The Mega Banks’ Most Devious Scam Yet

General Jackson Slaying the Many Headed Monster cropBanks are no longer just financing heavy industry. They are actually buying it up and inventing bigger, bolder and scarier scams than ever, writes Matt Taibbi at Rolling Stone:

…Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals. They likewise can now be found exerting direct control over the supply of a whole galaxy of raw materials crucial to world industry and to society in general, including everything from food products to metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum. And they’re doing it not just here but abroad as well: In Denmark, thousands took to the streets in protest in recent weeks, vampire-squid banners in hand, when news came out that Goldman Sachs was about to buy a 19 percent stake in Dong Energy, a national electric provider. The furor inspired mass resignations of ministers from the government’s ruling coalition, as the Danish public wondered how an American investment bank could possibly hold so much influence over the state energy grid.

There are more eclectic interests, too. After 9/11, we found it worrisome when foreigners started to get into the business of running ports, but there’s been little controversy as banks have done the same, or even started dabbling in other activities with national-security implications – Goldman Sachs, for instance, is apparently now in the uranium business, a piece of news that attracted few headlines.

Wall Street’s War

But banks aren’t just buying stuff, they’re buying whole industrial processes. They’re buying oil that’s still in the ground, the tankers that move it across the sea, the refineries that turn it into fuel, and the pipelines that bring it to your home. Then, just for kicks, they’re also betting on the timing and efficiency of these same industrial processes in the financial markets – buying and selling oil stocks on the stock exchange, oil futures on the futures market, swaps on the swaps market, etc.

Allowing one company to control the supply of crucial physical commodities, and also trade in the financial products that might be related to those markets, is an open invitation to commit mass manipulation. It’s something akin to letting casino owners who take book on NFL games during the week also coach all the teams on Sundays.

The situation has opened a Pandora’s box of horrifying new corruption possibilities, but it’s been hard for the public to notice, since regulators have struggled to put even the slightest dent in Wall Street’s older, more familiar scams. In just the past few years we’ve seen an explosion of scandals – from the multitrillion-dollar Libor saga (major international banks gaming world interest rates), to the more recent foreign-currency-exchange fiasco (many of the same banks suspected of rigging prices in the $5.3-trillion-a-day currency markets), to lesser scandals involving manipulation of interest-rate swaps, and gold and silver prices.

But those are purely financial schemes. In these new, even scarier kinds of manipulations, banks that own whole chains of physical business interests have been caught rigging prices in those industries. For instance, in just the past two years, fines in excess of $400 million have been levied against both JPMorgan Chase and Barclays for allegedly manipulating the delivery of electricity in several states, including California. In the case of Barclays, which is contesting the fine, regulators claim prices were manipulated to help the bank win financial bets it had made on those same energy markets.

And last summer, The New York Times described how Goldman Sachs was caught systematically delaying the delivery of metals out of a network of warehouses it owned in order to jack up rents and artificially boost prices.

You might not have been surprised that Goldman got caught scamming the world again, but it was certainly news to a lot of people that an investment bank with no industrial expertise, just five years removed from a federal bailout, stores and controls enough of America’s aluminum supply to affect world prices.

How was all of this possible? And who signed off on it?…

[continues at Rolling Stone]


Majestic is gadfly emeritus.

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13 Comments on "The Mega Banks’ Most Devious Scam Yet"

  1. Liam_McGonagle | Feb 16, 2014 at 3:37 pm |

    Through the legal doctine of “usufruct” I belive that Archer Daniels Midland have a good claim to legal control of at least 80% of the North American population. It would be a perversion of the law to allow lazy, grasping consumers to seize control of proteins whose existance is only made possible through use of ADM products.

  2. Anarchy Pony | Feb 16, 2014 at 3:44 pm |

    What’s the best way to ensure profits? Buy everything and rent it out.

    • Liam_McGonagle | Feb 17, 2014 at 11:35 am |

      And if you can do with cash borrowed from the taxpayers at 0% interest, so much the better.

  3. BuzzCoastin | Feb 16, 2014 at 5:51 pm |

    jpmorgan backed edison
    ousted him
    merge edison’s companies into others they owned
    and formed general electric
    around 1900ish
    (edison screwed tesla & jpmorgan screwed edison)

    this is a very old game
    several centuries old now
    and exposed multiple times over the centuries
    why does it continue?
    it’s an effect of the money technology
    money controls people
    people are monkeys when it comes to money
    centuties of the sameole sameole

    money technology has beneficial services
    not many pay attention to the disservices
    which are Legion

  4. Rhoid Rager | Feb 16, 2014 at 9:36 pm |


  5. VaudeVillain | Feb 17, 2014 at 12:43 am |

    Heheheh… Dong Energy… heheheh.

  6. Russell Scott Day | Feb 17, 2014 at 2:24 am |

    All the names are changed to obscure who is really in charge.

  7. You may want to read some of Joseph Farrell’s high octane speculations over at Giza Death Star.

  8. sdkeller72 | Feb 21, 2014 at 8:28 am |

    We need to nationalize the banking system and throw these criminals in a dark hole and never allow any branch of the Rothschild family tree to be involved in banking anywhere on the planet ever again.

    • PithHelmut | Mar 27, 2014 at 11:02 pm |

      We need to stop using this monetary system based on greed. It can be based on anything we want, carbon sequestration, grace, virtue.

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