Tag Archives | Wall Street

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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American Banks’ Record-Shattering Crime Spree

The hottest new revenue flow trend in banking is simply stealing money from your customers. Via the Village Voice:

You wouldn’t know it by watching the news or reading the paper, but America’s banks are on the largest crime spree the country has ever known. Let’s go to the highlight reel, shall we?

In July, Wells Fargo paid a $175 million settlement after the feds caught its brokers systematically pushing minority customers into mortgages with higher rates and fees, even though they posed the same credit risks as whites. One study found that Wells Fargo charged Hispanics $2,000 more in what the Justice Department called a “racial surtax.” The bank docked blacks nearly $3,000 extra for their own improper pigmentation.

But despite a colossal civil rights fraud perpetrated against 30,000 customers, the settlement amounted to just .011 percent of the San Francisco bank’s annual income.

Across the country, in Minneapolis, U.S.

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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.

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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.

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More Than 100 Arrests By Midday Of Occupy Wall Street Anniverary

A year after it all began, the Occupy protests returned to the New York Stock Exchange this morning, with more than a hundred arrests notched by the early afternoon. Raw Story reported a few hours ago:
A New York University professor and an artist featured in The Nation magazine this month were among more than 90 people arrested early Monday morning as Occupy Wall Street marked its first anniversary with various demonstrations in New York City. “Just grabbed off sidewalk, along with everyone else,” artist Molly Crabapple said on Twitter shortly after being picked up by police. Elsewhere, Jacobin magazine founding editor Bhaskar Sunkara reported that NYU Social and Cultural Analysis professor Andrew Ross, was arrested as part of a demonstration in the lobby of the JP Morgan Chase building on Park Avenue. “Cops are never friendly, but these cops aren’t cops,” Sunkara said. “They’re militarized beyond comprehension.”
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Occupy Returns To Wall Street

Day 14 Occupy Wall Street September 30 2011 Shankbone 4If the small number of protesters this weekend is anything to go by, Monday’s planned first anniversary action around New York’s financial district won’t cause too many banksters to be afraid to go to work (although it might be a light day anyway with the Jewish holiday of Rosh Hashanah falling on the same date). The Guardian reports from Wall Street:

Police in New York have made “multiple” arrests during marches and protests ushering in the first anniversary of the Occupy Wall Street movement.

Around 300 people were estimated to have taken part in a rally Saturday, which saw activists head towards Zuccotti Park – the lower Manhattan site which served as base camp for months of demonstration.

It was part of three days of action celebrating the anti-capitalist movement, which burst into life a year ago but has long since seen its momentum wane.

The main anniversary event will take place on Monday, when activists are expected to attempt to surround the New York Stock Exchange and disrupt morning rush hour traffic in Manhattan’s financial district.

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The True Story Of Mitt Romney At Bain Capital

Via Rolling Stone, Matt Taibbi explains how what Bain does to the companies it takes over pretty much mirrors what Romney has in mind for America:

In Romney’s version of the tale, Bain Capital – which evolved into what is today known as a private equity firm – specialized in turning around moribund companies (Romney even wrote a book called Turnaround that complements his other nauseatingly self-complimentary book, No Apology) and helped create the Staples office-supply chain.

The reality is that toward the middle of his career at Bain, Romney made a fateful strategic decision: He moved away from creating companies like Staples through venture capital schemes, and toward a business model that involved borrowing huge sums of money to take over existing firms, then extracting value from them by force.

Here’s how Romney would go about “liberating” a company: A private equity firm like Bain typically seeks out floundering businesses with good cash flows.

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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.

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Wall Street Criminal Rajat Gupta Convicted

Photo: World Economic Forum (CC)

A symbolic strike for the good guys, for once, as ex-Goldman Sachs bankster Raj Gupta is convicted of insider trading. For an explanation of why Wall Street is a crime scene check out this week’s Disinfo Deal: Danny Schecter’s Plunder: The Crime of our Time. Report from the Los Angeles Times:

A jury has convicted former Goldman Sachs director Rajat Gupta in his high-profile insider-trading case in New York.

A federal jury had been weighing Gupta’s fate for two days. The jury of eight women and four men found Gupta guilty of four criminal counts in a wide government push against insider trading. Gupta was found guilty of three counts of securities fraud and one count of conspiracy for leaking stock tips to Raj Rajaratnam, head of the Galleon Group hedge fund. He was acquitted on two counts of securities fraud.

Each fraud charge carries a sentence of up to 20 years in prison; the conspiracy charge could result in up to five years.

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