bank fiascos

Multiple reports indicate UBS will join previously expected  Barclays, JP Morgan,  RBS, and Citigroup  in settling up on their forex manipulation behavior next week.

A guilty plea to a felony criminal count is expected for all 5 TBTFs.

Biggest rumor is that DoJ may tear up the deferred prosecution agreement with UBS.

My wild guess of the dollar amount of the settlement? Four and a quarter billion. Reports i have seen over the past few weeks leave me wondering if that is just the DoJ settlements and doesn’t include NYDFS. If not, add another billion or three.

A few articles for more details:

http://fraudinfoblog.squarespace.com//fraud-info/2015/5/14/scarlet-letters-and-large-fines?hootPostID=6cd1af78b96858067766436572dd639b

 

http://mobile.nytimes.com/2015/05/14/business/dealbook/5-big-banks-expected-to-plead-guilty-to-felony-charges-but-punishments-may-be-tempered.html?_r=1&referrer

 

http://www.wsj.com/articles/justice-department-to-tear-up-past-ubs-settlement-1431645723

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 settlementsRead More »

 

 

Plan on how the banks will get out of the suits from soldiers. Also France tells HSBC to post a billion euro bond. Like they’re gonna’ grab a passport and book a flight to Argentina.

4/6 – Alison Frankel at Reuters – How Western banks hope to shake ex-U.S. soldiers’ Iran terror suit – Previously mentioned lawsuit by a number of US soldiers who were wounded by IEDs in Iraq. They allege the banks were providing the banking services used in turn to fund the terrorists who in turn wounded them.

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More good stuff on banking fiascos – 4-14Read More »

Change in massive organizations is slow. Here are a few articles on the speed of compliance to prevent future fiascos.

4/1 – Wall Street Journal – HSBC Monitor Says Bank’s Compliance Progress Too Slow and 4/1 – Deal Book at NY Times – HSBC Is Deemed Slow to Carry Out Changes – Quarterly report from the monitor on the 2012 DPA says he thinks the bank is not making enough progress on improving the anti-money laundering program. HSBC is now in year three of a five-year DPA.

On the other hand, progress takes time…

4/2 – This is Money at Daily Mail – Senior HSBC executive privately admits another major regulatory breach is ‘cast-iron certainty’, according to reports – This report got lots of coverage. I think it was reported elsewhere earlier than this article.

A senior compliance officer reportedly said that there is a high probability of another major regulatory violation at some point in the future. Several commenters and one headline I saw spun this as meaning the bank intends to break the law again.

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Bank fiascos – slow progress on changing cultures to prevent the next fiascoRead More »

For future reference, I’m accumulating reference points for illustrating the magnitude of the huge bank settlements we are seeing.

Previously mentioned the annual billings of Big 4 accounting firms. Here are two more reference points –

Election cost in U.S. – $4B / $6B / $10B – According to this site (which was the first one I found that had the info I wanted so I stopped looking), the cost of congressional elections was $3.6B in 2010. The cost of congressional and presidential elections in 2012 was $6.3B. So the federal elections in 2010 and 2012 cost $9.9B.

Cost to build a new aircraft carrier – $13B – Construction cost of the newest aircraft carrier, the U.S.S. Gerald Ford, is estimated at $12.8B per Wikipedia.

Settlement talks are apparently progressing in a large class action suit against the big banks for manipulating foreign exchange rates.

Wall Street Journal reports on 3/17 that Citigroup, Barclays Close to Settling Forex Lawsuit With Private Investors.

Rumors are those two banks may settle with a group of investors for $800M between them.

According to the article, here’s the current status:

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Scoreboard for private settlements of Forex litigationRead More »

After reading the data for the 100 largest accounting firms, I realized the CPA industry can provide a frame of reference for the magnitude of fiascos we are seeing in the banking industry. Discussion of that article is here.

My wild guess is here for the total fines for manipulating forex rates: a range of $11B to $16B with point estimate of $13B.

Sixteen billion is just a number with lots of zeros. Let’s look at that number in relation to revenue in the CPA profession.

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A new metric for measuring the size of bank finesRead More »

Perhaps HSBC is only getting all this massive attention because the huge leak of confidential data came from someone working at that bank. What would we know if there was a similar data dump of the 100,000 largest customers at all the other Swiss banks?

That idea was prompted by this article:

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Here’s a scary thought. Maybe HSBC isn’t the worst at helping tax evaders.Read More »

Where is the fence?

When an auditor finds several problems in one small area of the accounting, a typical approach is to put a fence around it. That means, figure what the outer boundaries are. Is it just one month’s worth of transactions in one department of one branch? If a little testing at the boundaries indicates the problem is localized, you can start working on the problem.

On the other hand, if the problem carries across to the whole year, or it affects many other branches, there is bigger problem. If you realize several other departments have the same issue, then you have no idea how big the problem is.

The worst situation is when every time you think there is a fence around the problem, the problem jumps the fence.  An auditor has a horrible feeling when there just doesn’t seem to be any boundary.

That is how the banking fiascos have felt over the last year or two. A minor inquiry from DoJ or some other regulator turns into full-blown investigation, then multiple regulators, and then six months or a year later most banks hand over a few billion collectively.

Then another investigation sprouts out of that one. And then there is half a dozen benchmark interest rates that have been manipulated.

Where is the fence showing the outer limits of fiascos created by the TBTF banks? I can’t see it.

Is there anything they aren’t playing games with?

There IS no fence showing the boundary or limit or end of fiascos

What’s next?

Possibly manipulating gold and silver prices?

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Where is the fence showing the outer limit of banking fiascos?Read More »