A 30% error rate.
Some of these were foreclosures on active duty servicemen, which is a felony.
But no prosecutions.
Why are Lloyd Blankfein and Jamie Dimon not in jail awaiting trial?
Coddling banksters just makes them more brazen in their fraud and deception.
When lenders lose original loan documentation, and their response is to fabricate documents that have nothing to do with reality, it is not a business plan, it is criminal fraud:
It is hard to credit, but lenders routinely mislay the card and loan agreements their customers originally sign. But even more astonishingly, if there has been a dispute later on, the lenders have used computer software to ‘ recreate’ the original documents, sometimes with less than accurate results.
Being able to recreate agreements in this way helps banks pursue borrowers over debts, but there is growing evidence that when lenders ‘recreate’ contracts they often do not stick to the original terms.
The result is that borrowers who are often already in financial trouble are left in worse difficulties.
Document ‘recreation’ is in the spotlight after a court case last month involving a number of borrowers with credit cards issued by HBOS, Barclaycard, MBNA and HSBC. Part of the case, heard in the High Court in Manchester, was to assess the circumstances in which banks could ‘ reconstitute’ lost agreements.
Judge David Waksman concluded that in future, lenders would have to explain why they did not have the original agreements. He said they would have to prove that the recreated document was a true copy of the original contract.
This is in the UK, not the US, that this is happening in right now.
There should be arrests and criminal charges, but all they are getting is a slap on the wrist from the Office of Fair Trading guidelines.
The UK is like us in this way, and it is a pity.
Just one bank failure:
So, here is the graph pr0n with last years numbers for comparison (FDIC only):
The numbers have dropped precipitously from the past few years.
Though it is surprising that it was former FBI director Louis Freeh who reported that Jon Corzine ran MF Global into the ground: (Thorough investigation is not what his consulting business is all about)
The “negligent conduct” of Jon Corzine and other officers of the MF Global Holdings Ltd brokerage contributed to the firm’s dramatic collapse in 2011, according to a report by the bankruptcy trustee.
The report by former FBI director Louis Freeh said the failure of MF Global’s officers contributed to losses of as much as $2.1 billion and adds to the growing number of reports and investigations pointing to their liability.
Freeh has prepared a lawsuit against former executives for breaches of fiduciary duty, but had not filed it pending the outcome of talks with a mediator appointed in a separate securities class action, according to the report.
Freeh’s 124-page document blamed the collapse on “the risky business strategy engineered and executed by Corzine and other officers and their failure to improve the company’s inadequate systems.”
While the report was sharply critical of Corzine’s conduct, it did not focus on one of the biggest mysteries of the MF Global collapse: the misappropriation of funds from customer trading accounts.
What, you mean that Freeh was too busy looking for Monica Lewinski’s blue dress to figure out who stole the f%$#ing money?
Now, there’s a surprise.
When Freeh is on the case, it is not about finding wrong-doers, it’s about protecting the powerful and generating PR.
Promontory Financial Group has hired Former SEC Chief Shapiro:
As regular readers may recall, Promontory Financial Group was one of the huge winners from the joke on the public otherwise known as the Independent Foreclosure Review. The only accurate word in that label, it turns out, was “foreclosure”.
As part of a series of consent orders issued to servicers in 2011, the OCC mandated that borrowers who had a foreclosure underway or completed in 2009 and 2010 could receive a review to determine if their foreclosure was handled improperly and caused financial harm. If so, they could receive as much as $125,000 in compensation.
Many observers, including yours truly, could see as soon as the reviews were announced that they were destined to be a sham, since the consultants hired to perform these assessments would be selected and pad by the banks, who would also be their immediate client. And after the reviews were hastily shut down, the revelations were even worse than even the cynics had predicted. Consultants like Promontory, who worked for three servicers, including Bank of America and Wells Fargo, ran up enormous tabs via being utterly incapable of organizing a process of this scale and complexity. Not that the bank cared, since they didn’t really want the work completed. Promontory racked up an estimated $1 billion in fees. Our whistleblowers say they completed only 4,800 borrower letters at Bank of America and may not have gotten through any at its smallest IFR client, PNC (in October of 2012, after over a year of work at PNC, Promontory said the work to dat needed to be scuttled since questions had been raised about the independence of the process. The reviews were shut down two months later).
So how is Promontory using all this lucre? Buying up even more former regulators to further its reputation as a connected insider. Mary Shapiro had barely left the SEC when she was nominated for a board seat at General Electric, which despite its image as a manufacturer, has for over two decades had nearly half its revenues coming from financial services. And now Shapiro has been signed by Promontory to help arm-twist regulators not to do their job.
This sort of incestuous corruption is a feature, not a bug.
First, it was federal Judge Jed Rakoff, who has refused to accept “no harm, no fowl” deals with the SEC, and now U.S. District Judge Sidney Stein is questioning the fairness of a settlement of shareholder lawsuit:
A Manhattan federal judge on Monday signaled he will not rubber-stamp Citigroup Inc’s proposed $590 million settlement of a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets.
U.S. District Judge Sidney Stein asked lawyers for the bank and its shareholders to address several issues at an April 8 fairness hearing, including requested legal fees and expenses of roughly $100 million, and the absence of payments by former Citigroup executives.
………
Stein joined other judges in recent years to question the fairness of large legal settlements in the financial industry.
Citigroup awaits a decision from the federal appeals court in New York on whether Stein’s colleague Jed Rakoff properly rejected a $285 million settlement with the U.S. Securities and Exchange Commission over the alleged defrauding of investors.
On Thursday, U.S. District Judge Victor Marrero in Manhattan cited that case in delaying a decision to approve the SEC’s $602 million insider trading settlement with a unit of Steven Cohen’s hedge fund SAC Capital Advisors LP.
………
According to court papers, the shareholder settlement also resolved claims against several former top Citigroup officials, including Chief Executive Charles Prince and senior adviser Robert Rubin. Stein asked whether this was proper.
“Does the absence of any payments from the individual defendants render the settlement unfair to class members who still hold the Citigroup stock they purchased during the class period?” he asked both sides to address.
More of this, please.
My bad, it’s actually a German banker saying that Euro Zone deposits are safe:
German Finance Minister Wolfgang Schaeuble has said savings accounts in the euro zone are safe, adding that Cyprus is a “special case” and not a template for future rescues.
In an interview with Bild newspaper published on Saturday, Schaeuble distanced himself from comments on Monday by Eurogroup chairman Jeroen Dijsselbloem, who said the rescue programme agreed for Cyprus – the first to impose a levy on bank deposits – would serve as a model for future crises.
“Cyprus is and will remain a special one-off case,” Schaeuble said.
“The savings accounts in Europe are safe.”
If you believe a German Finance minister right now, I have a bridge in Brooklyn that I want to sell you.
Just a “special case.” Yeah…Sure.
Because they indict their banksters:
Public frustration has been mounting over the lack of high-profile criminal prosecutions in the wake of the financial crisis here in the U.S. But the same cannot be said abroad.
Several news outlets reported that Iceland’s special prosecutor, hired in 2009 to investigate suspicious activities at several major banks, indicted fifteen bankers — including two chief executives — earlier this month over illegal activity tied to the meltdown of the country’s banking system in the fall of 2008. The bankers are accused of stock-price manipulation and securities fraud.
“These are quite big cases by any measurement, they’re my biggest cases so far,” Olafur Thor Hauksson, the prosecutor, told the Wall Street Journal last Friday, adding that the charged could face up to six years in prison if convicted.
Some blogs reacted to the news with the observation that Iceland’s actions are in contrast to the lack of prosecutions in the U.S.
Gee, you think it’s a contrast?
Our it is a mark of our corruption that not one of the big banksters has even been seriously investigated for crimes.
The high powered DC law firm Williams & Connolly has sued the OCC to get information about how they selected consulting firms to review the foreclosure settlement. Considering the half-assed job done by the consultants, and the indications that there were ties between the banks and the consultancies, this should get interesting”
A top Washington law firm is suing regulators to hand over information about how it selected consulting firms to participate in a multibillion-dollar review of banks’ past foreclosures.
The reviews, mandated by regulators in 2011 after widespread foreclosure shortcuts came to light, proved slow and expensive, and earlier this year 13 banks agreed to pay $9.3 billion to end them and compensate foreclosed borrowers.
But in a lawsuit in federal court in Washington, D.C., the law firm Williams & Connolly revisited the original reviews.
It is seeking documents explaining how the Office of the Comptroller of the Currency defined “independent” in its requirements for mortgage servicers to hire “independent consultants” to conduct the reviews.
The law firm declined to identify the client on behalf of which it filed the complaint.
It is possible that a consulting firm that lost out on the review contracts is behind the suit.
An OCC spokesman declined comment.
………
In the new lawsuit, Williams & Connolly said it had sought through a Freedom of Information Act request to the OCC any documents or records about the independence requirements for the consultants, and any documents about OCC standards for independence within the context of the foreclosure reviews.
The OCC initially denied the law firm’s request, then provided limited information on a redacted basis, the law firm said. The firm said in its filing that it went to court to obtain all of the information.
David Aufhauser, the Williams & Connolly lawyer who filed the action, and who is a former general counsel of the Treasury Department and of investment bank UBS, declined to comment on the case.
At least one of the consultancy firms was suspended, and if you follow Naked Capitalism you can get a full picture.
While one can generally be certain that any deal for the banks will be a corrupt bailout, when the Office of the Comptroller of the Currency is involved, you can be sure that it’s well over the line of what normal people will call corrupt self dealing.
I am looking forward to hearing more about this.
I am referring to the state-owned bank of North Dakota, which will be made illegal by the Trans-Pacific Partnership (TPP):
Clearly, from Wall Street’s perspective, the North Dakota bank must go, and all other state efforts to replicate it must be thwarted. Wall Street’s stealth weapon may be lodged within the latest corporate trade agreement called the Trans-Pacific Partnership (TPP), which currently is being negotiated in secret. We already know that Wall Street is seeking to remove all tariff restrictions that prevent the U.S. financial services industry from doing business in countries like Brunei, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The biggest banks also want the treaty to eliminate “non-tariff” barriers including regulations that create “unfair” competition with state-owned financial enterprises.
Depending on the final language, it is possible that the activities of the Bank of North Dakota could be ruled illegal because “foreign bankers could claim the BND stops them from lending to commercial banks throughout the state,” according to an analysis by Sam Knight in Truthout. How perfect for Wall Street: a foreign bank can be used as a shill to knock out the BND.
The nickel tour on BND is that it is a state-owned wholesale bank (it only makes loans to other banks), and the state keeps its money in an account there.
It generates significant savings, and significant savings for the taxpayer, and its senior executives are paid less than the President of the United States. (The most highly paid executive is paid about ½ that of POTUS.)
Also, the bank provides a financing alternative to bond sales managed by Wall Street firms.
Considering the Obama administrations neoliberal philosophies, along with its predilections toward direct and indirect government subsidies for the TBTF banks, I’m inclined to believe it. Particularly since that is what the Obama Administration’s point person is explicitly saying the trade agreement:
Publicly owned enterprises, for example, are being targeted by negotiators. One such entity in the United States that has been the subject of considerable interest in recent years is the Bank of North Dakota (BND) – the only fully publicly owned financial institution in the country. The BND, which is only allowed to lend wholesale, was a stabilizing force that helped keep the already energy-rich state insulated from the shock of the financial crisis (Alaska, for example, didn’t fare as well). It has also brought a small fortune to the state’s treasury – $340 million in net tax gain between 1997 and 2009. Legislators in at least 13 different states have proposed studying or emulating the North Dakota model – state-owned development of central-bank style institutions guaranteed by tax revenue. But if the TPP is passed, that option might not be available. [Chief TPP Negotiator for the Office of the US Trade Representative Barbara] Weisel said that State Owned Enterprises (SOE) are routinely “competing directly with private enterprises, and often in a way that is considered unfair.”
“Some of the advantages that can be conferred on State Owned Enterprises are things like preferential financing,” Weisel said. “Those are things that wouldn’t be provided to private companies – preferential provision of goods and services provided by a government.”
She said that “State Owned Enterprises – which in some cases can comprise a significant percentage of an economy – can be used to undermine what we’re otherwise trying to gain from this free trade agreement.”
What they are “trying to gain” with this agreement is to replace democracy with unregulated markets (aka looting).
Call your Congresscritter and tell him that you are absolutely opposed to the TPP.
Did Steve Cohen Buy Off the U.S. Government?
Seriously. If the SEC is settling for a payment of $616 million dollars, with no admission of wrongdoing, when the case against for insider trading is very strong, and it is a a f%$#ing slam dunk on Sarbanes-Oxley violation.
He got to walk because he’s rich and powerful:
Most scandals involving the cozy relationship between Wall Street and its regulators play out behind closed doors. Others happen in plain view, and this is one of the latter. In a Manhattan courtroom Thursday, a federal judge held a hearing on whether to approve a legal settlement in which Steven A. Cohen, one of the richest and most publicity-shy men in the country, appears to be buying off the U.S. government, which for years has been investigating wrongdoing in and around his hedge fund, SAC Capital Advisers.
Unless the judge, Victor Marrero, rejects the settlement between the Securities and Exchange Commission and SAC, which was announced a couple of weeks ago, Cohen will be free to go about his business, which has long been clouded by suspicions of insider trading, once he writes a check of six hundred and sixteen million dollars to the Securities and Exchange Commission. There will be no further sanctions and no admission of wrongdoing. And in fact, Cohen already appears to be celebrating. ………
To his credit, Judge Marrero has, at least for now, refused to go along with this travesty. Reserving judgement on the case, he asked why the settlement didn’t include an admission of wrongdoing on the part of SAC and Cohen. “There is something counterintuitive and incongruous about settling for six hundred million dollars if it truly did nothing wrong,” the judge said. ………
………
Exactly how Cohen pulled off this feat is something of a mystery. The details of the dealings between his lawyers and the government haven’t been revealed, and most likely won’t be. What we do know is this: until the settlement with the S.E.C. was announced, things were looking increasingly grim for Cohen and his firm, which is based in Greenwich, Connecticut.
During the past several years, investigators from the S.E.C. and the U.S. Attorney’s office in Manhattan have been carrying on a wide-ranging investigation of SAC, which manages about fifteen billion dollars in assets. As a result of this probe, no fewer than nine current or former employees of SAC have been tied to insider dealing while working at the firm, and four of them have pleaded guilty. The investigation started out with lowly former employees. Over time, though, it moved closer and closer to Cohen, the firm’s founder, until, finally, it enveloped him.
Last November, Preet Bharara, the U.S. Attorney for the Southern District of New York, held a press conference to announce the indictment of Matthew Martoma, a former SAC trader, for what Bharara said was “the most lucrative insider-trading scheme ever charged.” According to the complaint, the 2008 trades at the center of the case involved Cohen directly. After receiving at tip-off from an inside informant about a drug trial that had turned out badly, Martoma spoke for twenty minutes with Cohen—identified as “Portfolio Manager A”—and then started unloading shares that SAC owned in the two drug companies involved, Elan and Wyeth, the complaint said. Once the results of the drug trial became public, the stock prices of the drug companies fell sharply. The government said that Martoma’s trades netted SAC as much as two hundred and seventy-six million dollars.
………It’s a farce, and it’s not getting any funnier. The SAC settlement marks the first time, to my knowledge, that the S.E.C. has accorded such deference to a hedge fund, and it also raises the question of whether the Justice Department is now ducking bringing criminal charges against Cohen himself. Some folks who know how the system works from the inside think that that’s what it looks like. “I read the Martoma complaint,” Bradley Simon, a prominent white-collar criminal defense attorney and former federal prosecutor, told me. “It seems like there’s evidence there for them to charge Cohen, but they don’t want to do it.
………
A second possibility is that, despite the Martoma complaint, there simply isn’t sufficient evidence to convict Cohen, and the prosecutors have reluctantly accepted this fact. Insider-trading cases are tricky. We don’t know what Cohen said to Martoma during their conversation, or whether Martoma would be willing to testify against him. In the insider-trading cases of Raj Rajaratnam, who ran the Galleon hedge fund, and Rajat Gupta, the former head of McKinsey, the government relied heavily on wiretap evidence. According to the Wall Street Journal, the government obtained a warrant to tap Cohen’s home phone in 2008, but it isn’t known what, if anything, these intercepts yielded.
(emphasis mine)
They have f%$#ing wiretaps, and they are doing nothing.
Even if they don’t they have a slam dunk on the insider training, they do have a prima facie case that he violated SarBox when he certified that his company had sufficient internal controls, which would get him banned from management of a publicly traded company for life.
This is bullsh%$, and I am pining for Mmme. la Guillotine.
Just attach generators to the Obama administration’s revolving door. Problem solved:
Coming off a grueling four-year stint at the Justice Department, Lanny A. Breuer is poised to make a soft landing in the private sector.
Covington & Burling, a prominent law firm, plans to announce on Thursday that Mr. Breuer will be its vice chairman. The firm created the role especially for Mr. Breuer, a Washington insider who most recently led the Justice Department’s investigation into the financial crisis.
For Mr. Breuer, who will now shift to defending large corporations, Covington is familiar turf. He previously spent nearly two decades there.
………
“We’re proud to welcome him home,” said Timothy C. Hester, Covington’s chairman.
FWIW, I think that “welcome” is spelled “Ka-Ching.”
He did his job, and now Mr. Breuer is going to be paid for, “not bringing cases against the banks and executives at the center of the crisis.”
Buy them a safe that fits into a mattress:
If you arte going to put your savings in the mattress, this is the way to go.
It appears the the Russians are not going to be extending additional credit to Cyprus, nor are they going to drop the interest or extend the loans that they have already made.
Paul Murphy, watching Cypriot finance Minister Michael Sarris returning empty-handed from Moscow, says that “Medvedev and co could not have played a worse hand during this crisis — and it’s not immediately clear why”. His point is that the most likely outcome right now — he calls it “popping the red pill” — is that big depositors at Laiki Bank (read: rich Russians) are likely to lose some 40% of their money. Since that will make Russia very unhappy, why is Russia doing nothing to prevent it?
I don’t pretend to understand Russian politics, but this move seems to me to be a classic high-risk, high-aggression play; think of Medvedev as a geopolitical hedge-fund manager or poker player, and it begins to make a bit more sense.
Firstly, it’s worth noting that Russia is actually moving backwards on the amount of help it’s likely to extend to Cyprus. When the bailout plan was first announced, it included Russia extending its existing €2.5 billion loan to the country by five years, as well as reducing that loan’s interest rate. Now, Russia is refusing to agree even to that.
More generally, Russia is taking an absolutist stance with respect to Cyprus. No, we won’t restructure the money you owe us. No, we won’t buy a bank off
you. No, we aren’t interested in your natural-gas reserves. And underlying it all, of course, an unspoken — and all the more powerful for being unspoken — physical threat to any Cypriot who causes powerful Russians to lose billions of euros.
I think, and noted in the comments, that there are a number of motivations for the Russians:
Note that the reasons above are orthogonal, so it might be all of the above.
I do think that any tighter government integration in the EU will have to include some sort of government structure which prevents German hegemony, something like the bicameral structure of the US Congress, because this whole “Germany runs Europe” thing is working about as well as it did the last time.
Her apartment in France just got raided as a part of a corruption investigation:
Police have searched the Paris home of the head of the International Monetary Fund as part of a fraud investigation centred on a supporter of former president Nicolas Sarkozy.
Christine Lagarde’s flat was raided along with that of her office manager and the home of businessman Bernard Tapie, a former politician, actor, singer and television celebrity.
The IMF chief has been the subject of preliminary investigations for “complicity in the embezzlement of public funds”, since 2011, when Tapie was awarded €284m of public money in compensation in a financial dispute while she was economy minister.
The search came hours after the French government was rocked by a separate scandal after the budget minister Jérôme Cahuzac was put under criminal investigation amid claims he hid money from the French taxman in a secret Swiss bank account. Lagarde and Cahuzac have vehemently denied any wrongdoing.
………
The accusations against Lagarde centre on her role in what is known as the Tapie Affair, a row that has rumbled for two decades, which ended when she made a controversial decision to refer the businessman’s dispute with the public bank Crédit Lyonnais to arbitration. Critics say she abused her authority. Investigators are looking into whether Tapie was given a secret deal in return for supporting Sarkozy during his successful 2007 presidential election campaign.
Of course, a police raid does not imply guilt, but it does show just how corrupt the political elites are as a class, and why the idea of apolitical “technocrats” is a fraud.
This proposal for Cyprus is brilliant:
So TMM propose the Cypriot Government do the following – they’ll have to do it very quickly to avoid the ECB panicking and pulling back the ELA cash lent against dodgy collateral. Once done, the ECB will not be able to do anything about it.
- Transfer all bank deposits & unencumbered assets from the existing Cypriot banks to new bank holding companies: e.g. Cyprus Phoenix Bank. This should include the transfer of IT infrastructure, the branch network & any tangible assets like real estate (e.g. the banks’ HQs).
- Let the old banks go bankrupt, leaving the ECB with EUR 9bn of losses and wiping out both the subordinated & senior bondholders (EUR 1.75bn).
- These new banks are now adequately capitalised & under EU law, the ECB will not be able to prevent their participation in Target 2 via the Central Bank of Cyprus. The ECB may well kick & scream, but there will be nothing they can do about it.
- Domestic Bills/Bonds haircut by 80% for non-Cypriot banks. Although their non-bank ownership is small, every little helps, & using JPM’s ownership estimates, this would produce ~EUR 820m.
- The international bonds under UK (with a 75% CAC hurdle) are certainly tough to PSI, but let’s all be realistic, there’s no money left & government debt is at astronomically large amounts of GDP. TMM believe that Cyprus will be more successful than market punters reckon in restructuring this debt. And of course, they can also just unilaterally default on the debt. Again, an 80% haircut here sounds realistic, producing EUR 3.04bn.
- Adding the Gas reserve privatisation (which JPM estimate at EUR 4.2bn), TMM have found EUR 18.9bn.
- Cyprus could also, of course negotiate with the Russians to restructure the EUR 2.5bn loan, and if they are able to get say 20% NPV reduction on this, they could make the terms on the international bond restructuring less-onerous.
I’m not a fan of the proposal to privatizing the gas reserves, I think that it’s stupid to sell the future for pennies on the dollar, but otherwise I like it.
It appears legal, and it legally f%$#s the powers that be of finance, and it doesn’t make the people of Cyprus pay for their banksters fraud.
Them that broke the world should pay, but that will never happen.
When Troika (really, the Germans) decided that the solution to Cyprus’ problem with its banks was to take money from insured accounts, they had no idea the firestorm that it would unleash.
It appears that the Troika (really, the Germans) have found the limits of the authority, and hence the misery, that they can inflict, and so the Cypriot Parliament voted down the proposal to take money from depositor accounts:
The Cypriot parliament has thrown out a controversial plan to skim €5.8bn (£5bn) from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped country will seek a funding lifeline from Russia.
Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.
Late on Tuesday night the eurozone governments said that despite the vote Cyprus would still need to raise the €5.8 bn – a third of the €17bn bailout.
There are limits to bailing out hedge funds and large European banks, I guess.
Unfortunately, the good folks in New Zealand, which, as Yves Smith observes is already a haven for fraudulent corporations, had decided to abandon the whole concept of insuring bank deposit:
Picture this: you check your bank balance and see that your $1000 lies safely in your savings account.
That night you switch on the evening news and find to your horror that your bank has failed.
It turns out that the Government has had to move quickly, and has placed your bank in statutory management.
The next day you check your bank balance and you find that you have taken what is referred to in the banking industry as a “haircut”.
In other words, part of your savings remain, let’s say 80 per cent, but 20 per cent of it has been frozen – perhaps forever – while the statutory manager sorts out the mess.
You have just entered the world of Open Bank Resolution (OBR).
It may come as a surprise that the Reserve Bank already has the power to freeze bank deposits. The problem for the central bank has been a lack of technical infrastructure to implement the policy, should the need arise. The bank said last week that it was in discussion with the banks on “pre-positioning” their systems for OBR.
Un f%$#ing believable
A press release from the a New Zealand Green Party MP follows after the break:
National planning Cyprus-style solution for New Zealand
Tuesday, 19 Mar 2013 | Press Release
Contact: Russel Norman MP
Tags: Banking & Finance, Smart Economics, Economics
The National Government is pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts, the Green Party said today.
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
“Bill English is proposing a Cyprus-style solution for managing bank failure here in New Zealand – a solution that will see small depositors lose some of their savings to fund big bank bailouts,” said Green Party Co-leader Dr Russel Norman.
“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.
“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.
“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.
“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.
“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”
Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.
“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.
“OBR is not in line with Australia, which protects bank deposits up to $250,000.
“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.
“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”
“The Reserve Bank is in the final stages of implementing a system of managing bank failure called Open Bank Resolution. The scheme will put all bank depositors on the hook for bailing out their bank.“Depositors will overnight have their savings shaved by the amount needed to keep the bank afloat.
“While the details are still to be finalised, nearly all depositors will see their savings reduced by the same proportions.
“Bill English is wrong to assume everyday people are able to judge the soundness of their bank. Not even sophisticated investors like Merrill Lynch saw the global financial crisis coming.
“If he insists on pushing through this unfair scheme, small depositors can be protected ahead of time with a notified savings threshold below which their savings will be safe from any interference.”
Dr Norman questioned the Government’s insistence on pursuing Open Bank Resolution when virtually no other OECD country uses it.
“Open Bank Resolution is unprecedented in the world. Most OECD countries run deposit insurance schemes which protect people’s deposits up to a maximum ranging from $100,000 – $250,000,” Dr Norman said.
“OBR is not in line with Australia, which protects bank deposits up to $250,000.
“A deposit insurance scheme is a much simpler, well-tested alternative to Open Bank Resolution. It rewards safe banks with lower premiums and limits the cost to taxpayers of a bank failure.
“Deposit insurance will, however, require the Reserve Bank to oversee and regulate our banks more closely – a measure which is ultimately the best protection against bank failure.”
The first was coined by Eric Falkenstein:
People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend’s bar mitzvah.
The 2nd rule, which I call Saroff’s Rule:
If a financial transaction is complex enough to require that a news organization use a cartoon to explain it, its purpose is to deceive.
Well, now I have another rule, if your business plan requires an extraterritorial location not subject to any national law, it is because the principals involved intend to be lawless:
A company named Blueseed is a year away from offering entrepreneurs an inexpensive place, near Silicon Valley, in which to develop their products.
“Blueseed will station a ship 12 nautical miles from the coast of San Francisco, in international waters. The location will allow startup entrepreneurs from anywhere in the world to start or grow their company near Silicon Valley, without the need for a U.S. work visa. The ship will be converted into a coworking and co-living space, and will have high-speed Internet access and daily transportation to the mainland via ferry boat. So far, over 1000 entrepreneurs from 60+ countries expressed interest in living on the ship.”
No Civil Rights Act, no Equal Employment Opportunity Commission, no Fair Labor Standards Act, no Securities Exchange Act, no RICO statute, no consumer protection laws, no laws against slavery or indentured servitude, and indeterminate tax jurisdiction.
If you get an offer from these people, run the other way.
H/t Naked Capitalism.
No banks, but I just noticed some credit union closings:
I think that this is the first time since I started following this that credit union closings were the same as bank closings.
It probably means nothing.