Banks running amok. Banks losing billions. Banks busted for fraud that went on for over 20 years. Banks overcharging customers. The hits just keep on coming. One would think, at this point, the business suit would be more a symbol of jailbirds than a uniform of respectability. Yet on and on it goes and with that we overview the latest adventures in Mafia style Banksterdom.
The headlines blare JPMorgan Chase Revives Markets when they announced a $5.8 billion dollar loss on their derivatives trades.
The largest U.S. bank tried to demonstrate Friday that the worst of the problem was in the rear-view mirror, reporting a $4.96 billion profit for the second quarter, down 8.7% from a year ago.
Meanwhile new investigations against JPMorgan Chase are popping up with the bank refusing to release emails about manipulating the electricity market.
JPMorgan Chase & Co reasserted attorney-client privilege as the reason it will not hand over emails to U.S. regulators investigating the bank for possible electricity market manipulation, according to court documents filed on Friday.
The investigation by the Federal Energy Regulatory Commission follows complaints from grid operators that JPMorgan traders may have bid up electricity prices by some $73 million in California and the Midwest.
Investors reacted positively, pushing up shares of the bank $2.03, or 6%, to $36.07.
While the LIBOR scandal rages out, we have a warning from the Bank of England that the financial and banking sector are a cess pit. Basically other markets need to be investigated for manipulation, fraud and corruption.
It's clearly election season. We now have announcements of criminal charges for LIBOR manipulation. Yet notice below, these potential charges are pressure to settle for yet another slap on the wrist civil fine.
The Justice Department has identified potential criminal wrongdoing by big banks and individuals at the center of the scandal.
The department’s criminal division is building cases against several financial institutions and their employees, including traders at Barclays, the British bank, according to government officials close to the case who spoke on the condition of anonymity because the investigation is continuing. The authorities expect to file charges against at least one bank later this year, one of the officials said.
The prospect of criminal cases is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities. The Justice Department investigation comes on top of private investor lawsuits and a sweeping regulatory inquiry led by the Commodity Futures Trading Commission. Collectively, the civil and criminal actions could cost the banking industry tens of billions of dollars.
This is in the midst of news that Treasury Secretary knew about Barclay's manipulation of the LIBOR. Literally the Bank of England released a memo showing Geithner and the Fed knew about LIBOR manipulation and did nothing:
Bank of England Governor Mervyn King said that then New York Fed President Timothy Geithner's recommendations for improvements to the calculation of the London InterBank Offered Rate, or Libor, "seem sensible," according to a June 3, 2008 email released by the BOE on Friday. The Libor rate is now at the center of an international banking scandal. In his June 1, 2008 memo to King, Geithner proposed six reforms of Libor. The emails show that the BOE passed the recommendations on to the British Bankers Association. In a statement, the BOE said that "no evidence of deliberate wrongdoing had been cited" at the time of the correspondence. Central bankers were responding to concerns about the difficulties in settling Libor in the stressed market conditions of late 2007 and 2008. The New York Fed is expected to release more documents later Friday in response to inquiries from members of Congress about Geithner's and the New York Fed's efforts to address questions about Libor. The New York Fed said the documents will show that the New York Fed took prompt action to highlight problems with Libor and press for reform.
Meanwhile banks get yet another slap on the wrist for extorting billions from businesses under the guise of credit card swipe fees.
Visa Inc., MasterCard Inc. and banks that issue their credit cards have agreed to a $7.25 billion settlement with U.S. retailers in what could be the largest antitrust settlement in U.S. history, according to Reuters. The settlement would resolve a lawsuit over the fixing of credit and debit card fees filed by retailers in 2005, Reuters and other media outlets reported after the settlement papers were filed Friday in a federal court in Brooklyn. A judge must approve the settlement. Reuters said the settlement proposal involves a payment to a class of stores of $6 billion from Visa (US:V), MasterCard (US:MA) and more than a dozen of the country's largest banks who issue the companies' cards. The card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months for a total consideration to stores valued at about $1.2 billion, Reuters said, citing lawyers for the plaintiffs. An additional $525 million will be paid to stores suing individually, according to Reuters.
Then we have our classic Bankster sociopath cornered after running amok for over 20 years. What is even more disgusting about the fraud Peregrine Financial Group perpetuated on their customers is once again, we have whistle blowers and complaints, ignored by regulators:
Peregrine’s angry customers are asking how futures industry regulators could have missed another potential fraud. The scandal comes just months after MF Global, the defunct futures brokerage firm, lost more than $1 billion in clients’ money.
It now appears that regulators missed the red flags for years.
"The customers are just heartbroken over what happened," said Tom Power, a broker.
In 2004, a Peregrine client sent a letter to the National Futures Association, the firm’s primary regulator, and the C.F.T.C., asking it to intervene to prevent the firm from misusing its customers’ money, according to a person with knowledge of the correspondence and a copy of the letter obtained by The New York Times. Five years later, a tipster wrote to the N.F.A. asking it to review Peregrine’s bank account information for accuracy, according to people briefed on the matter who spoke on the condition of anonymity because the investigation was private. The tip was anonymous, and it is unclear how seriously the N.F.A. took it.
The auditor for Peregrine was a one-person shop run out of the accountant’s home in Glendale Heights, Ill., a Chicago suburb. As part of its investigation, the C.F.T.C. is looking into the role that the individual played, according to a person with knowledge of the case.
After the collapse of MF Global, the C.F.T.C. ordered a review of all futures firms to ensure the safety of customer money. The N.F.A. — where Mr. Wasendorf serves on an advisory committee — gave Peregrine a clean bill of health in January.
Since this guy was cornered, he did a lame ass suicide attempt, seemingly for us to feel sorry for him:
I have committed fraud. For this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man. Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts at Peregrine Financial Group, Inc. The forgeries started nearly twenty years ago and have gone undetected until now.
It just never ends! Seemingly, we routinely have a $1 billion or better scandal du jour at least every month, if not every week. Naked Capitalism pointed to two good video interviews on the history of the Libor as well as the potential for criminal charges, both shown below. Bloomberg interviewed Neil Barofsky who said banks are setting their own rules and regulators are captured by the banks.
The second find from Naked Capitalism is an interview with Ian Fraser. You must scroll the below video to the 11:45 time marker. He gives a history of England's lack of prosecutions against the financial sector and says literally, England gave the Banksters carte blanche to do as they pleased.
Finally, Bloomberg Law interviewed Chris Whalen who claims Libor has a history of collusion among banks, although clearly that needs to change. What you can get out of this interview is banks collude on a host of financial transactions, not just Libor and if you think things are above board, whoops, you need a walk up call.