Just a few tidbits on the massive settlements for manipulating forex and Libor rates.
4/23 – Zero Hedge – It Just Cost Deutsche Bank $25,000 Per Employee To Keep Its Libor Manipulating Bankers Out Of Jail – …
Minor update on banking settlements Read More »
The newest member of the elite club of banks that write billion dollar checks to settle up with the regulators is Commerzbank AG, the second largest bank in Germany.
After reading several reports on the billion and a half settlement, it seems to me that their corporate culture, at the core personality level, is to be not overly concerned about complying with US law.
The two primary issues are aiding and abetting the billion-dollar Olympus fraud and processing a quarter billion dollars of wire transfers for Iranian and Syrian customers banned from the US banking system.
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Commerzbank joins the billion-dollar-fine club Read More »
Investment News has discovered a documentary produced by Morgan Stanley chronicling the harsh competition between branches that is encouraged by their home office. Some news reports suggest this is a parody, but I don’t think so.
Click to see the ten minute video:
Some of my favorite scenes:
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There is radical change all around us and more on the way. I know that. My blind spot is figuring out how that will affect my audit firm.
(Cross-posted from my other blog, Outrun Change.)
Here’s one part of radical change I can see on the horizon:
1-24 – Wall Street Journal – Bitcoin and the Digital-Currency Revolution / For all bitcoin’s growing pains, it represents the future of money and global finance.– For a brain stretcher on digital currency, check out the article. Focus is on Bitcoin, which is merely the starting point in a revolution of disintermediation.
Just like money funds disintermediated (that means cut out of the picture) bank deposits in the distant ‘80s, bitcoin and other yet-to-be-invented digital currencies will disintermediate a huge portion of the financial system.
Picture the long series of transactions when you buy a cup of coffee at the corner shop with your credit card (this is a long quote cited under fair use, oh, also to promote the book it is extracted from): …
Here are a few possibilities for the record level of settlements for bank in ’14: Wrapping up the legacy issues from the financial crisis. Regulators are getting serious about pushing big banks to improve their operations. Or maybe regulators just want more money. Or maybe banks are getting worse at obeying the law.
Some articles for you to ponder:
12/30 – Wall Street Journal – For Banks, 2014 Was a Year of Big Penalties – Here’s my interpolation of the fines and legal costs for the largest banks, as presented in the article’s graph:
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What is behind the record $56 billion in bank fines in 2014?Read More »
What is behind the record $56 billion in bank fines in 2014? Read More »
Three major regulators announced settlements with six banks for their now admitted manipulation of foreign exchange rates. At least two regulators (Department of Justice and NY Department of Financial Services) still have investigations open. One bank, Barclays, withdrew from the settlement.
The scheme ran for six years, starting after the fall 2007 meltdown and running until a year after the Libor settlements were underway.
Here is my recap of the fines by bank with calculation of the annualized cost, all amounts in U.S. dollars: …
Previously mentioned the big banks are under investigation for allegedly manipulating forex: Next banking fiasco? Manipulating foreign exchange rates? Those are the rates used to trade currencies. In addition to admitting manipulation of Libor, many banks now stand accused of manipulating forex.
Just two updates..
10/30 – Wall Street Journal – Big Banks Brace for Penalties in Probes – Tons of leaks feed the story of the typical cast of big banks being in negotiations to settle allegations of their manipulating foreign exchange rates, or forex. Big news to me is the banks are all trying to settle at the same time with all of the regulators.
(If one company reaching a simultaneous agreement with every regulator is called a global settlement, then if every company in the industry reaches an agreement with all regulators on the same day, would that be called a global global settlement? Universal global settlement?)
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My previous post described a comment by Sam Antar during his CPE session that the fines arising from of a long list of financial fiascos are essentially a tax on illegal behavior.
He made another comment in that session that I wanted to describe in detail. He said these frauds are a cancer destroying capitalism.
I had opportunity to visit with him a few weeks ago and asked him to expand on this idea. I will summarize what we discussed.
Cancer destroying capitalism
He indicated the foundation of capitalism is reliability of financial information. If you can trust financial information you read then we can do business with each other.
He says the extent of frauds we have seen are leading people to lose faith in financial information. That leads to losing faith in their counterparties. Therefore people have less trust. In financial terms that means the risk premiums for transactions go up. The interest rate built into a transaction increases and the return drops.
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Frauds are a cancer destroying capitalism Read More »
The Wall Street Journal reports ”Flipped” Bankers Aid U.S. in Foreign-Exchange Probe – Criminal Charges Are Expected as Early as Next Month.
Looks like it is time to pay attention to a new fiasco. After manipulating LIBOR comes the foreign exchange rates, or forex.
Article appears to be based on lots of leaks. In a tossup between guessing whether the Justice Department or the banks are leaking most of the info, I’ll guess the slightly higher probability is the feds.
This new fiasco is apparently developed from information obtained during the LIBOR investigations.
Individual enforcement action this time
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Next banking fiasco? Manipulating foreign exchange rates?Read More »
Next banking fiasco? Manipulating foreign exchange rates? Read More »
A few stories paint a clearer picture for me – cheating your regulator, some regulators getting frustrated with the number of issues, the disconnect from personal responsibility, and bringing psychology into the analysis.
Why are there sooooo many scandals involving banking?
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What is wrong with big banks? Read More »