Latest news from wall street:according to the magazine “fortune”, “big six” U.S. banks – Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley – paid a total of more than 30 fines by about $ 110 billion. for fraud in the sale of mortgage securities that triggered the global financial crisis of 2007-2008.
Another $ 5 billion. will be paid in the near future… these statistics can be supplemented by the data of the report of Morgan Stanley published in August 2015: the five largest banks in the U.S. and 20 European banks have paid $ 260 billion. fines and compensation for all kinds of deception and fraud since the financial crisis of 2007-2008, The large legal costs at Bank of America – 65,6 billion., JPMorgan – $ 42.4 billion. and British Lloyds – 26.6 billion pounds.
Bankers, liars
At the end of last and beginning of this decade in the West was hotly debated question: how to prevent the recurrence of the global financial crisis. It was proposed to strengthen banking supervision, to strengthen the norms of capital adequacy for banks, to carry out the disaggregation of the banking giants, to increase the penalties for violations, to increase transparency of transactions in markets for financial derivatives, to conduct investigations to identify the perpetrators of the crisis and their punishment.
There were attempts to act. In the U.S., for example, in 2010 a law was passed Dodd-Frank, also called the law of Bank reform. By 2011 the economic and financial situation of the United States and other Western countries has stabilized and many of the ideas expressed in 2009-2010, forgot.
Perhaps the only direction where the financial authorities of the countries of the West showed admirable activity, has been conducting investigations into improper behavior of large and largest banks. The most extensive of these investigations have been in the United States. A series of investigations began with the identification of the role of individual banks, wall street and foreign banks in creating the “bubble” in the mortgage securities market (this market was the detonator of the crisis). Further, the authorities have engaged in fraud banks in the markets of the various types of swaps – financial instruments that supposedly insured banks and companies from the risks of defaults and a sharp market fluctuations. The scope of investigations began to expand. In the field of view of the us regulators have been increasingly hit banks London city and other European giants.
In Europe the financial regulators also began to move, starting their own investigation. This manipulation of banks with interest rate of interbank crediting of LIBOR and other similar interest “markers”, exchange rates, gold prices, etc. most of the manipulations were carried out on the basis of the collusion of the largest banks. Some signs of the international banking cartels and gross violations of Antimonopoly legislation, not to mention violations of the laws aimed at the suppression of the financing of terrorism, drug trafficking, corruption, shadow operations and tax evasion.
Almost every month the media report that a particular Bank on a global scale agrees to pay millions or even billions of amounts for violations. Most of these payments are made not on the basis of court decisions and agreements between the Bank and offender supervisors. Banks prefer the case to court not to lead up. Publicity terrible penalty. The amount paid as reported by the media, go to either the state budget or special funds from which the money should be remitted to the victims of deceptions and manipulations.
Bank of America – the champion of all scams
In 2013, the U.S. government ordered the Bank to pay JP Morgan $ 13 billion settlement in the case of operations with mortgage securities. At the end of 2013 in a similar investigation, Deutsche Bank entered into a settlement agreement with us authorities by paying $ 1.4 billion. Citigroup in July 2014 agreed to pay the U.S. government $ 7 billion for the termination of investigations into poor quality mortgage securities.
However, the record was the amount agreed in August 2014 to pay Bank of America. This giant agreed with the U.S. justice Department on payment of fine of us $ 17 billion. for securities fraud before the financial crisis. The crooks of Bank of America was engaged in various operations with bonds backed by residential mortgages (RMBS), and securities collateralized debt obligations (CDO). At the heart of these securities were of poor quality mortgage loans. In the end, Bank of America has pledged to donate 10 billion dollars to the US justice Department and $ 7 billion to provide American citizens a variety of financial incentives on mortgages.
Last year also had several high-profile cases. For example, American and British authorities awarded several banks to pay fines totaling USD 5.8 billion. for the manipulation in the currency markets. In the black list were American Citicorp and JPMorgan, the British Barclays and RBS, Swiss Bank UBS. The biggest fine went to the British Bank Barclays, which was fined 2.4 billion.
According to estimates by The Financial Timesfor the period 2007-2013 the big banks paid the financial regulators of the USA in total, about 200 of fines totaling about $ 100 billion., while $ 15 billion. were paid to foreign banks. If we assume that in 2014 and 2015, the amount of fines remained at the 2013 level, we will get that for the period 2007-2015 American and foreign banks had to pay the US government at least 200 billion. Our assessment is not much different from the data mentioned above the report Morgan Stanley.
From the above figures is breathtaking. However, banks wall street and the city of London quite quickly adapted to the new situation. The bankers themselves have acknowledged that they consider such costs as a new article of costs. The profit margin that banks receive from cartels and a variety of manipulation and abuse more than compensate for these costs. In the midst of the free campaign in 2014, the US banks showed record levels of net profit, which in the twenty-first century, they have never reached. So, the Bank is Citicorp, one of the main defendants in the many banking scandals in the first half of 2015 received a net profit, which was 2.3 times higher compared to the same period in 2014.
In Iceland the bankers started going to jail
In many ways the struggle for the establishment of order in the US banking sector is a facade. For example, the Dodd-Frank act framework, which is difficult or even impossible to use directly. And preparation of a package of more specific legislation that would help to begin a serious reform of the banking sector of the U.S. economy, blocked by the lobbyists of the banks. Under pressure from the banks, wall street, US financial regulators have decided that new international standards for capital adequacy known as”Basel-3″, while in the American banking system will not be used.
However, there is another point explaining why any positive changes in the U.S. banking system does not occur. We are talking about the personal responsibility of bankers for violations. Penalties are assigned to banks, these fines are paid regularly, but those managers and employees who have committed abuse, until recently, was always behind the scenes investigations. The situation began to change in recent months.
In October of 2015 in Iceland were court verdicts against five of the bankers who created the conditions that led to the emergence of the country’s financial crisis of 2008. Among the prisoners – three top Manager Landsbankin Islands and two top Manager Kaupting Bank. Suddenly it became clear that without much publicity to convictions even to a number of bankers that operated in Iceland. The total number of defendants to 26. This is the first in the world court verdict against the bankers responsible for the financial crisis in 2007-2009
Do I smell fried?
The second event of the same number occurred in the current year. Eleven former employees of Deutsche Bank, Barclays and Societe Generale on January 11, appeared in court in London on charges of fraud with the interbank rate Euribor, which interest rates are set on a large number of financial products, including mortgage loans.
Interbank rates Euribor and Libor, determining the price at which banks give each other loans, are crucial for financial products a total of more than 450 trillion. The trial commenced after more than three years since in 2012 the British Bank Barclays admitted that its traders tried to manipulate Libor and Euribor rates during the period 2005-2009 For many bankers, the start of the trial in London was a real shock.
In the banking world, where there is much talk about the London process, some draw attention to the fact that defendants in court are only the managers of European banks. And I hope that banks wall street will not come. Others note that the process in London – only the first swallow. Finally, still others believe that to calculate Bank managers and officials responsible for violations, not a big deal.
However, after all, financial regulators, and law enforcement agencies have long known about the specific abuses of the bankers, but nevertheless preferred to keep silent. This can be explained only stable corrupt connections in this area. Officials of financial regulators in its work has always been guided by two unwritten rules. One rule for banks as legal entities: Too big to fail (Too big to die). A different rule applies to managers of large banks: Too big to jail (Too big to go to jail).
Trials in Iceland and London for the first postwar decades, exceptions to the second rule. Nervous reaction of the authorities to the approach of the second wave of the financial crisis – a sure sign that there was a smell of fried.
