Tag Archives | Banksters

Shadow Banking Industry Now Worth $76 Trillion

Will unregulated, debt-based financial products destroy the world? Bloomberg reports that the funneling of capital into instruments of so-called “shadow banking” continues to balloon to unimaginably large proportions:

The shadow banking industry has grown to about $67 trillion, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight. The Financial Stability Board, a global financial policy group comprised of regulators and central bankers, found that shadow banking grew by $41 trillion between 2002 and 2011.

The size of the shadow banking system, which includes the activities of money market funds, monoline insurers and off-balance sheet investment vehicles, “can create systemic risks” and “amplify market reactions when market liquidity is scarce,” the FSB said.

Supervisors consider shadow banking activities to be those that allow banks to carry out business off balance sheets, as well as those which allow investors to bypass lenders and the functions they traditionally fulfill on the markets.

Read the rest

Continue Reading

What The Bankers Did Next

The U.K.-based Spinwatch has created an eight-minute film on the “private conversations” between government and the banking industry, and the industry’s use of lobbying and public relations to attempt to shape consensus reality in the wake of the financial crisis:

‘What The Bankers Did Next…’ takes a look at the government’s close relationship with the finance industry, some of the key players involved, and their efforts to manage public opinion and shut down debate.

Continue Reading

Woman Sues 12 Of The World’s Largest Banks Over Libor Rate Manipulation

In short, the pillars of finance are accused of illegally boosting Libor at the start of each month in order to inflate the interest rates (based on Libor and calculated at the beginning of the month) paid by as many as 100,000 mortgage holders, in what would seem to be the bilking of a pretty immense sum of money, CNBC reports:

A pensioner whose home was repossessed is taking on some of the world’s leading banks in the first known class-action lawsuit claiming that alleged Libor manipulation made mortgage repayments for thousands of Americans more expensive than they should have been. The subprime mortgages of Annie Bell Adams and her four co-lead plaintiffs were securitised into Libor-based collateralised debt obligations and sold by banks to investors.

The class action, filed in New York, alleges that traders at 12 of the biggest banks in Europe and North America – including Barclays, Bank of America and UBS – were incentivised to manipulate the London interbank offered rate to a higher rate on certain dates on which adjustable mortgage interest rates were reset.

Read the rest

Continue Reading

Crashing The Investment Banking Awards

The previously mentioned U.K.-based activist squad The Intruders somehow got inside the Investment Banking Awards, where they realized that this year’s most noteworthy accomplishment had gone unmentioned:

The Investment Banking Awards are the Oscars of the financial world. Dished out for so-called ‘innovation’, some of the world’s richest bankers gather together to congratulate each other on devising ever more creative ways to make obscene sums of money.

One of 2012′s most profitable scams was the bankers’ ‘innovative’ approach to a key interest rate called LIBOR. Virtually every bank at the event was involved in illegally colluding to rig LIBOR, ensuring that they would always be the winners in the multi-million pound bets they were making on the markets.

When we noticed that this money-spinner had been overlooked in the ceremony, we decided to show up and make sure the LIBOR-riggers got the recognition they deserve.

Continue Reading

Discover Ordered To Repay $200 Million It Stole From Cardholders

Kudos to Obama’s newly formed Consumer Financial Protection Bureau for cracking down on this. In short, Discover’s telemarketers offered customers unnecessary “add-on services” which were implied to be free, and then charged customers’ accounts for said services. In July, Capital One was forced to pay $210 million over the same practice. The Los Angeles Times reports:

More than 3.5 million Discover credit card customers will share $200 million in refunds in the wake of a federal investigation that determined the bank tricked people into signing up for payment protection plans and other add-on services. Regulators said scripts for Discover’s telemarketers “contained misleading language likely to deceive consumers about whether they were actually purchasing a product.”

Consumer advocates said the enforcement actions show that the new consumer bureau is on the job. “Banks have been doing this for years, but we never had a regulator who protected consumers before,” said Ed Mierzwinski, director of the consumer program for the U.S.

Read the rest

Continue Reading

Iran Sentences Banker Criminals To Death Penalty

Perhaps this is one instance in which we could learn something from Ahmadinejad and company? Via the BBC:

Four people have been sentenced to death for their roles in Iran’s biggest-ever bank fraud scandal. Two other defendants received life sentences, while 33 more will spend up to 25 years in jail, the chief prosecutor was quoted as saying. The scandal involved forged documents reportedly used by an investment company to secure loans worth $2.6bn.

The case broke in September 2011 when an investment firm was accused of forging documents to obtain credit from at least seven Iranian banks over a four-year period. The money was reportedly used to buy state-owned companies under the government’s privatisation scheme.

As part of their probe, authorities froze the assets of an Iranian businessman thought to be the mastermind behind the scam. The BBC’s Sebastian Usher said the firm at the heart of the scandal had moved from a small start-up capital to being worth billions of dollars.

Read the rest

Continue Reading

Bankers Gone Wild

Adam Smith (CC)

The erudite James Surowiecki brings his journalistic skills to the problem of a banking system that has subsumed the its own watchdogs, in The New Yorker:

In order to work well, markets need a basic level of trust. As Alan Greenspan said, in 1999, “In virtually all transactions we rely on the word of those with whom we do business.” So what happens to a market in which the most fundamental assumptions turn out to be lies? That is the question in a scandal that has roiled the banking industry all summer. The LIBOR (London Inter-bank Offered Rate) index is the most important set of numbers in the global financial system. Used as a benchmark for interest rates around the world, it’s assembled by asking a panel of big banks to estimate what it would cost them to borrow money today, if they had to. Hundreds of trillions of dollars in derivatives, corporate loans, and mortgages are pegged to these rates.

Read the rest

Continue Reading

Iceland Jails Bankers, Erases Citizens’ Debt, Recovers Strongly

 Seriously, the most advanced place on Earth. Bloomberg writes:

Icelanders who pelted parliament with rocks in 2009 demanding their leaders and bankers answer for the country’s economic and financial collapse are reaping the benefits of their anger.

Since the end of 2008, the island’s banks have forgiven loans equivalent to 13 percent of gross domestic product, easing the debt burdens of more than a quarter of the population.

The island’s steps to resurrect itself since 2008, when its banks defaulted on $85 billion, are proving effective. Iceland’s economy will this year outgrow the euro area and the developed world on average, the Organization for Economic Cooperation and Development estimates.

Iceland’s approach to dealing with the meltdown has put the needs of its population ahead of the markets at every turn. Once it became clear back in October 2008 that the island’s banks were beyond saving, the government stepped in, ring-fenced the domestic accounts, and left international creditors in the lurch.

Read the rest

Continue Reading

Many Wall Street Executives Say Wrongdoing Is Necessary

Capitalism-hating radicals claim that our financial sector is awash with unethical and illegal behavior, which is not merely tolerated, but encouraged or even required for success. Many Wall Street leaders concur completely. Via Yahoo! News:

A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday. In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.

Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.

Read the rest

Continue Reading

LIBOR Pains: Why Do These Stories Always Seem to Break in Britain?

Probably not because their regulators are any smarter or scrupulous than those in the U.S. – more likely because they’re relatively powerless to conceal them. From Caroline Salas Gage and Joshua Zumbrun at Bloomberg:

The Federal Reserve Bank of New York was aware of potential issues involving Barclays Plc (BARC) and the London interbank offered rate after the financial crisis began in 2007, according to a statement from the district bank.

“In the context of our market monitoring following the onset of the financial crisis in late 2007, involving thousands of calls and e-mails with market participants over a period of many months, we received occasional anecdotal reports from Barclays of problems with Libor,” New York Fed spokeswoman Andrea Priest said in an e-mailed statement.

“In the spring of 2008, following the failure of Bear Stearns and shortly before the first media report on the subject, we made further inquiry of Barclays as to how Libor submissions were being conducted,” the statement said.

Read the rest

Continue Reading