of integrity and regulatory compliance.”

Check out the Owl’s Ticket Clippers archive.

Categories: Ticket clippers Tags:

Stories about dishonest banks just keep on coming

November 19th, 2014 Comments off

BBC News – HSBC’s private banking arm accused of tax fraud by Belgium.

Authorities in Brussels have charged HSBC’s private banking arm, which is based in Switzerland, with helping wealthy Belgians to avoid taxes.
Prosecutors allege that hundreds of clients – including diamond dealers in Antwerp – moved money to offshore tax havens with the help of the bank. …
Prosecutor Michel Claise accused HSBC of “fraud, money laundering, criminal association and illegal exercise of the profession of financial intermediary”.

Categories: Ticket clippers Tags:

Ever seen an angry economics editor?

November 17th, 2014 Comments off

Paul Mason, economics editor for Britain’s Channel Four, explains why he’s sick of standing outside RBS’s headquarters talking about banks doing something wrong.

Categories: Ticket clippers Tags:

Bank of England Governor advocates jail terms for guilty bankers

October 13th, 2014 Comments off

2014-10-13_guiltybankers

Brisbane’s G20 meeting of world leaders is shaping up to be remembered as the time when the belief that the world’s largest banks were Too Big To Fail finally ended. Bank of England Governor Mark Carney foreshadowed the impending change at the weekend. Mr Carney said the bosses of the big banks behind the 2008 crash should have paid more for their errors, such as handing back severance packages and spending time in jail. The failure to inflict real punishment in both Britain and America had left the global economy exposed to the same risks as it was six years ago, he said.

London’s Daily Telegraph reported:

“They got away with their compensation packages, they got away without sanction,” Mr Carney told the International Monetary Fund’s annual meeting in Washington.

“Maybe they were not at the best tables in society after that, but they’re still at the best golf courses. That has to change.”

The Bank has proposed that senior bankers face prison if their organisation fails in the same way that Lloyds and RBS did in the financial crisis.

Curtailing pay alone was not enough to prevent risky behaviour, he said. Top executives should be forced to take full responsibility for the recklessness of their staff.

In his formal address to the 29th Annual G30 International Banking Seminar, Mr Carney said the job of fixing the fault lines cannot be complete without ending Too Big to Fail. He continued:

Operating in a heads-I-win-tails-you lose bubble, the world’s largest banks threatened the stability of the global financial system. Their bail-out using public funds undermines market discipline and goes to the heart of fairness in our societies.

This cannot be allowed to continue.
It is essential that all systemically important financial institutions can be resolved when they fail:
– Without the need for taxpayer support.
– And without disruption to the wider financial system or real economy.
Tackling the rampant moral hazard at the heart of the financial system hasn’t been easy. And our success can never be absolute. Specifically, we can’t expect to insulate fully all institutions from all external shocks, however large.
But we can change the system so that systemically important institutions bear the cost of their own actions and the risks they take.
After much hard work, and extensive cross-border co-operation, the FSB is on track to agree proposals that, once implemented, will be decisive in achieving that.
The use of statutory resolution powers to resolve global systemic banks will finally be possible.
The proposals will be presented to the Brisbane G20 Leaders summit in November.
That Summit will be the watershed in ending Too Big to Fail.
The first is an internationally agreed standard on the total loss absorbing capacity (or TLAC) that globally systemic banks must hold.
It will be based on clear principles. But it will be much more than a list of aspirations. It will include a detailed indicative term sheet that will cover the amount; the type, and the location of that loss absorbing capacity.
It will establish a level playing field between global systemic banks, while taking into account differences in national resolution regimes.

It will ensure globally systemic banks finally have the quantum of total loss absorbing capacity that extensive analysis show balances the benefit of greater resilience against the higher funding costs for the banks that results from the removal of public subsidies.
It will set clear roles for home and host regulators in a resolution.
It will give host nations the confidence that they won’t again be side-swiped by the failure of a large foreign bank.
And, by removing the implicit subsidy that systemic banks have long enjoyed, it will re-establish market discipline.
Once implemented, it will make our financial systems more resilient and our economies stronger.

Categories: Economic matters, Ticket clippers Tags:

The big bank scandals just keep on coming

October 7th, 2014 Comments off

The Justice Department is preparing a fresh round of attacks on the world’s biggest banks, again questioning Wall Street’s role in a broad array of financial markets.

With evidence mounting that a number of foreign and American banks colluded to alter the price of foreign currencies, the largest and least regulated financial market, prosecutors are aiming to file charges against at least one bank by the end of the year, according to interviews with lawyers briefed on the matter. Ultimately, several banks are expected to plead guilty.

via Big Banks Face Another Round of U.S. Charges – NYTimes.com.

Categories: Ticket clippers Tags:

The Reasons Bankers Weren’t Busted

September 11th, 2014 Comments off

On this little blog of mine I have been featuring stories on what I describe as ticket clippers for many months now. One of the continuing themes of many of them is the way that while banks keep getting hit with huge fines, the bankers that run them have almost always avoided being charged with any offences. It really is a depressing story of how money talks when it comes to the criminal justice system. I recommend you browse through my ticket clipper archive and also read a couple of recent postings on Bloomberg View.

The Reasons Bankers Weren’t Busted – Bloomberg View.

Here Bloomberg View columnist Barry Ritholtz, who has been following the absence of legal prosecutions since 2008 and posted on that subject more than 500 times, reviews the events of the financial crisis showing that the law was broken repeatedly by bankers.

Political access and lobbying go part way toward explaining the absence of prosecutions and, therefore, the lack of convictions. To understand why there were no convictions of senior bankers, you need to understand a bit of criminal law in the U.S. The American form of jurisprudence requires a criminal indictment to bring someone to trial. No indictment, no trial, no conviction. Where bankers and their lawyers have been so successful is stopping prosecutions before they begin. You don’t get to the conviction part if prosecutors don’t bring indictments.

In The Biggest Lie of the New Century Ritholtz argues that the biggest reason so many financial felons escaped justice was because they “dumped the cost of their criminal activities on you, the shareholder (never mind the taxpayer).” He then takes his readers on a brief survey of some of the more egregious acts of wrongdoing – Foreclosure fraudMortgage underwriting: where defects were knowingly ignored; Money Laundering of staggering sums of money for drug dealers and terrorists; Market manipulation where prices were either improperly manipulated or illegally rigged, with knowledge of the bank executives and the traders they employed and supervised; Fraud, skimming and bid-rigging of the good old-fashioned kind; Accounting fraud where some executives at banks cooked their books.

And the author’s conclusion of his two-part survey?

So next time you hear the claim that “there were no crimes committed by bankers,” just remember that this may be the biggest lie of the 21st century.

 

Categories: Ticket clippers Tags:

The ethics of bankers – just another example of intimidatory bullying

September 6th, 2014 Comments off

2014-09-06_bullybanks

The big banks sent hundreds of thousands of letters from fake debt collection firms to ‘intimidate’ customers. HSBC, Barclays, Santander and RBS/NatWest admit using the trick on families deep in the red. The letters misleadingly suggest that law firms and outside debt collectors are being called in.

The admissions, which follow a campaign by the Daily Mail to highlight the scandal, came in a series of letters released last night by MPs. In one of them, the chief executive of Barclays confessed the bank had used a number of ‘debt collection brands’. Appearing to acknowledge intimidation, Antony Jenkins said the letters were meant to indicate to customers ‘an escalation in the seriousness of the situation’. RBS chief Ross McEwan said the bogus letters ‘reflected what had become a common industry practice in a sector that had come to put its own interests above those of its customers’.

Categories: Ticket clippers Tags:

Chinese financiers learning the capitalist way of exploitation

September 3rd, 2014 Comments off

The Chinese financial system is developing in the normal capitalist way.

3-09-2014 carinsurers

3-09-2014 carinsurers2

Categories: Ticket clippers Tags:

Superannuation ticket clippers

August 27th, 2014 Comments off

Instead of all that boring stuff about will the Senate or won’t it, this is the story that should be on page one this morning:

2014-08-27_ticketclippers

Australian Super chief executive Ian Silk raises an issue of importance to all Australians forced to contribute to compulsory superannuation schemes. Too many people working in financial services, Mr Silk points out, are using the compulsory retirement savings system to enrich themselves rather than look after members’ money.

wisewords

This is an issue that Labor should be making central to its re-election policies.

NOTE: Find an assortment of other ticket clipping stories about the finance industry HERE.

Categories: Ticket clippers Tags:

Bank of America Offers U.S. Biggest Settlement in History and other news and views for Thursday 7 August

August 7th, 2014 Comments off
  • Bank of America Offers U.S. Biggest Settlement in History – “The tentative deal — which people briefed on the matter said would cost Bank of America more than $16 billion to settle investigations into its sale of toxic mortgage securities — started to take shape last week after the Justice Department rejected yet another settlement offer from the bank. Then, a wild card entered the fray. Judge Jed S. Rakoff, a longtime thorn in the side of Wall Street and Washington, issued an unexpected ruling in another Bank of America case that eroded what was left of the bank’s negotiating leverage.”
  • How Deeply Flawed Studies on Abortion and Breast Cancer Become Anti-Choice Fodder
  • In New Calculus on Smoking, It’s Health Gained vs. Pleasure Lost –  “Rarely has the concept of happiness caused so much consternation in public health circles. Buried deep in the federal government’s voluminous new tobacco regulations is a little-known cost-benefit calculation that public health experts see as potentially poisonous: the happiness quotient. It assumes that the benefits from reducing smoking — fewer early deaths and diseases of the lungs and heart — have to be discounted by 70 percent to offset the loss in pleasure that smokers suffer when they give up their habit.”

2014-08-07_22-20-41

  • Why Do So Many Female Characters Succeed at Work But Fail at Home? – “Barbara Hall, the seasoned showrunner and novelist, raised an intriguing question last month while talking up her new CBS drama, ‘Madam Secretary.’ Why are so many female characters depicted as successful in their professional lives but ‘broken’ in every other way? ‘Madam Secretary’ is Hall’s effort to bust out of what has become a TV cliche.

Strong economic case for coal divestment

Ho hum – just another billion dollar fine for a bank

July 31st, 2014 Comments off

Another day and another ruling against a bank for fraudulent practices. A New York judge has ruled that Bank of America’s Countrywide business must pay the US government $1.3bn for selling defective home loans. Former Countrywide executive Rebecca Mairone must also pay $1m.

A BBC report says Countrywide was found guilty of selling bad loans, as part of a programme called “hustle”, to US mortgage giants Fannie Mae and Freddie Mac in 2007.

Bank of America has spent nearly $40bn on legal matters relating to the housing market collapse, and the bank is expected to announce a multi-billion dollar settlement with US regulators over similar charges in the coming weeks.

The “hustle” suit came about after Edward O’Donnell, a former Countrywide executive, issued a whistleblower complaint alleging fraud.

Mr O’Donnell said a programme Countrywide instituted in 2007 known internally as the “high-speed swim lane” (also known as “HSSL” or “hustle”) did not properly screen mortgage applications, and that employees – who were paid based on loan volume and speed of processing – were give incentives to approve loans.

The programme was overseen by Ms Mairone.

 

Categories: Ticket clippers Tags:

Japanese financiers no different? Fraud at the home of the mafia

July 29th, 2014 Comments off

29-07-2014 nomura

It seems appropriate somehow that the Japanese financial giant Nomura chose Sicily for what Italian police allege was a 175 million euros fraud. According to police Colonel Francesco Mazzotta, four Nomura employees from back in 2000 to 2006 are under investigation, along with three other people, for using complex financial products to defraud the regional government of Sicily in the years leading up to the financial crisis.

Bloomberg reports that Italy’s financial police have seized bank accounts and credit valued at 98 million euros from Nomura, along with 6 million euros in property, shares and cash belonging to the seven suspects.

The amount represents the profit the bank allegedly made from the trades, police said.

Nomura created three derivatives contracts to restructure Sicily’s debt that wound up costing the region 60 million euros, police said. Sicily also lost 115 million euros on the securitization, or bundling, of health-care debt in 2002 at an “onerous” interest rate, police said.

Categories: Ticket clippers Tags:

The Daily Mail gets it right – throw crooked bankers in jail

July 29th, 2014 Comments off

29-07-2014 jailbankers

London’s Daily Mail reports this morning that the clamour grows as the Bank of England chief says Lloyds traders ‘clearly broke the law’. In summary:

  • Mark Carney says Lloyds staff involved may be guilty of ‘criminal conduct’
  • Bank ripped off Treasury during financial crisis with creditworthiness lies
  • It gained access to tens of billions from Government at favourable rates
  • MP says public don’t understand why rogue bankers haven’t been jailed

29-07-2014 fixingrates

The Mail was not alone in taking a hard line on banking practices. That daily bible of the financial community The Financial Times reported how Lloyds Banking Group has been criticised for “highly reprehensible” behaviour by the Bank of England after it became the first lender to be fined for rigging rates to cut the cost of a financial crisis rescue scheme, effectively costing the taxpayer millions of pounds.

Categories: European media, Ticket clippers Tags:

An update on bank settlements still flowing from the financial crisis

July 27th, 2014 Comments off

A deal to resolve a U.S. regulator’s claims against Goldman Sachs Group Inc over mortgage-backed securities sold to Fannie Mae and Freddie Mac leading up to the financial crisis could cost the bank between $800 million and $1.25 billion, according to a person familiar with the matter.

The person said Goldman Sachs is discussing a settlement with the Federal Housing Finance Agency (FHFA), which filed 18 lawsuits against Goldman and other banks in 2011 over about $200 billion in mortgage-backed securities that later went sour.

Goldman Sachs and the FHFA declined to comment on Saturday.

via Goldman mortgage deal with federal agency could reach $1.25 billion: source | Reuters.

In other ticket clipping news, Reuters reports that according to a Swiss newspaper about 80 of the 106 Swiss banks that signed up for a deal with U.S. tax authorities could be fined less than they had feared for their role in helping wealthy Americans cheat on their taxes, but must widen their cooperation. The banks, which include Geneva-based Lombard Odier and Zurich firm EFG International, came forward under a program brokered by the Swiss and U.S. governments, after criminal investigations of roughly a dozen Swiss banks including Credit Suisse in the United States.

NOTE: For other stories on this subject see the Owl’s Ticket Clippers archive.

Categories: Ticket clippers Tags:

The case for jail terms for bankers

July 19th, 2014 Comments off

What can you say – unless you are a banker – to disagree with the conclusion of this piece that while it will always be true that bankers do not want to turn away business, they would probably rather sacrifice some of their yearly bonus than risk spending a decade of their life behind bars?

Did the Banks Have to Commit Fraud? | Beat the Press.

Floyd Norris has an interesting piece discussing Citigroup’s $7 billion settlement for misrepresenting the quality of the mortgages in the mortgage backed securities it marketed in the housing bubble. Norris notes that the bank had consultants who warned that many of the mortgages did not meet its standards and therefore should not have been included the securities.

Towards the end of the piece Norris comments:

“And it may well be true that actions like Citigroup’s were necessary for any bank that wanted to stay in what then appeared to be a highly profitable business. Imagine for a minute what would have happened in 2006 if Citigroup had listened to its consultants and canceled the offerings. To the mortgage companies making the loans, that might have simply marked Citigroup as uncooperative. The business would have gone to less scrupulous competitors.”

This raises the question of what purpose is served by this sort of settlement. Undoubtedly Norris’ statement is true. However, the market dynamic might be different if this settlement were different.

Based on the information Norris presents here, Citigroup’s top management essentially knew that the bank was engaging in large-scale fraud by passing along billions of dollars worth of bad mortgages. If these people were now facing years of prison as a result of criminal prosecution then it may well affect how bank executives think about these situations in the future. While it will always be true that they do not want to turn away business, they would probably rather sacrifice some of their yearly bonus than risk spending a decade of their life behind bars. The fear of prision may even deter less scrupulous competitors. In that case, securitizing fraudulent mortgages might have been a marginal activity of little consequence for the economy.

Citigroup’s settlement will not change the tradeoffs from what Citigroup’s top management saw in 2006. As a result, in the future bankers are likely to make the same decisions that they did in 2006.

Categories: Ticket clippers Tags:

Some banks are under scrutiny (again)

July 17th, 2014 Comments off

What a wonderful industry. Are there any ethics in banking at all?

via Barclays, Deutsche Facing U.S. Senate Hearing – Bloomberg.

Barclays Plc (BARC) and Deutsche Bank AG (DBK) face scrutiny over their sale of products to a hedge-fund manager that allowed it to skirt borrowing limits and avoid taxes, according to people with knowledge of the matter.

The U.S. Senate Permanent Subcommittee on Investigations plans a hearing next week on what it calls abusive transactions by financial institutions, according to a July 14 notice from the panel. The companies, which aren’t named in the notice, are Barclays, Deutsche Bank and hedge-fund manager Renaissance Technologies LLC, the people said. Representatives for each of the companies plan to testify at the July 22 hearing, the people said.

The investigation is another blow for Antony Jenkins, chief executive officer of London-based Barclays, as he seeks to restore the firm’s reputation after it became the first lender to be fined for rigging Libor. For Deutsche Bank, the hearing comes less than four years after the Frankfurt-based lender paid $554 million to avoid unrelated U.S. criminal charges involving the sale of tax shelters.

Categories: Ticket clippers Tags:

The IMF gives a recipe for “The Double Irish Dutch Sandwich”

July 17th, 2014 Comments off

17-07-2014 taxingtimes

The International Monetary Fund called its Fiscal Monitor back in last October Taxing Times as it analysed ways that nations reducing budget deficits might raise revenue to help do so. In passing I note that on the Fund’s reckoning Australia is well down the list of those needing to take drastic action with its projections of debt to GDP by 2030.
17-07-2014 2030debtThere we are on the far right but I’m not sure of the assumptions used to put us there in pride of place. Perhaps the current Senate shenanigans might change things but there is hardly evidence there that Australia is facing some imminent disaster.

Be that as it may, what intrigued me when I belatedly discovered the paper was the description in a section on increasing company tax receipts of how some of those large multi nationals avoid paying much at all.

“So many companies exploit complex [taz] avoidance schemes, and so many countries offer devices that make them possible, that examples are invidious. Nonetheless, the “Double Irish Dutch Sandwich,” an avoidance scheme popularly associated with Google, gives a useful flavor of the practical complexities. Here’s how it works (Figure 5.1):


•• Multinational Firm X, headquartered in the United States, has an opportunity to make profit in (say) the United Kingdom from a product that it can for the most part deliver remotely. But the tax rate in the United Kingdom is fairly high. So . . .
•• It sells the product directly from Ireland through Firm B, with a United Kingdom firm Y providing services to customers and being reimbursed on a cost basis by B. This leaves little taxable profit in the United Kingdom. Now the multinational’s problem is to get taxable profit out of Ireland and into a still-lower-tax jurisdiction.
•• For this, the first step is to transfer the patent from which the value of the service is derived to Firm H in (say) Bermuda, where the tax rate is zero. This transfer of intellectual property is made at an early stage in development, when its value is very low (so that no taxable gain arises in the United States).
•• Two problems must be overcome in getting the money from B to H. First, the United States might use its CFC [controlled foreign corporation] rules to bring H immediately into tax. [Note: The “controlled foreign corporation” rules seek to reduce the ability of companies to move profits to another country via a pure paperwork transaction to what is really the same company.] To avoid this, another company, A, is created in Ireland, managed by H, and headquarters “checks the box” on A and B for U.S. tax purposes. This means that, if properly arranged, the United States will treat A and B as a single Irish company, not subject to CFC rules, while Ireland will treat A as resident in Bermuda, so that it will pay no corporation tax. The next problem is to get the money from B to H, while avoiding paying cross-border withholding taxes. This is fixed by setting up a conduit company S in the Netherlands: payments from B to S and from S to A benefit from the absence of withholding on nonportfolio payments between EU companies, and those from A to H benefit from the absence of withholding under domestic Dutch law.
This clever arrangement combines several of the tricks of the trade: direct sales, contract production, treaty shopping, hybrid mismatch, and transfer pricing rules.

Categories: Economic matters, Ticket clippers Tags:

Keeping tabs on those US ticket clippers

July 9th, 2014 Comments off

As reports appear that Citigroup Inc is close to paying about $7 billion to resolve a U.S. probe into whether it defrauded investors, the Wall Street Journal has prepared a detailed infographic on the $100 billion that large banks have so far agreed to pay to settle cases related to the 2008 credit crisis. The Journal’s figures include lawsuits over mortgages, foreclosures and some of the fire-sale deals made at the height of the financial meltdown.

9-07-2014 thetab

Go the WSJ site and select bars to see details of the individual settlements that make up each bank’s payments. It is a very informative summary.

Meanwhile Reuters quotes “a source familiar with the matter” saying that the latest Citibank settlement is expected to be in cash, but the figure also includes several billion dollars in help to struggling borrowers.

U.S. Attorneys offices in Brooklyn and Colorado have been investigating the bank as part of a larger task force probing faulty mortgage securities that helped fuel the housing bubble in the mid-2000s and contributed to its collapse.

JPMorgan Chase & Co paid $13 billion in November to resolve a range of probes from the task force, in a deal that U.S. authorities said would serve as a template for other banks. Bank of America Corp has also been in negotiations to resolve similar investigations.

Categories: Ticket clippers Tags:

Where there’s a bank there’s a will and a way plus other news and views for Thursday 3 July

July 3rd, 2014 Comments off
  • Another Failure to Regulate Derivatives – “By the time the Securities and Exchange Commission finalized a rule last month to regulate derivatives under the Dodd-Frank financial reform law, the big banks that dominate the multitrillion-dollar market had already figured out how to game it. This is not a tale, however, of how wily banks always find a way around the rules. In this case, the S.E.C. has written and passed a rule that is custom built for evasion, all the while insisting, unconvincingly, that it does not have the legal authority to be any tougher.”
  • An opportunity missed rather than a case settled – “The authorities have reaffirmed that banks such as BNP are too big to jail. …  If no one goes to jail and the fine does no permanent damage, the settlement becomes more a transaction tax than a deterrent. It is unlikely to be seen as justice in the eyes of the public – people who tend to go to prison when they break the law.”
  • In banking capital punishment works better than torture – “Who can be held accountable when banks misbehave? Not the people who run them. That seems to be the conclusion reached by prosecutors and regulators who, facing a tide of public anger over financial malfeasance, have resorted to putting in the dock not people but corporate defendants: the banks themselves. … Instead of torturing banks financially we should impose capital punishment. A bank that suffers a large loss or a severe compliance failure clearly has not learnt to control risk, and needs a bigger safety cushion. It should be required to hold more loss-absorbing capital. This would punish managers by making it harder to turn a profit.”

3-07-2014 shark

(From Wikipedia)

  • The shark is dead but the price has a bite – Something about contemporary art echoes pyramid schemes … Not long ago I asked Brett Gorvy, head of contemporary art at auction house Christie’s, to estimate the current value of Damien Hirst’s shark – the beast that floats in a tank of formaldehyde … It sold for $8m in 2004. In excess of $70m, Mr Gorvy responded. After all, he said, “Jeff Koons’s ‘Balloon Dog’ sold for $58m last November; is not Hirst’s shark far more celebrated round the world?”

3-07-2014 balloondog

(From Wikipedia)

Another day and another billions of dollars fine for a bank and other news and views for Tuesday 1 July

July 2nd, 2014 Comments off
  • BNP pleads guilty to sanctions violations and faces $8.9bn fine
  • A Grieving Father Pulls a Thread That Unravels BNP’s Illegal Deals – “A bus bombing two decades ago — and a New Jersey father’s quest for justice — inadvertently set off a chain of events that led American prosecutors to accuse some of the world’s biggest banks of transferring money for nations like Iran. On Monday, that crackdown culminated with the guilty plea of BNP Paribas, which admitted to doing billions of dollars in deals with Iran and other countries blacklisted by the United States and agreed to pay a record $8.9 billion penalty to state and federal authorities. The trail that ultimately led to BNP began in 2006, when the Manhattan district attorney’s office came upon a lawsuit filed by the father, who blamed Iran for financing the Gaza bus bombing that killed his 20-year-old daughter. Buried in the court filings, prosecutors found a stunning accusation: a charity that owned a gleaming office tower on Fifth Avenue was actually a “front” for the Iranian government, a claim that the prosecutors ultimately verified.”

1-07-2014 emperorpenguins

Which bank? The CBA’s credibility is so compromised that a royal commission into these matters is warranted.

June 26th, 2014 Comments off

Australia’s Commonwealth Bank has entered the ticket clippers big league

From the report of a Senate committee released today:

In this case study, the committee examined misconduct that occurred between 2006 and 2010 by financial advisers and other staff at Commonwealth Financial Planning Limited (CFPL), part of the Commonwealth Bank of Australia Group (CBA). Advisers deliberately neglected their duties and placed their personal interests far above the interests of their clients. The assets of clients with conservative risk positions, such as retirees, were allocated into high-risk products without their knowledge to the financial benefit of the adviser, who received significant bonuses and recognition within CFPL as a ‘high performer’. There was forgery and dishonest concealment of material facts. Clients lost substantial amounts of their savings when the global financial crisis hit; thecrisis was also used to explain away the poor performance of portfolios. Meanwhile, it is alleged that within CFPL there was a
management conspiracy that, perversely, resulted in one of the most serious offenders, Mr Don Nguyen, being promoted.
Initially the committee found:

 the conduct of a number of rogue advisers working in CFPL was unethical, dishonest, well below professional standards and a grievous breach of their duties—in particular the advisers targeted vulnerable, trusting people;
 both ASIC and the CBA seemed to place reports of fraud in the ‘too hard basket’, ensuring the malfeasance escaped scrutiny and hence no one was held to account;
 the CBA’s compliance regime failed, which not only allowed unscrupulous advisers to continue operating but also saw the promotion of one adviser, thus exposing unsuspecting clients to further losses;
 there was an inordinate delay in CFPL recognising that advisers were providing bad advice or acting improperly and in CFPL acting on that knowledge and informing clients and ASIC;
 ASIC was too slow in realising the seriousness of the problems in CFPL, instead allowing itself to be lulled into complacency and placing too much trust in an institution that sought to gloss over its problems;
 ASIC did not pay sufficient attention to the whistleblowers who raised serious concerns about the conduct of Mr Nguyen and the action

As the committee gathered more and more evidence, however, lingering doubts began to grow about the robustness and fairness of the ASIC-sanctioned compensation process for CFPL clients who had suffered losses because of adviser misconduct. The committee could see major flaws in the process being implemented by CFPL, in particular:
 the manner in which information about adviser misconduct was conveyed to clients, which rather than reassure clients tended in some cases to intimidate and confuse them;
 CFPL’s obfuscation when clients sought information on their investments or adviser;
 a strong reluctance on the part of CFPL to provide files to clients who requested them;
 no allowance made for the power asymmetry between unsophisticated, and in many cases older and vulnerable clients, and CFPL;
 no client representative or advocate present during the early stages of the investigation to safeguard the clients’ interests when files were being checked and in many cases reconstructed;
 numerous allegations of missing files and key records, of fabricated documents and forged signatures that do not seem to have been investigated;
 the CFPL’s initial offer of compensation was manifestly inadequate in many instances; and
 the offer of $5,000 to clients to pay the costs of an expert to assess the compensation offer was made available only after the CFPL had determined that compensation was payable and an offer had been made.

Recent developments, whereby both ASIC and the CBA have corrected their testimony about the compensation process, have only deepened the committee’s misgivings about the integrity and fairness of the process. The committee is now of the view that the CBA deliberately played down the seriousness and extent of problems in CFPL in an attempt to avoid ASIC’s scrutiny, contain adverse publicity and minimise compensation payments.

In effect, the CBA managed, for some considerable time, to keep the committee, ASIC and its clients in the dark. The time is well overdue for full, frank and open disclosure on the CFPL matter. The committee is concerned that there are potentially many more affected clients that have not been fairly compensated. The clients that gave evidence at a public hearing were exceptional in that they were willing to voice their concerns publicly and were able to fight for compensation because of their circumstances. They were fortunate because they had a family member determined to assist them, were able to obtain independent expert advice, or were able to obtain a copy of their original file from one of the whistleblowers.

At this stage, the committee’s confidence in ASIC’s ability to monitor the CBA’s implementation of its new undertaking regarding the compensation process is severely undermined. Furthermore, the CBA’s credibility in the CFPL matter is so compromised that responsibility for the compensation process should be taken away from the bank. The committee considered five options to finally resolve the CFPL matter. But, given the seriousness of the misconduct and the need for all client files to be reviewed, the committee believes that an inquiry with sufficient investigative and discovery powers should be established by the government to undertake this work. To resolve this matter conclusively and satisfactorily, the inquiry would need the powers to compel relevant people to give evidence and to produce information or documents.

The committee is of the view that a royal commission into these matters is warranted.

Categories: Economic matters, Ticket clippers Tags:

The latest legal setback for the UK’s Barclays bank

June 26th, 2014 Comments off

Top NY securities regulator sues Barclays over ‘dark pool’ – FT.com:

“New York’s top securities regulator has sued Barclays alleging the UK bank favoured high-speed traders using its “dark pool” trading venue while misleading institutional investors. Eric Schneiderman, the state attorney-general, said Barclays had expanded its dark pool, Barclays LX, to one of the biggest off-exchange venues “by telling investors they were diving into safe waters . . . Barclays’ dark pool was full of predators – there at Barclays’ invitation”.”

 

Categories: Ticket clippers Tags:

Higher income for the finance industry, slower economic growth and a greater number of asset bubbles

June 22nd, 2014 Comments off

Buttonwood: Counting the cost of finance | The Economist.

 

… finance was taking a heavier toll on the economy even before Lehman Brothers went under.

That is the conclusion of a new paper by Guillaume Bazot of the Paris School of Economics. …

The paper is a useful contribution to the debate about the role of the financial industry in the global economy. What justifies the high incomes earned by bankers and fund managers? One could argue that they have created a lower cost of capital for business in the form of low bond yields and high equity valuations. But that is a tricky case to make: low yields are more the consequence of central-bank policy and the low level of inflation.

An alternative view is that these higher incomes are what economists call rents: excess incomes earned by those with a privileged economic position. The financial industry is protected because governments and central banks will act to rescue it when it falters, in a way they would not do for chemicals, say. And the sector may also benefit from asymmetric information: some of the products it sells are highly complex and clients may not be aware of the full cost until well after a sale is made.

The central question that the finance industry needs to answer is this: why has its increased importance been associated with slower economic growth in the developed world and a greater number of asset bubbles?

Categories: Ticket clippers Tags:

Another 15 banks investigated for fraud? Well fancy that

May 30th, 2014 Comments off

Well fancy that:

(Reuters) – U.S. prosecutors have opened criminal and civil probes into at least 15 banks and payment processors as part of a wide-ranging consumer fraud investigation, according to documents released on Thursday by a congressional committee.

The Justice Department’s investigation, known as “Operation Choke Point,” is more than a year old and aims to crack down on fraud by going after firms that handle and move money for various suspect businesses.

Just for good measure let me add this one that Reuters also reports today:

The U.S. Attorney’s office in Manhattan is investigating at least five banks over whether they overcharged the government for expenses incurred during foreclosures on federally backed home loans, filings and interviews show.

And don’t forget my earlier report today: What’s $10 billion? Just another bank fine

Categories: Ticket clippers Tags:

What’s $10 billion? Just another bank fine

May 30th, 2014 Comments off

It gets a bit monotonous. Another major bank facing a major fine for improper behaviour.

2014-05-30_bankfine

Today it is BNP Paribas that is reportedly facing a $10 billion fine for evading US sanctions against Iran and other countries.

Once again there is no talk of any bank official going to jail for what is a criminal offence.

You will find details of other examples of the ethical standards of banks in the Owl’s Ticket clippers section. It is a depressing collection.

 

Categories: Ticket clippers Tags:

Another day, another major bank, another scandal, another fine

May 25th, 2014 Comments off

From The Financial Times comes the news that a shadow has been cast over another key global financial benchmark after UK regulators found that a Barclays trader had manipulated the London gold fix that is used to value billions of dollars of derivatives contracts annually. The UK’s Financial Conduct Authority fined the British bank £26m on Friday and reprimanded it for nine years of lax controls for its failure to rein in an options trader who in 2012 drove the gold price lower to avoid paying £2.3m to one of the lender’s clients.

Categories: Ticket clippers Tags:

Poverty Is Not a State of Mind and other news and views for Tuesday 20 May

May 20th, 2014 Comments off

19-05-2014 richorpoor

  • Poverty Is Not a State of Mind – “There is a poisonous view among some conservatives that the poor are deficient in character, not cash.”
  • Europe’s Migration Emergency – “Italy says that as many as 800,000 migrants, mainly from Africa, South Asia and Syria, are massing in Libya now with the intent of reaching Italy. Libya’s interim interior minister, Salah Mazek, recently warned the European Union that Libya had had enough of being a way station for migrants heading to Europe, and that it was ‘Europe’s turn to pay.’ Libya and Italy are merely points along a larger migration route. They cannot — and should not have to — cope alone.”

2014-05-20_president

Just another bank under a corruption investigation

May 12th, 2014 Comments off

You wonder if it will ever end. New investigations into improper conduct by bankers just keep on coming. I referred to a couple in my news and views item posted earlier today. Now I can add this one from London’s Financial Times:

UK fraud office steps up probe into Barclays’ dealings with Qatar – “Bob Diamond, John Varley and other senior members of Barclays’ former management are set to be questioned under caution by the UK’s Serious Fraud Office, in an acceleration of its probe into alleged corrupt arrangements in Qatar as part of the bank’s emergency cash call in 2008.”

Categories: Ticket clippers Tags:

How hedge fund titans are testing the quality of US democracy and other news and views for Monday 12 May

May 12th, 2014 Comments off
  • 2 Banking Giants Implore U.S. Authorities to Go Easy – “Two of the world’s biggest banks, facing the threat of criminal charges, are mounting final bids for leniency. To avoid the fallout from pleading guilty — no giant bank has done so in more than two decades — BNP Paribas and Credit Suisse made last-ditch appeals to prosecutors and regulators in recent weeks, according to people briefed on the talks.”
  • Hedge fund titans are testing the quality of US democracy – “John Paulson made his fortune by taking a massive short position against the US housing bubble. Today the hedge fund billionaire is betting that the US political system will fail. This time he has company. Other billionaires have launched a lawsuit to force the US Treasury to pay shareholders vast sums from the government-sponsored housing enterprises that it bailed out in 2008. Betting on Washington’s largesse has become a routine investment strategy. Whether this one works, aspiring billionaires should take note: if you want to strike it lucky, try shorting American democracy. The risk is small and the rewards are spectacular.”
  • ‘Democrats argue. Republicans contend. We have no idea.’ A he said, she said at the Times – “Look, we have no idea who’s right. How would we? Figure it out for yourselves! Don’t be asking us to sort out what’s real from what’s fiction. We’re just New York Times journalists. We don’t do ‘there’s no basis for that.’ We do ‘Republicans contend…’ “
  • How Google money is helping turn the political right against strong copyrights
  • Crazy Climate Economics – “How environmentalism became a Marxist plot.”
  • Revealed: Mossad’s most wanted – “The Mossad is searching Facebook to find its latest recruits. Should we worry?”

Looting and pillaging for my ticket clippers collection

April 29th, 2014 Comments off

I stumbled across this on my Facebook page. A kind soul found it on John Pilger’s The War you Don’t See site.

Just had to steal if for my ticket clippers selection.

2014-04-29_sachs

Categories: Ticket clippers Tags:

Banking on someone else to sleep your bank to the top

April 24th, 2014 Comments off

Ah, the morality of bankers knows no bounds.

News out of China put ever so delicately by the Financial Times:

China Resources, the state-owned conglomerate whose chairman was detained last week by anti-corruption investigators, has allocated many of its investment banking deals over the past five years to institutions employing the chairman’s alleged mistress.

From 2009 until 2012, Credit Suisse was one of the most prominent advisers on acquisitions and capital market activity carried out by China Resources and its numerous subsidiaries, according to data from Dealogic financial services information. This period coincides with the employment of Yang Lijuan, who also goes by the name Helen Yang and who is alleged to have been the mistress of the disgraced China Resources chairman Song Lin.

And, surprise, surprise, when Ms Yang left Credit Suisse for UBS the business stopped for Credit Suisse while UBS became the joint bookrunner on two large bond sales and a key adviser on the two largest public acquisitions ever involving China Resources.

I suppose we could call it banking on someone else to sleep your bank to the top.

Categories: Sexual politics, Ticket clippers Tags:

CBA under fire at ASIC inquiry

April 10th, 2014 Comments off

This evidence today  is almost too bad to be true but then the witnesses were bankers. From the SMH website:

CBA under fire at ASIC inquiry.

Commonwealth Bank’s top lawyer, David Cohen, was rebuked before a senate inquiry on Thursday morning for downplaying systematic fraud within the bank’s financial services arm as ”inappropriate”.

The word ”inappropriate” was suitable to describe an error of judgment in clothing choice, said Mark Bishop, chairman of the Senate inquiry into the performance of the Australian Securities and Investments Commission, but not the fraud and failure within the bank’s wealth management division which culminated in clients losing millions of dollars in savings.

Categories: Ticket clippers Tags:

Banks Ordered to Add Capital to Limit Risks

April 9th, 2014 Comments off

Federal regulators on Tuesday approved a simple rule that could do more to rein in Wall Street than most other parts of a sweeping overhaul that has descended on the biggest banks since the financial crisis.

The rule increases to 5 percent, from roughly 3 percent, a threshold called the leverage ratio, which measures the amount of capital that a bank holds against its assets. The requirement — more stringent than that for Wall Street’s rivals in Europe and Asia — could force the eight biggest banks in the United States to find as much as an additional $68 billion to put their operations on firmer financial footing, according to regulators’ estimates.

Faced with that potentially onerous bill, Wall Street titans are expected to pare back some of their riskiest activities, including trading in credit-default swaps, the financial instruments that destabilized the system during the financial crisis.

via Banks Ordered to Add Capital to Limit Risks – NYTimes.com.

Categories: Ticket clippers Tags:

And yet another one: Crime inquiry said to open on Citigroup

April 3rd, 2014 Comments off

From the New York Times:

Just as Citigroup was putting a troubled past of taxpayer bailouts and risky investments behind it, the bank now finds itself in the government’s cross hairs again.

Federal authorities have opened a criminal investigation into a recent $400 million fraud involving Citigroup’s Mexican unit, according to people briefed on the matter, one of a handful of government inquiries looming over the giant bank.

The investigation, overseen by the F.B.I. and prosecutors from the United States attorney’s office in Manhattan, is focusing in part on whether holes in the bank’s internal controls contributed to the fraud in Mexico. The question for investigators is whether Citigroup — as other banks have been accused of doing in the context of money laundering — ignored warning signs.

Categories: Ticket clippers Tags:

Banks breaking deals? Vast profits at public expense? Can you believe it?

April 1st, 2014 Comments off

Well blow me over. Who would have thought it? Banks behaving badly?

2014-04-01_banksini

You will find other examples of banking ethics in my Ticket Clipping section HERE.

Along with one of my favourite cartoons that seems to grow more apt with every day that passes:

2014-03-20_bankers

Categories: Ticket clippers Tags:

The banking industry has discovered that it can thrive without trust and other news and views for Thursday 20 March

March 20th, 2014 Comments off
  • You Don’t Say – “Peter Eavis… highlighted a statement… by… William Dudley (formerly of Goldman Sachs, then a top lieutenant to Tim Geithner): There is evidence of deep-seated cultural and ethical failures at many large financial institutions…. In 2008… people probably thought that our largest banks were just guilty of shoddy risk management, dubious sales practices, and excessive risk-taking… we’ve had to add price fixing, money laundering, bribery, and systematic fraud on the judicial system…. Framing the problem as a ‘trust issue’—customers no longer see banks as trustworthy institutions—is beside the point. Wall Street’s main defense is that its clients already realize that investment banks do not have their buy-side clients’ best interests at heart, and clients who don’t realize that are chumps. And in the wake of the financial crisis, I suspect there are few individuals out there who believe that their banks are there to help them. The banking industry has discovered that it can thrive without trust, which is not surprising; retail depositors trust the FDIC, and bond investors know that trust isn’t part of the equation…”
  • How wars can be started by history textbooks – “The imposition of an authorised version of events turns education into brainwashing.”
  • The Programmed Prospect Before Us – Robert Skidelsky reviews Mindless: Why Smarter Machines Are Making Dumber Humans by Simon Head.  “The philosopher Hubert Dreyfus famously argued that artificial intelligence cannot mimic higher mental functions. No activity that requires intelligent behavior can be done by computers, he wrote, because algorithms cannot adequately structure the complex situations that are addressed by intelligent thinking. However, in most of the business activities described in this book, no intelligent behavior is required of most workers: the intelligence is provided by the managers; the workers only have to follow the rules of highly simplified situations. I see no reason in principle why the rules of behavior for such situations cannot be followed by machines… Recently, Michael Scherer, a Time magazine bureau chief, received a phone call from a young lady, Samantha West, asking him if he wanted a deal on health insurance. After she responded to a number of his queries in what sounded like prerecorded fashion, he asked her point-blank whether she was a robot, to which he got the reply “I am human.” When he repeated the question, the connection was cut off. Samantha West turned out to be a system of recorded messages that were part of a computer program created by the brokers for health insurance The point is not that humans were not involved, but that the experts had worked out that far fewer of them needed to be involved to sell a given quantity of health insurance. Orthodox economics tells us that automating such transactions, by lowering the cost of health insurance, will enable many more policies to be sold, or release money for other kinds of spending, thus replacing the jobs lost. But orthodox economics never had to deal with competition between humans and machines.
  • The sun never sets on Eton’s empire – “Controversy over the school reflects the increasing polarisation between rich and poor.”
  •  Einstein’s Lost Theory Discovered … And It’s Wrong – “Faced with evidence the universe was growing, Einstein apparently wanted to figure out why it wasn’t filling up with empty space. His proposed solution is in this newly discovered paper. As the universe expanded, he suggested, new matter showed up to fill the gaps. New stars and galaxies would just pop up, according to Einstein’s model, so that even as the universe grew, it would look the same. Just to be clear, this theory is totally wrong. But for a little while Einstein thought it was right. The numbers made sense, because he had made a mathematical mistake. In the middle of a complicated calculation, he wrote a minus sign where he should have written a plus.”
  • Half Of Americans Believe In Medical Conspiracy Theories – “Despite evidence to the contrary, many Americans believe cellphones cause cancer and that health officials are covering it up. Discredited theories about vaccines and fluoridation also remain popular.”

The bankers united will never be defeated

March 20th, 2014 Comments off

I dip my lid to the cartoonist. About bankers – what else is there to say? From Moir on Twitter.
2014-03-20_bankers

Categories: Ticket clippers Tags:

Prosecute bankers and not just banks

March 10th, 2014 Comments off
  • Lawsky to step up assault on Wall Street’s corporate wrongdoing – Benjamin Lawsky, New York’s aggressive banking regulator who is campaigning to clean up Wall Street, is turning his sights on the individuals as well as the institutions who squeeze struggling homeowners or help banks violate US sanctions. ‘Corporations are a legal fiction. You have to deter bad individual conduct within corporations’, said Mr Lawsky, superintendent of NY’s Department of Financial Services, in an interview with the Financial Times. ‘People who did the conduct are going to be held accountable’.”
  • Forex probes set to dwarf Libor cases – The global probe into possible price rigging in foreign exchange markets has spawned a new industry centred on investigating the £5.3tn a day sector as regulators and global banks throw enormous resources at shedding light on the allegations.

2014-03-10_cameronfacebook

  • David Cameron mocked for paying for Facebook friends – “Prime minister’s ‘selfie’ gaffe on Twitter followed by news that Tory party paid to get him more ‘likes’ on social network… The Mail on Sunday reports that the Tories have spent thousands of pounds on advertising to encourage Facebook users to “like” Cameron’s page. Marketing experts estimated that the campaign cost about £7,500, and succeeded in boosted Cameron’s “likes” by 47,000 to 127,000, overtaking Nick Clegg’s 80,000 in the process.
  • Diamonds: Natural and unnatural wonders – “How much more do you think someone should pay to propose with a stone that’s a billion years old, as opposed to one made last week in a factory?”
  • Migrants die in Yemen boat sinking – Forty-two African migrants have drowned when their boat capsized off the coast of Yemen, according to officials… Every year thousands of Africans make the perilous journey to Yemen in crowded boats. Hundreds have died.

2014-03-10_david

Bookmakers as ticket clippers

March 9th, 2014 Comments off

With the British corporate bookmakers now dominating the trade in Australia would-be customers should note this story from Britain’s Observer showing that it is not just bankers who can clip a client’s deposit account:

2014-03-09_inactiveaccountfees

 

Categories: Betting, Ticket clippers Tags:

The ticket clipping update – More bankers suspended

March 7th, 2014 Comments off

From London’s Daily Telegraph:

2014-03-07_forexscandal

Categories: Ticket clippers Tags:

Banking ethics Credit Suisse style

February 26th, 2014 Comments off

Credit Suisse ‘helped US tax evaders’ – FT.com.

Credit Suisse made false claims in US visa applications, conducted business with clients in secret elevators and shredded documents to help more than 22,000 American customers avoid US taxes, according to a scathing report by a US congressional committee.

Categories: Ticket clippers Tags:

The murky cowboy world of bank traders

February 17th, 2014 Comments off

Forex in the spotlight – FT.com.

It just goes on and on doesn’t it – the complete lack of ethics involved in modern banking? From the FT comes this episode:

The annual Prime Finance get-together in The Hague is a rather arid affair, with a coterie of academics, lawyers and the odd banker gathering to discuss the finer points of jurisprudence in the international markets.

But at last month’s event a trader spiced things up. “We’ll figure out ways around any rules, so why do you think anything you’re doing is going to make a difference?” the trader asked, according to an attendee.

The trader’s words capture the cowboy mentality of some working in the murkier areas of the trading world, such as foreign exchange and commodities. But for all the bravado, it may be the mindset of a dying breed.

Over recent months, a fast-expanding global investigation into alleged collusion and manipulation among foreign exchange traders has rocked the forex units of more than a dozen large banks, raising fundamental questions about the way they operate.The trader’s words capture the cowboy mentality of some working in the murkier areas of the trading world, such as foreign exchange and commodities. But for all the bravado, it may be the mindset of a dying breed.

Over recent months, a fast-expanding global investigation into alleged collusion and manipulation among foreign exchange traders has rocked the forex units of more than a dozen large banks, raising fundamental questions about the way they operate.

You will find other examples of banking ethics in my Ticket Clipping section HERE.

 

 

Categories: Ticket clippers Tags:

Ticket clippers, disappearing butterflies and other news and views Wednesday 5 February

February 5th, 2014 Comments off

A ticket clipping update. The head of Britain’s Financial Conduct Authority (FCA), Martin Wheatley, has told MPs that 10 banks were now helping with its investigation of foreign exchange rate-fixing. “The allegations are every bit as bad as they have been with Libor,” Mr Wheatley told the Treasury Select Committee referring to the interest rate scandal that led to banks paying $6bn in fines. And the investigations of the ways banks and their employees make a billion or so from the unsuspecting public is now going even wider. Mr Wheatley revealed the FCA’s probe had now widened, and “a number of other benchmarks that operate in London” were being investigated “because of concerns that are being raised with us”.

In the United States meanwhile, Morgan Stanley said it would pay $1.25 billion to the U.S. regulator for Fannie Mae and Freddie Mac to settle a lawsuit related to the sale of mortgage-backed securities.

Not to forget about Australia where a court ruled that the late payment fees the bank charged customers by the ANZ Bank were extravagant, exorbitant and unconscionable.

The disappearing butterfly. The number of monarch butteflies migrating from the north of America to the Oyannel fir forest in Mexico’s Sierra Madre mountains has dropped this year to a new record low.

World Wildlife Fund Mexico announced onWednesday that just 33.5 million individuals are wintering in Mexico this year – back in 1997, there were over 1 billion.

5-02-2014 monarch

 

An article in Climate Progress notes that although the number of butterflies varies from year to year — the long term average over the past 20 years of record keeping is 350 million — this year’s number is the 9th consecutive yearly measurement below the long term average.

Researchers have identified three major factors that are driving the decline: deforestation in Mexico, agriculture displacing key milkweed habitat in the U.S., and episodes of extreme weather along the migration route.

Our small time boat people problemReports the BBC:

More than 2,000 migrants landed on Italian shores in January, the government says, compared to just 217 in the same month last year. Deputy Interior Minister Filippo Bubbico said Italy was subject to an “incessant and massive influx of migrants” in 2013. He said that a total of 42,925 migrants reached Italy by sea last year, an increase of 325% on 2012. The figures do not include migrants who died making the perilous sea crossing.

Other items noticed along the way

  • OECD ‘debunks myth’ that poor will fail at school – “There is nothing inevitable about the weaker academic performance of poorer pupils, says an analysis of Pisa tests by the OECD’s Andreas Schleicher. Mr Schleicher, who runs the tests, says the high results of deprived pupils in some Asian countries shows what poor pupils in the UK could achieve. The most disadvantaged pupils in Shanghai match the maths test results of wealthy pupils in the UK.Mr Schleicher says it ‘debunks the myth that poverty is destiny’.”
  • New research reveals that unemployment is especially hellish in the U.S. — because unemployed Americans blame themselves for their plight.
  • Miles Kimball on the Extraordinary Inequities of Restrictions on International Migration – “Miles Kimball starts a train of thought that leads to the conclusion that our descendants 500 years in the future–if we have a good future, that is–may well likely to regard our tolerance of our present-day restrictions on global migration from country to country with roughly the same kind of horror that we today regard James Madison’s, Thomas Jefferson’s, and Aristotle’s tolerance of slavery.”
  • Why the Rich Feel Besieged: A Checklist
  • Lessons from the economics of crime – “In many settings, criminal behaviour can be analysed just like any other economic decision-making process, namely – as the outcome of individual choices influenced by perceived consequences. This column explains the advantages of adopting an economic approach to understanding crime. Furthermore, criminal law and crime-prevention programmes can be evaluated using the same normative techniques applied to health, education, and environmental regulation.”

Just another banking error

January 30th, 2014 Comments off

ANZ review after glitch forces $70m in home loan refunds.

ANZ Bank is conducting a sweeping review all of its home loan, savings and small business accounts to ensure they are operating correctly, after a major glitch forced it to refund $70 million to 235,000 home loan customers.

Last week the bank commenced sending out letters to the customers, who were charged incorrect interest rates through their mortgage offset accounts due to processing errors by the bank.

Some of the errors dated back to 2003, and occurred because key processes were carried out manually, leaving the door open to human error.

Customer complaints first alerted the bank to problems with the offset accounts in 2010, which then led to a four-year review led by PwC.

Categories: Ticket clippers Tags:

Yet more ticket clipping – Banks and market rigging

January 14th, 2014 Comments off

Exclusive: FBI suspects front running of Fannie, Freddie in swaps market | Reuters.

Wall Street traders may be manipulating a key derivatives market and front running Fannie Mae and Freddie Mac, hurting the US-owned mortgage giants in the process, according to an FBI intelligence bulletin reviewed by Reuters.

Using what Federal Bureau of Investigation agents described as “unsophisticated tradecraft,” such as hand signals and special telephone ring tones, some traders are conspiring to rig rates on large orders submitted by Fannie Mae and Freddie Mac, or front running them in the interest rate swaps market, the document says.

The FBI said in the bulletin that the information came from a former high-level employee at a U.S. bank and an employee at a Canadian Bank, plus interviews with other bank workers conducted in 2012 and 2013. The former high-level employee at the U.S. bank estimated the front running had resulted in profits of $50 million to $100 million for the bank, the FBI said.

The bulletin did not name any of the traders or banks suspected of the activity, or indicate whether it may extend beyond the two banks.

Front running occurs when someone with advance knowledge of another market participant’s plan to make a sizable transaction puts an order in first, often profiting from a market move that can occur once the big trade has gone through.

 

The FBI bulletin is the latest indication that officials are concerned that traders are manipulating financial markets. U.S. and European authorities have fined 10 banks around $6 billion for allegedly manipulating the London Interbank Offered Rate, or LIBOR, and other interest rate benchmarks, and authorities are actively investigating comparable behavior in the foreign exchange market.

Categories: Ticket clippers Tags:

Make way for more wolves of Wall Street – FT.com

January 10th, 2014 Comments off

Make way for more wolves of Wall Street – FT.com

The people who once would have been gangsters can now be found in the darker corners of finance

I suspect that many readers of the Financial Times will find something objectionable in Martin Scorsese’s latest filmThe Wolf of Wall Street. Running at three hours, it explores the pleasures of snorting cocaine, swallowing sedatives, lying, stealing, cursing, cheating on your wife, hiding money in Switzerland, taking part in orgies and dwarf tossing.

But for anyone interested in business – and the way it is practised in New York – the movie is food for thought. Mr Scorsese is a leading chronicler of the American underworld, and he has documented a disturbing chapter in its evolution. The auteur himself has noticed that the kinds of people who used to do terrible things in his old mob films have found profitable homes in the darker corners of finance.

 

Categories: Ticket clippers Tags:

$50 billion bill to come for US banks

January 10th, 2014 Comments off

The figures for the penalties US banks probably still have to pay for their financial crisis shenanigans just seem to get bigger and bigger. Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits is the headline on a New York Times Dealb%k story predicting the price of buying peace from federal authorities who are taking aim at the banks over their role in the mortgage crisis.

Bracing for a potential reckoning, the banks and their outside lawyers are quietly using JPMorgan Chase’s record $13 billion mortgage settlement in November to do the math and determine just how much each bank might have to pay to move beyond the torrent of government mortgage litigation that has dogged them since the financial crisis. Such calculations, people briefed on the matter said, have gained particular urgency among the banks’ board members.

If the settlements materialize, they could yield, according to the analysis, $15 billion in relief for consumers — a mixture of cash payments and other assistance, like reductions in the size of homeowners’ loan payments. A payment of $50 billion, made up of a string of separate deals, would amount to roughly half the total annual profit of large American banks in 2012.

Categories: Ticket clippers Tags:

Yet more criminal investigations of big banks

January 9th, 2014 Comments off

JP Morgan Chase and Co has so far agreed to roughly $22 billion in payouts over the last year to settle various lawsuits including this week’s settlement for alleged failures to stop Bernard L. Madoff’s massive fraud. But don’t think the story of misbehaviour by the biggest bank in the USA is over. The US government is still investigating alleged manipulation of currency and interest-rate benchmarks along with JP Morgan’s overseas hiring practices and now, reported the Wall Street Journal this week, it is one of at least eight banks under scrutiny by prosecutors and regulators over whether banks cheated mortgage-bond clients in the years following the financial crisis.

The Justice Department is investigating alongside the Securities and Exchange Commission and the special inspector general for the Troubled Asset Relief Program, or Sigtarp, the people close to the probe said. The investigation, revealed by The Wall Street Journal in a page-one article Wednesday, is the first known wide-ranging probe into mortgage-bond sales by banks in the years after the economic meltdown of 2008.

Categories: Ticket clippers Tags:

Amex fined after staff misled customers

December 25th, 2013 Comments off

American Express will pay $75.7m in fines and reimbursements to customers, after regulators found that its salesforce misled customers over the benefits of numerous credit card insurance products.

Some 335,000 Amex customers will receive compensation as a result of a settlement announced on Christmas Eve with three US regulators.

via Amex fined after staff misled customers – FT.com.

Categories: Ticket clippers Tags:

Bankers – they cheat us here, they cheat us there

December 20th, 2013 Comments off

Headlines from around the world this morning suggest that banks cheat us everywhere.

From Australia’s Fairfax papers:

2013-12-20_banksandsuper

And on the other side the of the world comes this report from the European edition of The Wall Street Journal:

2013-12-20_cheatingbankers

 

Clipping the ticket of ordinary people’s savings appears to have no limit for the money managers.

And now, it seems, the Australian Coalition government is intent on aiding and abetting the robbery. The Assistant Treasurer Arthur Sinodinos today announced plans to undo changes made by the previous Labor government to protect consumers from greedy financial planners. One of the proposed changes would water down a provision obliging financial advisors to always act in the best interests of their clients.

The ABC reports that the Government also wants to remove the “opt-in” requirement, which forces financial advisors to contact fee-paying clients every two years to renew their contacts. It would also scrap rules requiring financial advisors to disclose how much they charge clients in annual fees.

The group representing industry superannuation funds is worried the changes will allow financial planners to once again receive sales commissions, paid for by banks and private super funds.

Industry Super Australia executive manager David Whitely says he particularly concerned about provision requiring advisor’s to act the best interest of clients.

“We’re very concerned that changes to the best interest test will result in creating loopholes which allow financial planners to once again receive sales commissions, ongoing fees, volume rebates and all sorts of other incentives to sell a product,” he said.

Categories: Ticket clippers Tags:

How big banks help the ticket clipping of the poor

December 18th, 2013 Comments off

Your neighborhood pawn shop is propped up by big banks.

From the Washington Post’s Wonkblog:

We usually think of payday lenders, pawn shops, rent-to-own stores and other high-cost loan operations as alternative forms of financing for people who are short of cash. But that’s merely a facade: They couldn’t operate without billions of dollars in cheap capital from the nation’s biggest banks.

Reinvestment Partners, a North Carolina-based non-profit that advocates for the underbanked, put out a report Monday laying out how the system works, and just how much money flows through it — $5.5 billion, to be precise.

Categories: Ticket clippers Tags:

A ticket clipping update – Which bank?

December 18th, 2013 Comments off

From this morning’s Fairfax business pages:

An independent expert will investigate Commonwealth Bank’s online broker, CommSec, after the financial regulator found it pooled clients’ money and withdrew funds from client accounts for years without authorisation…

It follows findings by the Australian Securities and Investments Commission that the broker and another CBA subsidiary, Ausiex, was withdrawing client money for daily cash settlements and shifting the bank’s own money into client trust accounts.

Categories: Ticket clippers Tags:

European Union Fines Banks Billions For Rigging Interest Rates

December 5th, 2013 Comments off

From the European Commission’s press release Antitrust: Commission fines banks € 1.71 billion for participating in cartels in the interest rate derivatives industry

The European Commission has fined 8 international financial institutions a total of € 1 712 468 000 for participating in illegal cartels in markets for financial derivatives covering the European Economic Area (EEA). Four of these institutions participated in a cartel relating to interest rate derivatives denominated in the euro currency. Six of them participated in one or more bilateral cartels relating to interest rate derivatives denominated in Japanese yen. Such collusion between competitors is prohibited by Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEA Agreement. Both decisions were adopted under the Commission’s cartel settlement procedure; the companies’ fines were reduced by 10% for agreeing to settle.

Joaquín Almunia, Commission Vice-President in charge of competition policy, said: “What is shocking about the LIBOR and EURIBOR scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other. Today’s decision sends a clear message that the Commission is determined to fight and sanction these cartels in the financial sector. Healthy competition and transparency are crucial for financial markets to work properly, at the service of the real economy rather than the interests of a few.”

Interest rate derivatives (e.g. forward rate agreements, swaps, futures, options) are financial products which are used by banks or companies for managing the risk of interest rate fluctuations. These products are traded worldwide and play a key role in the global economy. They derive their value from the level of a benchmark interest rate, such as the London interbank offered rate (LIBOR) – which is used for various currencies including the Japanese yen (JPY) – or the Euro Interbank Offered Rate (EURIBOR), for the euro. These benchmarks reflect an average of the quotes submitted daily by a number of banks who are members of a panel (panel banks). They are meant to reflect the cost of interbank lending in a given currency and serve as a basis for various financial derivatives. Investment banks compete with each other in the trading of these derivatives. The levels of these benchmark rates may affect either the cash flows that a bank receives from a counterparty, or the cash flow it needs to pay to the counterparty under interest rate derivatives contracts.

See also European Union Fines Banks Billions For Rigging Interest Rates : The Two-Way : NPR.

Categories: Ticket clippers Tags:

Pressure builds for tougher UK bank reform

November 26th, 2013 Comments off

Pressure builds for tougher UK bank reform – FT.com.

George Osborne will on Tuesday face fresh demands to toughen up “inadequate” new banking regulation as public pressure mounts over the controversies plaguing Royal Bank of Scotland, the Co-operative Bank and payday lenders.

Justin Welby, the Archbishop of Canterbury, will join Lord Lawson, the former Tory chancellor, and other senior peers in seeking to amend Mr Osborne’s banking reform bill, which is intended to draw a line under the banking scandals of the last five years.The peers want a robust licensing regime for senior bankers below board level, draconian sanctions for banks that undermine the new “ringfence” separating high street lending from investment banking and other new powers for regulators.

Categories: Ticket clippers Tags:

US banks warn Fed interest cut could force them to charge depositors

November 25th, 2013 Comments off

US banks warn Fed interest cut could force them to charge depositors – FT.com.

Leading US banks have warned that they could start charging companies and consumers for deposits if the US Federal Reserve cuts the interest it pays on bank reserves.

Depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households.

 

 

Categories: Ticket clippers Tags:

Why No Bankers Go to Jail

November 19th, 2013 Comments off

Paula Dwyer writing for Bloomberg’s The Ticker has a couple of interesting posts on the failure of US federal prosecutors failing to charge top financial executives with criminal wrongdoing.

In Judge Rakoff Wants Someone to Pay, Ms Dwyer quotes a recent speech to a gathering of securities lawyers by U.S. District Court judge Jed Rakoff, “who’s been at the heart of some of the most significant trials stemming from the financial crisis”,  asking why there haven’t been more criminal prosecutions.

2013-11-19_jedrakoff

The lack of prosecutions of senior financial executives “must be judged one of the more egregious failures of the criminal justice system in many years,” he said. And with a five-year statute of limitations running out, it appears “very likely” that none ever will be charged, Rakoff said.

In the follow up Why No Bankers Go to Jail she summarises the judge’s attempt to explain the hesitance to bring to justice those who contributed to the worst economic crisis since the Great Depression.

Theory 1: U.S. attorneys and the Federal Bureau of Investigation have other priorities, whether it’s antiterror cases after the Sept. 11 attacks, accounting frauds after Enron’s bankruptcy, or Ponzi rip-offs after Bernard Madoff’s huge scam. Financial frauds are particularly tough to crack, and many of the prosecutors with the requisite knowledge have been moved to other areas.

Theory 2: Law enforcement agencies have had to compete for a shrinking pot of money from Congress, and the best way to do that is by beefing up their statistics with smaller, easier cases and avoiding the years-long financial fraud probes that may turn up nothing. The Manhattan U.S. attorney, moreover, has been preoccupied with the sprawling insider-trading case against hedge-fund owner Raj Rajaratnam. Tapes of his conversations have been a gold mine — resulting in slam-dunk cases that have led to numerous convictions — for Manhattan prosecutors who previously would have focused on bank fraud.

Theory 3: The federal government’s involvement in the mid-2000s bubble — encouraging more people to buy homes, deregulating the financial industry, keeping interest rates low and giving Fannie Mae and Freddie Mac way too much leeway — may also have given prosecutors pause.

Theory 4: The U.S. has shifted over the last 30 years from prosecuting high-level individuals to using delayed-prosecution agreements to settle cases against entire companies. That shift “has led to some lax and dubious behavior on the part of prosecutors,” Rakoff said, including allowing managers to sweep crimes under the rug.

Categories: Ticket clippers Tags:

The ethics of banking – hire a Chinese leader’s daughter

November 15th, 2013 Comments off

Disclosures about the wonderful ways of bankers just keep on coming. This time the investigation is into a little matter of bribery and corruption.

The Securities and Exchange Commission and the U.S. attorney’s office in Brooklyn, N.Y., are looking into $1.8 million that JPMorgan Chase paid to a two-person firm in China where one of the twosome was the daughter of China’s then Prime Minister Wen Jiabao. Not that the relationship with a relative was obvious. The consulting contract used the pseudonym Lily Chang rather than the daughter’s actual name of  Wen Ruchun.

The New York Times reports that United States authorities are scrutinizing JPMorgan’s ties to Ms. Wen, whose alias was government approved, as part of a wider bribery investigation into whether the bank swapped contracts and jobs for business deals with state-owned Chinese companies, according to the documents and interviews. The bank, which is cooperating with the inquiries and conducting its own internal review, has not been accused of any wrongdoing.

The story makes for fascinating reading and follows on nicely from Times reports last year that Wen Jibao’s family had amassed $2.7 billion in assets.

2013-11-15_jpmorganandthewenfamily

Regulators’ £500m fines fail to change corporate behaviour – FT.com

November 12th, 2013 Comments off

Dealing with the ticket clippers is a difficult task. Fines don’t seem to make any difference to behaviour as this Financial Times of London story makes clear.

Regulators’ £500m fines fail to change corporate behaviour – FT.com.

Perhaps it will take criminal jail sentences of senior executives to really make a diffrence,