Tag Archives | Banking

Goldman Sachs Contains 4,000 Separate Corporate Entities

Including more than 739 companies based in the Cayman Islands alone. Common Dreams on the staggering webs woven by multinationals as they split and grow, bringing to mind primitive, blob-like life forms expanding and engulfing their surroundings:

The London-based Open Data Institute has collected and mapped ccorporate data, much of it made public for the first time, showing the complex relationships between multinational companies and their global subsidiaries. Stunning visuals on the corporate networks of the six biggest banks in the U.S. – Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo, Citigroup and JP Morgan – show the tangled webs they weave.

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Senators Propose Bill To Break Up Biggest Banks

elizabeth warrenElizabeth Warren for president? Reuters reports:

 A small bipartisan group of senators on Thursday introduced legislation that would break up Wall Street’s megabanks by separating traditional banking activity from riskier financial services.

The bill, called the 21st Century Glass-Steagall Act, has an uncertain future, but it shows some lawmakers’ frustration that banks have only continued to grow since the 2007-2009 financial crisis.

Democratic Senator Elizabeth Warren from Massachusetts, is one of the sponsors of the bill [along with] Republican Senator John McCain from Arizona, Democratic Senator Maria Cantwell from Washington, and Senator Angus King, an independent from Maine.

The legislation would bring back elements of the 1933 Glass-Steagall Act, which divided commercial and investment banking, and was repealed in 1999. It would separate the operations of traditional banks with accounts backed by the FDIC from riskier activities such as investment banking, insurance, swaps and hedge funds.

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German Bank Worker Accidentally Transfers Nearly $300 Million By Falling Asleep On Keyboard

falling asleep on keyboardSomething tells me that the falling-asleep-on-keyboard mistake will eventually be how the world ends. Via FRANCE 24:

An obviously tired German bank employee fell asleep on his keyboard and accidentally transformed a minor transfer into a 222 million euro ($293 million) order, a court heard Monday.

The Hessen labour court heard that the man was supposed to transfer just 62.40 euro from a bank account belonging to a retiree, but instead “fell asleep for an instant, while pushing onto the number 2 key on the keyboard” — making it a huge 222,222,222.22 euro order.

The bank discovered the mistake shortly afterwards and corrected the error. The case was taken to court by the man’s 48-year-old colleague who was fired for letting the mistake slip through when verifying the order.

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Wall Street Investors Buying Up Entire Neighborhoods In Poorer Areas

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Wall Street investment firms are eager to become your new landlord. New York Times Dealbook reports:

Large investment firms have spent billions of dollars over the last year buying homes in some of the nation’s most depressed markets. The influx has been so great, and the resulting price gains so big, that ordinary buyers are feeling squeezed out. Nationwide, 68 percent of the damaged homes sold in April went to investors, and only 19 percent to first-time home buyers.

Wall Street played a central role in the last housing boom by supplying easy — and, in retrospect, risky — mortgage financing. Now, investment companies like the Blackstone Group have swooped in, buying thousands of houses in the same areas where the financial crisis hit hardest.

Blackstone, which helped define a period of Wall Street hyperwealth, has bought some 26,000 homes in nine states. Colony Capital, a Los Angeles-based investment firm, is spending $250 million each month and already owns 10,000 properties.

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Liberty Reserve, “Bank of Choice for the Criminal Underworld”

Liberty reserveKurt Eichenwald likens the latest massively fraudulent bank scandal at Liberty Reserve to BCCI (remember them, the terrorist bankers of choice?), at Vanity Fair:

Another day, another alleged fraud. But this one—brought to light by the federal indictment of Liberty Reserve, which prosecutors said was one of the world’s largest online money operations—sounded a little bit too familiar.

According to the charges, the operators of Liberty Reserve constructed an extremely complex international network for financial transactions that allowed its customers to transmit vast sums of money around the globe, all while operating under layers of anonymity. As a result, the indictment says, “Liberty Reserve was in fact used extensively for illegal purposes, functioning in effect as the bank of choice for the criminal underworld.”

If that rings a bell for any of you fraud aficionados, think back to 1991 and the virtual financial explosion of a shadowy international institution called the Bank of Credit and Commerce International, best known as B.C.C.I.

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Major U.S. Banks’ Checks Sent To Homeowners Bounce In $3.6 Billion Improper Foreclosure Settlement

improper foreclosureHere’s fair warning that if Bank of America, Citibank, Goldman Sachs, HSBC, or Wells Fargo illegally foreclose on your home, the piddling compensation check sent to you a few years later may bounce when you attempt to cash it. Via ABC News:

A bunch of big banks agreed to a $3.6 billion legal settlement a few months ago to halt a review of improper foreclosures, in which banks’ law firms fabricated and robosigned documents.

Under the settlement, checks will be sent to more than 4 million homeowners who lost their homes to foreclosure in 2009 and 2010.

The first wave of checks was sent Friday. And, according to the Federal Reserve, at least some of them bounced. The Fed phrased it this way: “Some early recipients of checks informed the Federal Reserve’s consumer helpline on Tuesday that they were told their checks could not be cashed.” The Fed says the problem has been solved.

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Goldman Sachs Rejects Proposal To Run For Political Office

The investment banking giant needed intervention from the SEC to ensure that a shareholder’s satirical proposal—that the firm drop all pretense and simply run for political office as a candidate called “Goldman Sachs”—will not be put to a vote at its annual meeting, reports Bloomberg:

A shareholder proposal that the New York-based company run for office instead of funding political campaigns was discarded, according to a letter last month from the Securities and Exchange Commission, which agreed the firm can exclude the measure from its annual meeting.

Harrington Investments Inc. President John Harrington submitted the proposal last year, saying the $6.39 million in 2012 political contributions from the firm’s employees risks doing more harm to its reputation. He said the bank should explore running for office, using a U.S. Supreme Court ruling that corporations have similar political rights to individuals.

“It would be less damaging to the integrity of our political system and our company, for our corporation to directly run for office as a person under federal or state law, than to continue in the current form of political participation,” Harrington wrote in the proposal.

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How Your Social Media Score Will Shape Your Life Options

On the intertwining of social capital and literal capital, the Economist reveals:

Facebook data already inform lending decisions at Kreditech, a start-up that makes loans in Germany, Poland and Spain. Applicants are asked to provide access for a limited time to their account on Facebook or another social network. Much is revealed by your friends, says Alexander Graubner-Müller, one of the firm’s founders. An applicant whose friends appear to have well-paid jobs and live in nice neighbourhoods is more likely to secure a loan. An applicant with a friend who has defaulted on a Kreditech loan is more likely to be rejected.

An online bank that opens in America this month will use Facebook data to adjust account holders’ credit-card interest rates. Based in New York, Movenbank will monitor messages on Facebook and cut interest rates for those who talk up the bank to friends. If any join, the referrer’s interest rate will drop further.

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U.S. Goverment Says Drug Cartel-Linked Banking Giant HSBC Is Too Big To Jail

HSBC was fined of $1.9 billion this week for laundering billions of dollars for Colombian and Mexican drug cartels. It’s worth noting that for the world’s second largest bank, with trillions in assets, this is equivalent to a littering ticket. The New York Times writes:

It is a dark day for the rule of law. Federal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system. They also have not charged any top HSBC banker in the case, though it boggles the mind that a bank could launder money as HSBC did without anyone in a position of authority making culpable decisions.

When prosecutors choose not to prosecute to the full extent of the law in a case as egregious as this, the law itself is diminished.

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The Psyche Of The Wall Street Quant

Via Ghost Exchange, excerpts from a fascinating PBS interview with former hedge fund analyst Cathy O’Neil on the culture within Wall Street:

The basic cultural assumptions were not pleasant to me. The sort of most basic cultural assumption was that as a smart person, we have the right to take advantage of the system and of “dumb people.” And that is sort of — I mean, I guess I should have known, going into a hedge fund, that’s what people think.

I was thinking of it naively, more like, “Oh, there’s a system, and we should see what inefficiencies there are in the system and add information.” I mean, I just sort of drank that Kool-Aid. But once I was inside, I realized that’s not really how people think about it. They think, “Well, of course we’re going to take advantage, because we’re smart, and we can. We have better tools, and our tools are our brains.” Take advantage of absolutely everything and everyone that we can, in any way we can.

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