Tag Archives: banks

5 Years After The Financial Crisis, The Big Banks Are Still Committing Massive Crimes

22 Sep

usury

Cross-posted from Zero Hedge:

Preface: Not all banks are criminal enterprises. The wrongdoing of a particular bank cannot be attributed to other banks without proof. But – as documented below – many of the biggest banks have engaged in unimaginably bad behavior.

You Won’t Believe What They’ve Done …

Here are just some of the improprieties by big banks over the last century (you’ll see that many shenanigans are continuing today):

  • Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
  • Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
  • Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
  • Committing massive fraud in an $800 trillion dollar market which effects everything from mortgages, student loans, small business loans and city financing
  • Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this
  • Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this
  • Participating in various Ponzi schemes. See this, this and this
  • Bribing and bullying ratings agencies to inflate ratings on their risky investments

The executives of the big banks invariably pretend that the hanky-panky was only committed by a couple of low-level rogue employees. But studies show that most of the fraud is committed by management.

Indeed, one of the world’s top fraud experts – professor of law and economics, and former senior S&L regulator Bill Black – says that most financial fraud is “control fraud”, where the people who own the banks are the ones who implement systemic fraud. See this, this and this.

Even the bank with the reputation as being the “best managed bank” in the U.S., JP Morgan, has engaged in massive fraud. For example, the Senate’s Permanent Subcommittee on Investigations released a report today quoting an examiner at the Office of Comptroller of the Currency – JPMorgan’s regulator – saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. And Joshua Rosner – noted bond analyst, and Managing Director at independent research consultancy Graham Fisher & Co – notes that JP Morgan had many similar anti money laundering laws violations as HSBC, failed to segregate accounts a la MF Global, and paid almost 12% of its 2009-12 net income on regulatory and legal settlements.

But at least the big banks do good things for society, like loaning money to Main Street, right?

Actually:

  • The big banks have slashed lending since they were bailed out by taxpayers … while smaller banks have increased lending. See this, this and this

Indeed, top experts say that fraud caused the Great Depression and the 2008 crisis, and that failing to rein in fraud is dooming our economy.

We can almost understand why Thomas Jefferson warned:

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies ….

John Adams said:

Banks have done more injury to religion, morality, tranquillity, prosperity, and even wealth of the nation than they have done or ever will do good.

And Lord Acton argued:

The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.

No wonder a stunning list of prominent economists, financial experts and bankers say we need to break up the big banks.

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Australian Banks “Welcome” Cyprus-Style Bail-In Plan

17 Jul
AFMA letter to Australian Treasury, 11 January 2013, page 5 (click to enlarge)

AFMA letter to Australian Treasury, 11 January 2013, page 5 (click to enlarge)

On 11 January 2013, the Australian Financial Markets Association (AFMA) responded to the Australian Treasury regarding the government’s Consultation Paper (September 2012) Strengthening APRA’s Crisis Management Powers.

Click to enlarge

Click to enlarge

There is much of interest in AFMA’s letter.

But this (page 5) is arguably the “money quote” that should be of most interest to Aussies with savings in a bank:

“The FSB’s Key Attributes lays out its principles for executing a bail-in within resolution. We welcome the role of the bail-in tool for a resolution.”

The Australian Treasury’s consultation paper further evidences that the internationalist, Goldman-Sachs chaired, FSB-directed new regime for Cyprus-style bail-in of banks using depositors savings was endorsed by the G20:

Australian Treasury, Strengthening APRA's Crisis Management Powers, September 2012, page 4 (click to enlarge)

Australian Treasury, Strengthening APRA’s Crisis Management Powers, September 2012, page 4 (click to enlarge)

Treasury_StrengtheningAPRA_cover

… and that bail-in of Australian banks is an FSB requirement, one that will be enforced by APRA as Australia’s “resolution authority”, under new “robust statutory powers”:

Australian Treasury, Strengthening APRA's Crisis Management Powers, September 2012, page 5 (click to enlarge)

Australian Treasury, Strengthening APRA’s Crisis Management Powers, September 2012, page 5 (click to enlarge)

More to come.

See also:

Australia Plans Cyprus-Style “Bail-In” Of Banks In 2013-14 Budget

Timeline For “Bail-In” Of G20 Banking System

G20 Governments All Agreed To Cyprus-Style Theft Of Bank Deposits … In 2010

Mortgage Insurance Through The Roof, And Other Nasty Signs

7 Jul

From the Sunday Telegraph:

PREMIUMS have gone through the roof for the supposed “insurance” that a quarter of all homebuyers have to pay when taking out a loan.

Lenders Mortgage Insurance for a borrower with a typical 10 per cent deposit on a $500,000 property has risen from less than $6000 last year to nearly $9000, a surge of close to 50 per cent according to brokers Home Loan Experts.

… LMI has been used in more than two million loans but is poorly understood and is rarely discussed in detail. It is charged whenever a borrower has a deposit of less than 20 per cent. Many of those who pay it don’t even realise it protects the bank, not them.

In August 2011, then Treasurer Wayne Swan announced the introduction of a one-page fact sheet on LMI. Nearly two years on it still isn’t in place. It is “close” to being in place, according to the office of Assistant Treasurer David Bradbury.

Incredibly, when it is, it won’t even nominate the cost. And it is unlikely to point out that LMI is neither portable nor refundable.

That means any household looking to refinance with another lender faces paying thousands of dollars in LMI for a second time, unless they have at least 20 per cent equity in their home.

Mortgage brokers and consumer groups say this is undermining the Government’s efforts to increase competition in the home-loan market because having to pay LMI again makes switching lenders financially unviable.

… Home Loan Experts’ LMI premium increase calculations were based on comparing 2012 and 2013 rates for Genworth, one of the two major providers of lenders mortgage insurance in Australia.

When contacted for comment, Genworth said all executives authorised to speak to the media were on holidays.

Premiums levied by the other big provider, QBE, have also increased considerably. A mortgage broker who asked not to be named for fear of retribution said there had been a 17 per cent increase since 2010…

QBE would not provide any information on its premium rates. However, a spokeswoman did say premium increases were due to elevated claim levels and higher reinsurance costs, as well as lower investment income.

Lenders Mortgage Insurance is a perfect example of how our society is totally ruled by bankers.

Consider for a moment just how completely unjust … how utterly f***ed up … “our” financial system is:

  1. Banks are (exclusively) allowed to create new “credit” — backed by nothing — simply by typing new numbers into their computer.
  2. Banks are allowed to make profits by charging usury (interest) on that new “credit”, when they sign you up to a loan contract — which you must repay, or risk losing everything you own (bank-rupt).
  3. You have to pay for insurance to protect the bank in the event that you can not continue repayments of their “credit” + usury.
  4. You have to pay for that insurance again, if you want to transfer your 30-year debt+usury repayment obligations to a different bank.

The “finance” game is completely rigged.

They can’t lose.

In related news, the real estate industry lobby parasites are now calling on the government to let first home buyers tap into their superannuation savings, in order to come up with enough money for a deposit:

Call to supersize home deposits

Concerned about declining home ownership levels and a sharp fall in the proportion of buyers purchasing their first property, the Real Estate Institute of Australia (REIA) wants first homebuyers to be able to tap into their superannuation savings to help them scrape together a deposit.

… The institute says recent interest rate cuts have had little impact on the desire of potential first homebuyers to enter the market.

Er … hello?! Maybe that’s because Australian house prices — the highest on the planet — are simply too expensive?

Maybe it’s because the younger, internet-savvy generations are discovering the truth about our world-leading housing Ponzi?

Or maybe it’s because they do not want to be in debt to the bankers usurers for the rest of their working lives?

The institute cites two schemes operating overseas – in Singapore and Canada – that allow first homebuyers to use their superannuation savings when they buy a property.

… The REIA has also called on state and territory government to reverse the trend to only offer first homebuyers grants for new dwellings. “It’s excluding 80-odd per cent of people who have historically bought established homes,” [REIA President Peter] Bushby says.

When it comes to keeping the flow of property buyers coming in at the bottom of the Great Australian Housing Ponzi scheme, supporting and driving up prices (and thus, their commissions from property sales), there really is nothing — no bald-faced lie, no cunning deceit, no twisting of the truth — that these filthy rotten morally vacuous scumbags won’t say.

Perhaps it would be best for the common good if these people — along with the bankers, whose scraps they feed off — were all rounded up, taken down the back paddock, and their 100% self-serving thought processes “rebalanced” the good old-fashioned way.

With a small high velocity lead weight implanted in the side of their heads.

If you are not keenly interested in understanding and sharing the truth about the evil, deceitful, parasitic way in which the bankers’ debt-at-usury “money” system works, then you — your apathy, your ignorance, your disinterest — are a vital part of the reason why this predatory, cancerous system continues.

When Banks Write Government Legislation, It’s Time To Kill The Banks … And The Government

25 May

From the New York Times:

WASHINGTON — Bank lobbyists are not leaving it to lawmakers to draft legislation that softens financial regulations. Instead, the lobbyists are helping to write it themselves.

One bill that sailed through the House Financial Services Committee this month — over the objections of the Treasury Department — was essentially Citigroup’s, according to e-mails reviewed by The New York Times. The bill would exempt broad swathes of trades from new regulation.

In a sign of Wall Street’s resurgent influence in Washington, Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)

The lobbying campaign shows how, three years after Congress passed the most comprehensive overhaul of regulation since the Depression, Wall Street is finding Washington a friendlier place.

The cordial relations now include a growing number of Democrats in both the House and the Senate, whose support the banks need if they want to roll back parts of the 2010 financial overhaul, known as Dodd-Frank.

This legislative push is a second front, with Wall Street’s other battle being waged against regulators who are drafting detailed rules allowing them to enforce the law.

And as its lobbying campaign steps up, the financial industry has doubled its already considerable giving to political causes. The lawmakers who this month supported the bills championed by Wall Street received twice as much in contributions from financial institutions compared with those who opposed them, according to an analysis of campaign finance records performed by MapLight, a nonprofit group.

The passage of the Dodd-Frank Act, which took aim at culprits of the financial crisis like lax mortgage lending and the $700 trillion derivatives market, ushered in a new phase of Wall Street lobbying. Over the last three years, bank lobbyists have blitzed the regulatory agencies writing rules under Dodd-Frank, chipping away at some regulations.

But the industry lobbyists also realized that Congress can play a critical role in the campaign to mute Dodd-Frank.

The House Financial Services Committee has been a natural target. Not only is it controlled by Republicans, who had opposed Dodd-Frank, but freshmen lawmakers are often appointed to the unusually large committee because it is seen as a helpful base from which they can raise campaign funds.

For Wall Street, the committee is a place to push back against Dodd-Frank. When banks and other corporations, for example, feared that regulators would demand new scrutiny of derivatives trades, they appealed to the committee. At the time, regulators were completing Dodd-Frank’s overhaul of derivatives, contracts that allow companies to either speculate in the markets or protect against risk. Derivatives had pushed the insurance giant American International Group to the brink of collapse in 2008. The question was whether regulators would exempt certain in-house derivatives trades between affiliates of big banks.

As the House committee was drafting a bill that would force regulators to exempt many such trades, corporate lawyers like Michael Bopp weighed in with their suggested changes, according to e-mails reviewed by The Times. At one point, when a House aide sent a potential compromise to Mr. Bopp, he replied with additional tweaks.

Ultimately, the committee inserted every word of Mr. Bopp’s suggestion into a 2012 version of the bill that passed the House, save for a slight change in phrasing…

Citigroup and other major banks used a similar approach on another derivatives bill. Under Dodd-Frank, banks must push some derivatives trading into separate units that are not backed by the government’s insurance fund. The goal was to isolate this risky trading.

The provision exempted many derivatives from the requirement, but some Republicans proposed striking the so-called push out provision altogether. After objections were raised about the Republican plan, Citigroup lobbyists sent around the bank’s own compromise proposal that simply exempted a wider array of derivatives. That recommendation, put forth in late 2011, was largely part of the bill approved by the House committee on May 7 and is now pending before both the Senate and the House.

[Full article here]

One wonders how similarly “helped” our local lawmakers are.

The final word goes to UK Independent Party politician, Nigel Farage –

By Hook Or By Crook – Moody’s Says Our Banks Are Too Big To Fail

20 May

Australia’s Big Four banks have all just received a credit rating downgrade by ratings agency Moody’s.

From the Sydney Morning Herald:

Moody’s Investors Service has downgraded the long-term debt ratings of Australia’s big four banks to Aa2 from Aa1, citing their relatively high reliance on overseas funds rather than local deposits.

For a closer analysis of what this really means for Australia’s economic future, we turn to a man far more knowledgeable on this topic than I.

From the must-read MacroBusiness.com.au (emphasis added):

Moody’s analysis of the Australian banks’ vulnerability is pointed. In fact, it’s right on the money as it were, capturing both the past vulnerability and potential future problems, as well as solutions.

To put it bluntly, Moody’s is onto us.

For well over a decade, Australia’s banks have funded huge swathes of the current account deficit. As well, over the past two commodities booms, much of the export income has been leveraged up and blown on housing and fancy living. Moody’s is effectively calling the risks of this model to account. And they’re still not finished:

At Aa2, the major banks’ ratings continue to incorporate 2 notches of uplift from systemic support. Moody’s views bank supervisors and the government in Australia to be supportive by global comparison and the banks to have high systemic importance, as implicitly recognized by the government’s “Four Pillars” policy (which restricts M&A among the banks).

Moody’s also notes that creditor-unfriendly initiatives — such as bail-in legislation — are not on the policy agenda in Australia.

Heavens to Betsy.  It’s finally out in the open. The big four are too big to fail and Moody’s rates the Australian government’s implicit guarantee of the banks’ wholesale debt (as well as the explicit deposit guarantee) as worth two ratings notches. Moreover, by phrasing it this way, Moody’s has essentially put the Australian government on notice that if it dares back away from that guarantee then it can count on the result. The further implication is that the Budget had better remain shipshape to provide the guarantee.

Moody’s is rightly concerned about our banks’ heavy reliance on borrowing from off-shore, in order to lend into our housing bubble.

But as we have recently seen (“Tick Tick Tick – Aussie Banks’ $15 Trillion Time Bomb“), our banking system is vulnerable to a much greater danger than reliance on wholesale funding.

Derivatives.

The exotic financial instruments at the very heart of the GFC, that the world’s most famous investor, Warren Buffet, famously called “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”.

To give you an idea of the vast disconnect between our banks’ $2.66 Trillion in On-Balance Sheet “Assets” (66% of which are loans), and their $15 Trillion in Off-Balance Sheet exposure to OTC derivatives, take a look at the following chart.

It shows our banks’ combined total Assets – blue line – versus a red line of total Off-Balance Sheet “business” (click to enlarge):

$2.66 Trillion in "Assets" versus $15 Trillion in Off-Balance Sheet "Business"

Never mind the risk of wholesale funding liabilities.  What happens when our banks’ $15 Trillion worth of Off-Balance Sheet “financial weapons of mass destruction” blow up – just as they did in the USA?  That’s more than 10x the entire value of this country’s annual GDP!

Now you know the answer.

The takeout from the Moody’s downgrade is very simple.

Moody’s has effectively just warned the Australian government that it MUST continue to guarantee the liabilities of our entire banking system. Or else the Big Four banks’ credit ratings will be downgraded even further.

Meaning much higher interest rates.  And, the real risk of off-shore funding drying up completely.

Australian taxpayers are now firmly on the hook … to bail out the crooks.

Because – just like in America – they are now considered Too Big To Fail.

For a sneak preview of our future, here’s how Australia will look when the SHTF.

Our “Squeeze Pop” Carbon Bank

17 May

Big bubbles, no troubles:

An independent carbon bank, similar to the Reserve Bank, should be set up to oversee a carbon price and investment in clean technology, the peak renewable energy lobby says.

The Clean Energy Council will today release a discussion paper proposing the carbon bank, which it says could be allowed to borrow money to invest in renewable energy projects against the future revenue of Labor’s proposed carbon tax and emissions trading scheme.

Hmmmmm.

An “independent” carbon bank.

Trading in … what you breathe out.

Borrowing … and “investing” … against the future government tax revenue.

In other words, the government … meaning taxpayers … the guarantor for any losses on those “investments”.

In a bankster-designed, multi-trillion dollar, global air-trading derivatives market:

What could possibly go wrong?

National Australia Bank Ltd, Westpac Banking Corp Ltd and the Reserve Bank of Australia (RBA) were all recipients of emergency funds from the US Federal Reserve during the global financial crisis, according to media reports.

Data released by the Fed shows the RBA borrowed $US53 billion in 10 separate transactions during the financial crisis…

The “independent” Reserve Bank is a great model to follow then.

Its track record certainly inspires con-fidence:

Why do we tolerate an “independent” Reserve Bank, whose first legal duty is to maintain a “stable” currency, when it is so clear that they have always utterly failed to do so.

And derivatives, well, they’re safe-as-houses too.

After all, the mortgage-backed derivatives market that blew up America is only a tiddling little market.

So there’s clearly no cause for concern about yet another bankster-driven scheme, to blow up a global, air-backed derivatives bubble:

To give an idea of the vast disconnect between our banks’ “Assets” (66% of which are loans), and their exposure to OTC derivatives, the following chart shows their total Assets – blue line – versus a red line of total Off-Balance Sheet “business” (click to enlarge):

$2.66 Trillion in "Assets" versus $15 Trillion in Off-Balance Sheet "Business"


They say that the main gimmick used to promote Hubba Bubba is that it is less sticky than other brands of bubble gum, and so burst bubbles are easier to peel from your skin.

No worries then.

Sure, we are going to get squeezed dry.

But there’ll be no needing to go shave our heads or rend our clothes when the biggest bubble ever goes POP!

I wonder which flavour we will get.

Raspberry?

Watermelon?

Squeeze Pop?

Or, will it be another new flavour …

Carbon Tax.

Emissions Trading.

“Independent” Carbon Bank.

Behave … debt slave.

Ka-Ching!

Aussie Banks Not So Safe

4 Mar

From Money Morning:

We dropped the line yesterday about the banks having $13 trillion of off-balance sheet business. We’ve mentioned this number several times over the last year, but if you’re a new reader to Money Morning, here’s a link to the Reserve Bank of Australia spreadsheet that contains the awful truth.

To be precise, it currently runs to $13,058,814,195,842.70.

Just to put that in perspective, the banks have a total of $2.59 trillion of on-balance sheet assets. We’re sure the banks and the RBA will claim that all the off-balance sheet business is completely offset, so that losses are contained.

Personally, we don’t think you should believe a word of it. The number one risk with the off-balance sheet business is counterparty risk. As long as each counterparty can keep the ponzi scheme going then sure, everything will be tickety-boo.

But as we all know, that can’t happen. We’ve seen counterparties collapse before (Lehman, Bear Sterns, etc…) and they’ll collapse or need bailing out again.

There’s only so long that banks can keep the ponzi going. They’ve scraped through by the skin of their teeth thanks to an unprecedented bail-out by the taxpayer.

You see, $13 trillion is $13 trillion. It’s the big unspoken risk that the banks have created for themselves.

You can see the growth in off balance sheet business for yourself here:

$13 Trillion - AU Banks' Off Balance Sheet "assets"

$13 Trillion Off Balance Sheet Business = RISK

So let me make one thing clear. When you hear all the talk about banks deleveraging and de-risking, don’t believe a word of it. As you can see from the chart above, they’re in as deep as they’ve ever been.

The issue of counterparty risk is precisely why the Greek debt crisis is a threat to Australia – despite what Ken Henry and Glenn Stevens would have us believe.

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