Wake Up Call: July 21, 2012
Banking Scandal AD/OD
Why is nobody freaking out about (bs1, bs2, …)
Outrageous new banking scandals and crises are in the news almost every week, it seems. If we were ever really paying attention at all, it’s clear that we’re now suffering from a collective ODD: “outrage deficit disorder.” As you read this (or, if you read this) ask yourself: how many will go to jail for this? My bet: zero.
Major banking scams & scandals reported in recent WEEKS
(just the major ones):
1. Last month: Greece, Spain, and the collapse of the Euro / European banking system
BANK BAILOUTS were again the order of the day, although the traditional approach of demanding brutal austerity measures in exchange seems to be foundering on the political rocks. The US FED helped bail out european banks on the sly, to the tune of an undetermined amount of banker welfare amounting to at least $20-30 billion.
2. Last week: Bid-rigging on municipal bond interest rates
Yet another massive exposé from Matt Taibi, the Rolling Stone financial writer who I believe along with the economist Paul Krugman (New York Times) should be required reading for every single American over the age of 16. Taibi explains how a group of obscure Wall Street traders at some of America’s biggest banks took part in a criminal nationwide bid-rigging conspiracy, in a Mafia-like scam going back decades for skimming money off the top of billions in ordinary municipal financing. In other words, picking the pockets of nearly every ordinary taxpayer in the country.
Despite its massive scale and clearly criminal nature, this one got comparatively little media attention because after Taibi’s piece the story was almost immediately blown off the radar screen by number 3:
3. This week: LIBOR – another interest rate scam, even bigger than #2.
More than a dozen major US and global banks are being investigated for criminally manipulating interest rates in 2008 and forward, affecting trillions of dollars in financing worldwide, from mortgages to car loans and credit card debt. This one is getting more media attention than #2 at the moment, though hardly anyone understands it, and it won’t survive past the next Runaway Bride.
What’s a LIBOR (London Interbank Offered Rate), anyway? Short answer: one of two measures of the interest rate that banks use to borrow from each other (the other is the so-called “prime rate,” which it turns out isn’t so prime anyway). Virtually all adjustable-rate debt is pegged to the LIBOR, so it affects pretty much every one of us.
The Libor scandal, whose true scale and impact is yet to be discovered, is yet another example of a couple of rich dudes in suits and air-conditioned offices finding really sneaky ways to steal massive amounts of money, hiding the theft by spreading it around. It’s kind of like applying a secret surcharge of 2 cents on every gallon of gasoline burned in America, which in 2010 was around 140 billion gallons. You do the math. Stealing 2 cents that way works out to nearly $3 billion dollars. When you manipulate interest rates, or even better, the index for interest rates, you create truly massive rip-offs. Nice work, if you can get it.
4. HSBC Money Laundering
HSBC has a money laundering track record going back more than 10 years, apparently on behalf of clients with ties to drug cartels and terrorists – among other things. Over a recent 3-year period, more than $20 billion in U.S. dollars, often paper bills or giant piles of sequentially numbered and machine-signed travellers' checks are involved, particularly in the bank’s middle-eastern and Mexican operations.
Those are just the major scams exposed in recent weeks.
I used to think politicians, as a class (many of whom are lawyers, by the way), were the least trustworthy humans on the planet. Now I’ve reconsidered, as it seems they’ve been topped by bankers. Of course, politicians are owned by bankers and the financial industry, so it’s hard to draw a clear line between the two.
Of course, the behavior of elite banking executives and Wall Street traders may differ from the way that locally owned banks and bankers behave, and it’s probably not fair to paint them all with the same brush – even if they’ve loaded it with paint themselves.
Exploitative practices by large multi-national commercial banks have a way of bleeding down to small local banks, though. At this moment I’m in the process of moving my personal and business banking from one local bank to another, after yet another incident where a wayward $10 transaction triggered over $100 in service charges. In some ways, small local banks act just like their nasty bigger brothers.
It’s stunning that in this environment, one of the big issues in the presidential election is likely to be the dreaded evil, “government regulation.” Leading the charge, of course: banking and finance industry executives, and pro-corporate business organizations like the U.S. Chamber of Commerce.
Don’t let them fool you.
The name of the game in politics and media today: keep us distracted, with any other issues, so we don’t notice what they’re doing with the real money.
Personally, I refuse to listen to anymore campaign BS from any politician of any stripe until they start talking about, and really doing something about, the elephants in the living room.
***
Previous columns by Mike Williams
Wake Up Call: July 9, 2012
Still Jobless... after all these years
Wake Up Call: June 27, 2012
Fracking and Trashing Hemlock Lake
Wake Up Call: June 20, 2012
A Special Place in Hell
Wake Up Call: June 8, 2012
Prisons, Prisons, Everywhere
Wake Up Call: May 28, 2012
Your Tax Dollars at Work
Wake Up Call: May 16, 2012
Who is Jamie Dimon, and Why Should We Care?
Wake Up Call: January 17, 2012
Will The Real “Deadbeat” Please Stand Up?
Wake Up Call: December 22, 2011
End of The Iraq War? NOT!
***
*Editor's note: the GeneseeSun.com does not endorse any of the opinions of our columnist section. We provide a forum for the expression of a diversity of opinions. If you would like to be a guest columnist please email josh@geneseesun.com.
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Banking Scandal AD/OD
Why is nobody freaking out about (bs1, bs2, …)
Outrageous new banking scandals and crises are in the news almost every week, it seems. If we were ever really paying attention at all, it’s clear that we’re now suffering from a collective ODD: “outrage deficit disorder.” Call it As you read this (or, if you read this) ask yourself: how many people are going to go to jail for this? My bet: zero.
Major banking scams & scandals reported in recent WEEKS
(just the major ones):
1. Last month: Greece, Spain, and the collapse of the Euro / European banking system
Bailouts were again the order of the day, although the traditional approach of demanding brutal austerity measures in exchange seems to be foundering on the political rocks. The US FED helped with the bailouts on the sly, to the tune of an undetermined amount of banker welfare amounting to at least $20-30 billion.
2. Last week: Bid-rigging on municipal bond interest rates
Yet another massive exposé from Matt Taibi, the Rolling Stone financial writer who I believe along with the economist Paul Krugman (New York Times) should be required reading for every single American over the age of 16. Taibi explains how a group of obscure Wall Street traders at some of America’s biggest banks took part in a criminal nationwide bid-rigging conspiracy, in a Mafia-like scam going back decades for skimming money off the top of billions in ordinary municipal financing … in other words, picking the pockets of nearly every ordinary taxpayer in the country.
Despite its massive scale widespread and clearly criminal nature, this one got comparatively little media attention because after Taibi’s piece the story was immediately blown off the radar screen by number 3:
3. This week: LIBOR scandal – another interest rate scam, this one even more massive than #2.
More than a dozen major US and global banks are being investigated for criminally manipulating interest rates in 2008 and forward, affecting trillions of dollars in financing worldwide, from mortgages to car loans and credit card debt. This one is getting more media attention at the moment, though hardly anyone understands it, and it won’t survive past the next Runaway Bride.
What’s a LIBOR (London Interbank Offered Rate), anyway? Short answer: one of two measures of the interest rate that banks use to borrow from each other (the other is the so-called “prime rate,” which it turns out isn’t so prime anyway). Virtually all adjustable-rate debt is pegged to the LIBOR, for starters, so it affects pretty much every one of us.
The Libor scandal, whose true scale and impact is yet to be discovered, is yet another example of a couple of rich dudes in suits and air-conditioned offices finding really sneaky ways to steal massive amounts of money, hiding the theft by spreading it around. It’s kind of like applying a secret surcharge of 2 cents on every gallon of gasoline burned in America, which in 2010 was around 140 billion gallons. You do the math. Stealing 2 cents that way works out to nearly $3 billion dollars. When you manipulate interest rates, or even better, the index for interest rates, you create truly massive rip-offs. Nice work, if you can get it.
4. HSBC Money Laundering
HSBC has a money laundering track record going back more than 10 years, apparently on behalf of clients with ties to drug cartels and terrorists, among other things. Over a recent 3-year period, more than $20 billion in U.S. dollars, often paper bills, are involved, particularly in the bank’s middle-eastern and Mexican operations.
Those are just the major scams exposed in recent weeks.
I used to think politicians, as a class (many of whom are lawyers, by the way), were the least trustworthy humans on the planet. Now I’ve reconsidered, as it seems they’ve been topped by bankers. Of course, politicians are owned by bankers and the financial industry, so it’s hard to draw a clear line between the two.
Of course, the behavior of elite banking executives and Wall Street traders may differ from the way that locally owned banks and bankers behave, and it’s probably not fair to paint them all with the same brush – even if they’ve loaded it with paint themselves.
Exploitative practices by large multi-national commercial banks have a way of bleeding down to small local banks, though. At this moment I’m in the process of moving my personal and business banking from one local bank to another, after yet another incident where a wayward $10 transaction triggered over $100 in service charges. In some ways, small local banks act just like their nasty bigger brothers.
It’s stunning that one of the big issues in this presidential election is likely to be the dreaded evil, “government regulation.” Leading the charge, of course: banking and finance industry executives, and pro-corporate business organizations like the U.S. Chamber of Commerce.
Don’t let them fool you.
The name of the game in politics and media today: keep us distracted, with any other issues, so we don’t notice what they’re doing with the real money.
Personally, I refuse to listen to anymore campaign BS from any politician of any stripe until they start talking, and really doing something about, the elephants in the living room.