More good stuff on the banking fiascos – 2/10/15
The coverage by The Guardian and ICIJ mentioned in yesterday’s post is kicking off a lot of coverage. Twitter is lighting up with a few hundred tweets in a few minutes, but I’m learning that interest typically fades in a few days. By Friday, the twitterverse will be on to its next outrage.
Here are two more articles I found interesting. First is on UBS maybe having more trouble on aiding tax evasion. Second, when stock analysts say one of the too big to fail banks is too big to manage, it is capitalists making the criticism, not people outside the business world.
DoJ is investigating whether UBS was using bearer bonds and bearer stock to help Americans evade taxes. Unregistered securities with principal payments and face amount can be cashed by whoever has the paper in their possession. That is a good tool for engaging in bad behavior.
Article says a dozen Swiss banks are still under investigation by the U.S. government for possible tax evasion issues.
That there is a brand new issue visible indicates the long running turmoil is not likely winding down for UBS specifically, Swiss banks broadly, or TBTF banks in general.
At the start of my career, I was a staff person on audits of banks, so I’ve seen bearer bonds. A fascinating instrument. Typically they are very pretty works of art. As with all tools, they are subject to abuse.
1/21 – James Kwak at Medium – Why Capitalism is Against Big Banks – Article points out that when stock analysts at Goldman and other shops are saying JP Morgan is too big and should be broken up, it is capitalists that are speaking against the humongous banks, not the mean ol’ regulators. Great point.
From whatever direction you wish to look, the gigantinormous banks are too big to fail, too big to manage, too big to jail, and too big to regulate. I cannot grasp how they can be audited. I’m sure Francine McKenna would say they are too big to audit.
Check out his read of the big players in capitalism.
Well, the people who make enormous piles of money in a capitalist system fall into at least two different categories. One is those people who only care about making money. You haven’t heard of most of them: they are hedge fund managers, private equity partners, venture capital partners, owners of private companies — people who stay out of the news and do whatever will bring in the most cash. They don’t think companies should be large or small, only that they should be profitable.
The other group are people who like being famous and powerful. They like money, certainly, but (past a certain point) as a symbol of success and power. What they care about are the size of their empires and the frequency of their media mentions. CEOs of large banks, like CEOs of most large companies, fall into this second category. They are constantly talking about the merits of size and scope, usually to justify some acquisition that will further expand their empire. (Those empires rarely get broken up by sitting CEOs; instead, it is activist shareholders or private equity firms that do the job.)
I will suggest the label crony capitalists for the second category – business people making their living from government favors.