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Big Banks Pay $5.6 Billion, Plead Guilty To Felonies Over Currency And Rate-Fixing
"The Department of Justice says that conversations about fixing markets took place on a "near daily" basis, often in "an exclusive electronic chat room" that participants called "The Cartel" or "The Mafia.""
I didn't see a list of felons...just names of friendly neighbor "hood" banks. Nice to know that my mortgage interest payments to Citi are going to good productive use.
@bee- Yeah, isn't it really cool that all of those extortionate fees and special charges that banks charge us are needed to pay the government fines so that the government can recapture some of the taxes that it has to charge us so that it can keep an eye on the banks with all of those extortionate fees and special charges that they charge us?
Not being an attorney; but one would consider the guilty plea opens the door to "civil lawsuits". 'Course, there may be a clause somewhere in the statements page that takes this power away from the regular folks, eh?
'Course, I'll remain an investor for the time being; just hoping I continue to dodge most of the financial bullets.
One of these participants was a Vice President at Barclays - someone on CNBC was asking why this person is not being "perp walked". There will be criminal charges filed against these participants, but ultimately it doesn't seem like that will do anything or change the mentality.
I mean, the ego of these conversations suggest people who are operating under the belief that the rules don't apply to them and I think that's a mentality that has swept over the banks since 2008, where there is this belief that "heads we win, tails we win and someone bails out our bad decisions" will just happen again and again - and you know what, it wouldn't surprise me.
@Scott- When I initiated this post it was with a grin as I said to myself "I wonder how long it will take Scott to comment?".
Well, I think there is understandable upset over corruption, but I think perhaps the bigger issue to me is how pervasive the mentality is that people in this industry feel that being corrupt is acceptable and necessary and that if their bets go bad, it will just be someone else's problem, so why not take all the risk?
There is a level of greed and ego and whatnot in terms of human nature, okay, but when you have a financial system where those who are overseeing it in government have basically turned the other way - and some likely because there's such a revolving door between government and Wall Street they want to keep the option to jump to a hedge fund open - that's a whole other story. If you read some of the full transcripts of what went on in the chats referenced, the behavior is so terrible as to be almost laughable. There is a level of moral hazard at play that is upsetting and tremendously concerning in a system that I think is more volatile, fragile and complex than some market participants seem to appreciate.
I mean things like this: “markup is making sure you make the right decision on price . . . which is whats the worst price i can put on this where the customers decision to trade with me or give me future business doesn’t change . . . if you aint cheating, you aint trying.”
I mean, are you kidding me?
Ray Dalio, who overseas the largest hedge fund company in the land, said this on CNBC today: "we're beyond the point of being able to successfully manage this... and I worry about another leg down in the economy causing social disruption... Hitler came to power in 1933 because of the social tension between the factions."
Ultimately, I do think if there is another 2008 because of the financial industry takes down the economy again, it would not surprise me if the level of anger directed at the financial industry wildly exceeds anything seen post-2008. If the financial industry sinks the economy again because of bad bets and reckless risk, there will be such anger that I question whether there will be political will to bail the banking system out again.
If we DO go back to square one due to a financial crisis after several years of stimulus, I'm going to pop some popcorn because the explaining that will have to be done will be monumental.
And really, I do think this ends badly. But you know, it becomes a matter of owning what I'm going to own and having confidence in the long-term abilities of the businesses that I invest in. Also, following the rules that I tend to follow, ie focus on needs over wants. It's all that one can do and rather than argue about monetary policy, I'd rather focus on things that I find enjoyable than stressing over what the FOMC minutes said today. Honestly, I don't even care anymore about statements that will inevitably be revised, tweaked and contradicted over the course of the coming days, weeks, months and year.
So let me ask this. We keep hearing about all these fines. How we do know they are not just bribes? Where does this money go?
If some bank was fined some billion dollars because of some XYZ thing they did, then does this money go toward compensating victims of XYZ, preventing XYZ from happening again. Where is the audit/traceability on the fines?
@Scott: You then said "I mean, are you kidding me?"
Remember our conversation a few days ago? You thought that I was "making excuses" because humans were involved. To which I replied: "No "excuses", just facts. If there are humans involved in trying to make a profit, expect chicanery. Simple as that. Always has been, always will be."
Just more confirmation of that sad fact, as if any more were needed.
@Scott: You then said "I mean, are you kidding me?"
Remember our conversation a few days ago? You thought that I was "making excuses" because humans were involved. To which I replied: "No "excuses", just facts. If there are humans involved in trying to make a profit, expect chicanery. Simple as that. Always has been, always will be."
Just more confirmation of that sad fact, as if any more were needed.
As I noted above, it's one thing to have corruption, it's another to have an environment where this kind of behavior is basically allowed by those who should be regulating the system (again, probably because they are trying to gain favor for their eventual move to a hedge fund or financial institution) as well as the administration. Whenever it's apparent that it has to look like someone cares, the banks get a "tisk tisk", a "slap on the wrist" and basically go back to the same behavior.
I mean, how many times have Bank of America and other major banks been fined since 2008? At some point does it dawn on people that maybe they just don't give a blank? Seriously. At some point after Bank of America has had umpteen fines since the financial crisis might a regulator want to take more significant action to correct that behavior or nah?
We have banks getting in trouble for rigging Libor, we have banks now getting in trouble for rigging foreign exchange, it just continues on and on since 2008.
I mean, "if you aint cheating, you aint trying.” was said by a Barclays Vice President in NYC. Corruption happens, but I tend to think that blatant corruption used to be met with punishment and perp walks and not a slap on the wrist.
Corruption happens, but how dangerous to the complex global financial system is a widespread mentality that "rules don't apply to me and the worst that may happen if I get punished is a slap on the wrist." When reckless behavior leads to systemic risk again, I'm sure CNBC anchors will all go, "Whocouldaknown?"
Another financial crisis of significant magnitude and I tend to think that "Hey, we're human" will not be an acceptable answer to a furious populace demanding answers.
I mean, "Two months into his presidency, Obama summoned the titans of finance to the White House, where he told them, "My administration is the only thing between you and the pitchforks." "Strikingly, federal prosecutions overall have risen sharply under Obama, increasing dramatically in such areas as civil rights and health-care fraud. But according to the Transactional Records Access Clearinghouse, a data-gathering organization at Syracuse University, financial-fraud prosecutions by the Department of Justice are at 20-year lows. They're down 39 percent since 2003, when fraud at Enron and WorldCom led to a series of prosecutions, and are just one third of what they were during the Clinton administration. (The Justice Department says the numbers would be higher if new categories of crime were counted.)" (http://www.newsweek.com/why-cant-obama-bring-wall-street-justice-65009)
Lets see how much political will there will be to play defender of the bankers next time around.
I recall a blip/verbal that with normal circumstances, that when a U.S. bank pleads guilty to violation of the banking rules, the charter for the bank may be pulled....here and now. My recall is that this portion of the banking rules and regs was "set aside" per the aggrement with the "said banks" that they will maintain their charters; but ya got to plead guilty. Other than anything else the general public is not aware of; all is well in the financial land of "milk and honey". All of this above noted information is likely readily searchable; but my scheudle is full up.......
Even with all that fine. No one from these banks went to jail unlike the past S&L bailout. In addition, $6.5 billion divided between 6 large global banks is chum change - they call it the cost of doing business!
Comments
I'm not fine with just fines.
I just love symmetry... it's so natural!
Not being an attorney; but one would consider the guilty plea opens the door to "civil lawsuits". 'Course, there may be a clause somewhere in the statements page that takes this power away from the regular folks, eh?
'Course, I'll remain an investor for the time being; just hoping I continue to dodge most of the financial bullets.
I mean, the ego of these conversations suggest people who are operating under the belief that the rules don't apply to them and I think that's a mentality that has swept over the banks since 2008, where there is this belief that "heads we win, tails we win and someone bails out our bad decisions" will just happen again and again - and you know what, it wouldn't surprise me.
There is a level of greed and ego and whatnot in terms of human nature, okay, but when you have a financial system where those who are overseeing it in government have basically turned the other way - and some likely because there's such a revolving door between government and Wall Street they want to keep the option to jump to a hedge fund open - that's a whole other story. If you read some of the full transcripts of what went on in the chats referenced, the behavior is so terrible as to be almost laughable. There is a level of moral hazard at play that is upsetting and tremendously concerning in a system that I think is more volatile, fragile and complex than some market participants seem to appreciate.
I mean things like this: “markup is making sure you make the right decision on price . . . which is whats the worst price i can put on this where the customers decision to trade with me or give me future business doesn’t change . . . if you aint cheating, you aint trying.”
I mean, are you kidding me?
Ray Dalio, who overseas the largest hedge fund company in the land, said this on CNBC today: "we're beyond the point of being able to successfully manage this... and I worry about another leg down in the economy causing social disruption... Hitler came to power in 1933 because of the social tension between the factions."
Ultimately, I do think if there is another 2008 because of the financial industry takes down the economy again, it would not surprise me if the level of anger directed at the financial industry wildly exceeds anything seen post-2008. If the financial industry sinks the economy again because of bad bets and reckless risk, there will be such anger that I question whether there will be political will to bail the banking system out again.
If we DO go back to square one due to a financial crisis after several years of stimulus, I'm going to pop some popcorn because the explaining that will have to be done will be monumental.
And really, I do think this ends badly. But you know, it becomes a matter of owning what I'm going to own and having confidence in the long-term abilities of the businesses that I invest in. Also, following the rules that I tend to follow, ie focus on needs over wants. It's all that one can do and rather than argue about monetary policy, I'd rather focus on things that I find enjoyable than stressing over what the FOMC minutes said today. Honestly, I don't even care anymore about statements that will inevitably be revised, tweaked and contradicted over the course of the coming days, weeks, months and year.
Dalio full interview: worth watching.
If some bank was fined some billion dollars because of some XYZ thing they did, then does this money go toward compensating victims of XYZ, preventing XYZ from happening again. Where is the audit/traceability on the fines?
I'm thinking someone knows.
@Scott: You then said "I mean, are you kidding me?"
Remember our conversation a few days ago? You thought that I was "making excuses" because humans were involved. To which I replied:
"No "excuses", just facts. If there are humans involved in trying to make a profit, expect chicanery. Simple as that. Always has been, always will be."
Just more confirmation of that sad fact, as if any more were needed.
I mean, how many times have Bank of America and other major banks been fined since 2008? At some point does it dawn on people that maybe they just don't give a blank? Seriously. At some point after Bank of America has had umpteen fines since the financial crisis might a regulator want to take more significant action to correct that behavior or nah?
We have banks getting in trouble for rigging Libor, we have banks now getting in trouble for rigging foreign exchange, it just continues on and on since 2008.
I mean, "if you aint cheating, you aint trying.” was said by a Barclays Vice President in NYC. Corruption happens, but I tend to think that blatant corruption used to be met with punishment and perp walks and not a slap on the wrist.
Corruption happens, but how dangerous to the complex global financial system is a widespread mentality that "rules don't apply to me and the worst that may happen if I get punished is a slap on the wrist." When reckless behavior leads to systemic risk again, I'm sure CNBC anchors will all go, "Whocouldaknown?"
Another financial crisis of significant magnitude and I tend to think that "Hey, we're human" will not be an acceptable answer to a furious populace demanding answers.
I mean, "Two months into his presidency, Obama summoned the titans of finance to the White House, where he told them, "My administration is the only thing between you and the pitchforks." "Strikingly, federal prosecutions overall have risen sharply under Obama, increasing dramatically in such areas as civil rights and health-care fraud. But according to the Transactional Records Access Clearinghouse, a data-gathering organization at Syracuse University, financial-fraud prosecutions by the Department of Justice are at 20-year lows. They're down 39 percent since 2003, when fraud at Enron and WorldCom led to a series of prosecutions, and are just one third of what they were during the Clinton administration. (The Justice Department says the numbers would be higher if new categories of crime were counted.)" (http://www.newsweek.com/why-cant-obama-bring-wall-street-justice-65009)
Lets see how much political will there will be to play defender of the bankers next time around.
Other than anything else the general public is not aware of; all is well in the financial land of "milk and honey".
All of this above noted information is likely readily searchable; but my scheudle is full up.......