Category: Finance

Hurrray for the ……………… Swiss?

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Switzerland citizens have petitioned binding shareholder votes on executive compensation to referendum:

In February 2008, Thomas Minder, a Swiss businessman whose family-owned company is best known for its old-fashioned herbal toothpaste, attacked his banker, UBS Chairman Marcel Ospel, as if he were a form of stubborn plaque. At a shareholders’ meeting in Basel, he stormed the podium as Ospel addressed the crowd. Ospel’s bodyguards grappled with Minder and wrestled him away before he could land his symbolic blow — he was trying to hand the embattled head of Switzerland’s largest bank a bound copy of Swiss company law, which codifies corporate temperance.

 “Gentlemen, you are responsible for the biggest write-downs in Swiss corporate history,” Minder had railed just a few minutes before, referring to UBS’s loss of $50 billion during the subprime meltdown that prompted it to seek a government bailout. “Put an end to the Americanization of UBS corporate philosophy!”

 The bodyguards marched Minder out of the hall amid a chorus of boos and jeers. Two months later, Ospel was gone, taking the fall for UBS’s recklessness, but Minder’s campaign against big bonuses had only just begun; shortly after Ospel was ousted, Minder filed the 100,000 signatures needed to launch a referendum to impose some of the tightest controls on executive compensation in the world.

 Of the top 100 Swiss companies, 49 give shareholders a consulting vote on the pay of executives. A few other countries, including the United States and Germany, have introduced advisory “say on pay” votes in response to the anger over inequality and corporate excess that drove the Occupy Wall Street movement. Britain is also planning to implement rules in late 2013 that will give shareholders a binding vote on pay and “exit payments” at least every three years. Minder’s initiative goes further, forcing all listed companies to have binding votes on compensation for company managers and directors, and ban golden handshakes and parachutes. It would also ban bonus payments to managers if their companies are taken over, and impose severe penalties — including possible jail sentences and fines — for breaches of these new rules.

Honestly, I was hoping that someone would do this, but in my wildest dream, I would have not have thought that it was the Swiss who would be at the forefront of this movement.

It appears that I have some stereotypical views about the Swiss, basically as conventional banker types, which does not reflect the actual reality.  I’ve got to be more enlightened.

Iceland Wins in Court Over Icesave Deposite Guarantees

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I’m not particularly surprised:

A European court has cleared the Icelandic government of failing to guarantee minimum levels of compensation for UK and Dutch savers in the collapsed Icesave bank.

Icesave, run by the Icelandic Landsbanki, collapsed in 2008 along with all of Iceland’s banking system.

The UK and Dutch savers were bailed out completely by their governments.

The ruling may halt the UK’s attempt to get all of its money back from the Icelandic government.

………

The Icelandic government said it took “considerable satisfaction” from the ruling from the European Free Trade Agreement (EFTA) Court.

“Iceland has from the start maintained that there is legal uncertainty as to whether a state is responsible for ensuring payments of minimum guarantees to depositors using its own funds and has stressed the importance of having this issue clarified in court,” it said.

………

The EFTA judgement stated: “The Court holds that the Directive does not envisage that the defendant itself must ensure payments to depositors in the Icesave branches in the Netherlands and the United Kingdom, in accordance with Articles 7 and 10 of the Directive, in a systemic crisis of the magnitude experienced in Iceland.”

What’s the core issue here is that Iceland guaranteed these accounts up to £16,300, but the British and Dutch cover the whole account, and demanded that Iceland pay the whole amount.

This is separate from the attempts to make the bondholders whole, for which there is no legal obligation whatsoever.

Geithner As Sociopath: The Interview

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In an interview with Liaquat Ahamed at The New Republic Timothy Geithner reveals his good German.

In response to the idea of justice, his response was that it, “wasn’t his thing.”

LA: One of the ways that people have figured out in the past to reconcile the politics was to go populist. That was what Roosevelt did. You, on the other hand, had been resolutely against that. You refer to it as Old Testament justice, implying that while it may be emotionally satisfying, it doesn’t serve any purpose.

 TG: I never used that phrase as a pejorative description. I just used it as a simple shorthand to refer to the understandable need people had for justice. But the President didn’t ask me to come do this to be the architect of a political strategy. I never felt that was my thing. I had some views on the issue, but I didn’t give them much weight. I thought my job was to figure out the financial parts.

(emphasis mine)

Justice doesn’t matter, and notwithstanding his protestations, he ridiculed it as, “Old Testament justice”.

He knows that his job is to be the lick-spittle watchdog for the banksters.

Note however that the Cossacks work for the Czar

The IMF Gets One Right

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IMF chief Christine Lagarde is calling for increases in the minimum wage, strengthening the social safety net, and reining in bankers pay:

Christine Lagarde, the managing director of the IMF, has warned that “corrosive” inequality was hindering the world’s economic recovery.

 In a combative speech to an audience of some of the world’s wealthiest financiers at the World Economic Forum, [Davos] Ms Lagarde said that bankers’ pay should be cut to close the gap between the rich and poor. “Excessive inequality is corrosive to growth; it is corrosive to society. I believe that the economics profession and the policy community have downplayed inequality for too long” she said.

 Ms Lagarde, a former French finance minister who was appointed head of the International Monetary Fund in 2011, added that it might be necessary for nations to impose minimum wages in order to reduce income gaps.

 II believe policies such as robust social safety nets, extending the reach of credit, and – in some cases – minimum wages can help” she told the audience of business and political leaders in the Swiss ski resort of Davos. Ms Lagarde also warned that necessary reforms of the multinational banking sector, which plunged the Western world into recession in 2008-09, were being watered down by industry lobbying.

 ………

 Ms Lagarde told delegates that bankers’ pay is too high. “We must move in the direction of more prudent compensation practices” she said. “Ultimately, this is all about accountability: we need a financial sector that is accountable to the real economy– one that adds value, not destroys it”.

Your mouth to God’s ear, ma’am.

Good Riddance

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Lanny Breuer, head of the criminal division at the Department of Justice and pimp for the banksters, has resigned:

Lanny Breuer is out as head of the Criminal Division of the Department of Justice, according to the Washington Post. After his ratlike performance on Frontline (transcript here) it won’t be long before we find him at some creepy New York or DC law firm defending his best friends, the banks and their sleazy employees. His legacy is simple: too big to fail banks can’t possibly commit crimes, so minor civil fines and false promises of reform are punishment enough. Jamie Dimon couldn’t have put it better.

BTW, the Department of Justice has said that they would never work with the producer of the segment ever again:

He’s gone, but I’m certain that he’s going to a cushy Wall Street gig where he will make millions of dollars.

It’s how back loaded bribery works.

Tobin Tax Progresses in Europe

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The EU has begun to implement a plan to tax financial transactions:

A hotly contested tax on financial trades took a big step forward on Tuesday when European Union finance ministers allowed a vanguard of member states to proceed with the plan.

The so-called Robin Hood tax would apply to trading in stocks, bonds and derivatives. Although the tax would probably be small — one-tenth of a percentage point or less on the value of a trade — it could earn billions of euros for struggling European governments.

Algirdas Semeta, the European commissioner in charge of tax policy, called the decision “a major milestone in tax history” and said the levy could be imposed starting next year. But deep concerns about how it would work could still lead to delays.

The European Commission, the bloc’s policy-making arm, still needs to draft the final legislation, and the 11 states in favor of the law will have to give their unanimous approval before it becomes law — two more than the minimum required for legislation to be drafted.

A significant complication is opposition to the tax by Britain, which has the largest trading hub in Europe in the City of London. But because Britain has decided to stay outside the group of states applying the tax, its resistance would probably not stop the plan from moving ahead.

Among the 27 members of the European Union, the proposal has firm backing from Germany, France and nine other countries. Others might eventually support the idea, which is closely associated with James Tobin, a United States economist and Nobel laureate who suggested a version of it in the 1970s.

In addition to be a good source of revenue, it creates a large disincentive for short-term speculation by making it more expensive.

Here is hoping that this becomes a permanent fixture of the world economy.

He Didn’t Tweet a Picture of His Penis to a Football Player’s Imaginary Penis, So it Does Not Matter………*

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This explains why the media has largely ignored the revelation in the latest release of the Federal Reserve’s meeting minutes from 2007, which is that Timothy Geithner was leaking changes to the discount window to the big banks ahead of their official release:

In the summer of 2007, as storm clouds gathered over the world’s financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and other banks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official.

 Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation during a Fed conference call in August 2007, and he stuck to his 5-year-old claim against the current U.S. treasury secretary in a statement provided to Reuters on Friday.

 “From conversations I had prior to the video conference call on August 16, 2007, I was aware of discussions among a few large banks about borrowing from their discount windows to support the asset backed commercial paper market,” Lacker said in the statement. “My understanding was that (New York Fed) President Geithner had discussed a reduction in the discount rate with these banks in connection with these initiatives.”

The folks at Zero Hedge were the first ones to notice this, and they nail it when they say, “[J]ust when we thought our opinion of the outgoing Treasury Secretary and former NY Fed head Tim Geithner, whose TurboTax incompetence is now legendary, couldn’t get lower, it got lower. Much lower.“

Here is the pertinent section from the transcript of the August 16, 2007 conference call:

MR. LACKER. If I could just follow up on that, Mr. Chairman.

 CHAIRMAN BERNANKE. Yes, go ahead.

 MR. LACKER. Vice Chairman Geithner, did you say that [the banks] are unaware of what we’re considering or what we might be doing with the discount rate?

 VICE CHAIRMAN GEITHNER. Yes.

 MR. LACKER. Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.

 CHAIRMAN BERNANKE. Okay. Thank you. Go ahead, Vice Chairman Geithner.

 VICE CHAIRMAN GEITHNER. Well, I cannot speak for Ken Lewis, but I think they have sought to see whether they could understand a little more clearly the scope of their rights and our current policy with respect to the window. The only thing I’ve done is to try to help them understand—and I’m sure that’s been true across the System—what the scope of that is because these people generally don’t use the window and they don’t really understand in some sense what it’s about.

They also note that there was a sudden and unexplained jump of 50 points (4%) in the S&P 500 in just 1 hour.  (Note that they also make a compelling circumstantial case that Geithner’s schedule indicates that he leaked this information)

BTW, as ZH also notes, the Fed’s 5 year delay in the release of records means that Geithner has outlasted the statute of limitations.

Awfully convenient, nu?

We won’t have a fix to our financial system until Geithner, and his mentor Robert Rubin are under criminal investigation for what they dud.

*Not my words, but a slight reworking of sentiments expressed by JR at the Stellar Parthenon BBS.

What a Surprise

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Another Obama administration foreclosure mitigation program has descended into a morass of corruption and self-dealing:

No wonder the Fed and the OCC snubbed a request by Darryl Issa and Elijah Cummings to review the foreclosure fraud settlement before it was finalized early last week. What had leaked out while the Potemkin borrower reviews were underway showed them to be a sham, as we detailed at length in an earlier post. But even so, what actually took place was even worse than hardened cynics had imagined.

………

There are some issues that are highlighted in the piece, others that are implication that get somewhat lost in the considerable detail. The first, as stressed by Sheila Bair and other observers, is that the reviews were never designed to succeed. This is something we and others pointed out; this was all an exercise in show. The OCC had entered into these consent orders in the first place with the aim of derailing the 50 state attorney general settlement negotiations. This was all intended to be diversionary, but to make it look like it had some teeth, borrowers who were foreclosed on in 2009 and 2010 who thought they were harmed were allowed to request a review. If hard was found, they could get as much as $15,000 plus their home back if they had suffered a wrongful foreclosure, or if they home had already been sold, $125,000 plus any equity in the home. Needless to say, the forms were written at the second grade college level, making them hard to answer. A whistleblower for Wells Fargo reported that of 10,000 letters, harm was found in none because the responses were interpreted in such a way as to deny harm (for instance, if the borrower did not provide dates of certain incidents, those details were omitted from the assessment).

Read the whole thing.

Not Something I Did Not Expect From Time Magazine

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they just did an article about the advantages of state owned banks:

The American Great Plains are known for their expansive farm lands, endless horizons, and — in recent history — staunchly conservative politics. So it may come as a surprise that only state-owned bank in the U.S. (an institution more widely associated with communist China than the Republican Party) can be found in ruby-red, rural North Dakota.

 That’s right, The Bank of North Dakota (BND) — the largest bank in the state by deposits — was founded by legislative mandate in 1919, and has been a mainstay of the North Dakotan economy since that time, mostly through partnering with community banks to provide loans for local businesses. And advocates of public banking are holding up the BND as an example of what government-owned banks can do for an economy.

 ………

 Sure, there are many obstacles to launching publicly-owned financial institutions. Pulling state capital out of commercial institutions could prove to be disruptive to the current financial system. And proper controls need to be set up to avoid political considerations overwhelming proper analysis of lending opportunities. But North Dakota has avoided these pitfalls, and the NBD is an institution that has proven its ability to work alongside the private banking industry to help the state’s economy — one of the most successful in the nation in recent times — develop and grow.

The idea that this idea has gained enough currency to appear on the pages of Time Magazine is pretty remarkable. 

Generally, the MSM will view something like North Dakota’s as an anachronism, or some sort of upper Midwest peculiarity, like something from the movie Fargo.

They are actually taking this seriously, and that’s a change.

Dean Baker on Timothy Geithner, That’s Gonna Leave a Mark

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This is positively brutal:

Treasury Secretary Timothy Geithner’s departure from the Obama administration invites comparisons with Klemens von Metternich. Metternich was the foreign minister of the Austrian empire who engineered the restoration of the old order and the suppression of democracy across Europe after the defeat of Napoleon.

This was an impressive diplomatic feat – given the widespread popular contempt for Europe’s monarchical regimes. In the same vein, protecting Wall Street from the financial and economic havoc they brought upon themselves and the country was an enormous accomplishment.

Just go read it.

Quote of the Day

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The only problem is, the suit is being filed by maybe the biggest douchebag of all time, Hank Greenberg (and his company, Starr International), a man who has not only been proven to be corrupt and a fraud, but who perhaps more than anyone else was responsible for the galactic balance-sheet goat-f%$# that caused AIG’s implosion in the first place. If there is such a person as an innocent AIG shareholder who was harmed by the government’s conduct, it sure as hell isn’t Hank Greenberg.

—Matt Taibbi, on Greenberg’s suit against the US because he did not get well paid enough for running AIG into the ground.

(%$# mine)

FWIW, In an unexpected outbreak of sanity AIG has decided not to join Greenberg’s lawauit.

Still, “Galactic Balance Sheet goat f%$#,”  that is good, even by Matt’s high standards.

Go read.

Just Go Read Matt Taibbi

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He is on fire when writing about the nature of the bank bailouts:

………

Through behavior like this, the government has turned the entire financial system into a kind of vast confidence game – a Ponzi-like scam in which the value of just about everything in the system is inflated because of the widespread belief that the government will step in to prevent losses. Clearly, a government that’s already in debt over its eyes for the next million years does not have enough capital on hand to rescue every Citigroup or Regions Bank in the land should they all go bust tomorrow. But the market is behaving as if Daddy will step in to once again pay the rent the next time any or all of these kids sets the couch on fire and skips out on his security deposit. Just like an actual Ponzi scheme, it works only as long as they don’t have to make good on all the promises they’ve made. They’re building an economy based not on real accounting and real numbers, but on belief. And while the signs of growth and recovery in this new faith-based economy may be fake, one aspect of the bailout has been consistently concrete: the broken promises over executive pay.

………

The implications here go far beyond the question of whether Dimon and Co. committed insider trading by buying and selling stock while they had access to material nonpublic information about the bailouts. The broader and more pressing concern is the clear implication that by failing to act, federal regulators­ have tacitly approved the nondisclosure. Instead of trusting the markets to do the right thing when provided with accurate information, the government has instead channeled Jack Nicholson – and decided that the public just can’t handle the truth.

………

So what exactly did the bailout accomplish? It built a banking system that discriminates against community banks, makes Too Big to Fail banks even Too Bigger to Failier, increases risk, discourages sound business lending and punishes savings by making it even easier and more profitable to chase high-yield investments than to compete for small depositors. The bailout has also made lying on behalf of our biggest and most corrupt banks the official policy of the United States government. And if any one of those banks fails, it will cause another financial crisis, meaning we’re essentially wedded to that policy for the rest of eternity – or at least until the markets call our bluff, which could happen any minute now.

Other than that, the bailout was a smashing success.

Seriously, just go read, and then scream at your congresscritters.

God Bless America

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The US Treasury is now freezing the accounts of cartoonists of mass destruction:

I went to Congo to write a comic book about a terror group — and ended up being labelled a terror supporter myself by the Treasury Department.

The bizarre tale of my graphic novel Army of God, the Lord’s Resistance Army in Congo and Treasury’s Office of Foreign Assets Control (OFAC) is a window inside a little-known counter-terrorism campaign that captures more than a few innocents in its wide net.

Nearly 12 years since the massive expansion of federal powers in the wake of the 9/11 attacks, OFAC’s collateral damage — myself included — is a reminder that defeating terrorists can come at the cost of our freedom.

It began two years ago. In the fall of 2010 I spent a month in the Democratic Republic of Congo reporting on the Lord’s Resistance Army, a brutal Ugandan rebel group that was chased from its homeland and has spent the last decade hiding out in the forests of eastern Congo. Led by charismatic madman Joseph Kony, the LRA pillages farming villages for supplies, kills or mutilates the adults and enslaves the children.

………

In early December our agent wired [artist Tim] Hamilton his share of the advance, but the money never reached the artist’s account. After a few weeks the agent made some calls. “He was told that the party holding the funds was the federal wire fraud unit which suspected that they were laundering funds for a terrorist organization,” Hamilton says.

On one level, it may seem as if it is not a big deal, but it is.  

Basically, this means that they can take everything you have with out any recourse at any time, and if they are wrong, or if they are malicious, it does not matter, because they are above the law, because if anything goes wrong, all they need to do is go, “Yadda, yadda, terrorism.”

We have deliberately created a lawless national security state.

More Financial Fraud Enforcement Theater from the Obama Administration

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Yesterday, I heard the news that the 271 year old Swiss bank, Weglin, was shut down following a US Department of Justice investigation into their actions supporting tax evasion and money laundering.

It sounded too good to be true, and , as Yves Smith so eloquently points out, it was too good to be true.

The Nickel version is that the bank’s asserts were transferred to another entity, Raiffeisen, and the proceeds likely given to the owners in the weeks power to its being shut down.

Finally, the DoJ is saying NOTHING about whether the got information about the accounts, and the people who used them too avoid taxes.

This its a pretty good tell that they hour no data:  If they had, they would be trumpeting it to the heavens, because they would thereby induce people to turn themselves in.

Go read the while thing, including the reader comments.

Posted via mobile.

History Repeats Itself………

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They’re Back!!  Yes, the symbol looks very familiar

The Golden Dawn, the resurgent Greek Fascist party.

Rather surprisingly, their increasing popularity in Greece, along with the increasing violence associated with their actions, along with evidence that Greek police are increasingly directly colluding with them.

When you consider the fact EU measures have produced an economic collapse that has women in labor refused admission to hospital, and a descent to a barter economy, you would think that the Greek ruling elite, as well as the Eurocrats in Brussels, along with the Germans who pull their chain, would be running around like their hair was on fire about this.

It’s not happening, because the however uncomfortable the corrupt Greek elites are with Fascists, they hate the Greek left as manifested by SYRIZA, the Greek party of the left, because if they win, they threaten to undermine the kleptocratic duopoly of the PASOK New Democracy party.

On the European Union side, however uncomfortable they are with Fascism, they hate the Greek left as manifested by SYRIZA, and more generally they hate the underlying ideas that the EU bureaucracy should serve the will of the people (witness the gyrations to prevent votes on EU expansion once the referenda started to fail), and that neoliberal bank coddling policies are a bad.

So, why is there the studious ignorance regarding the rise of Fascism in Greece (and in a number of other EU nations)?

Well, when you look at the attitudes of the Eurocrats toward SYRIZA, or the Left Party in Germany, or similar, you see a hell of a lot more alarm at them, but they are not xenophobic violent antidemocratic groups.

I would argue that what we are seeing is a tacit endorsement of the rise in Fascism in Europe, because they are seen as “useful idiots” who can serve to counteract the threat of a resurgent left, either by providing an outlet for nationalist sentiments, or through violence.

Does this sound familiar to you?  It does to me.

In the late 1920s and the early 1930s, industrialists funded Fascists all over Europe, most notably in Germany, because of concerns about potential gains of leftists parties as a result of the economic collapse. (Yes, I know, Godwin’s Law)

I’m wondering when we are going to see the blond boy singing Tomorrow Belongs to Me.

My brother is pessimist.  He expects there to be a collapse the EU and war in the near future.

I am an optimist.  I expect there to be a collapse the EU and cold war in the near future.

Until the Eurocrats are put back under public control, and until Germany realizes that their morality play wet dreams do nothing but kill people, I do not see a better outcome in the next couple of decades.

Not Gonna Happen Next Year

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Not this, nor next year, will the Former Greek finance minister face criminal charges:

Greece’s coalition government called on Monday for the indictment of former Finance Minister George Papaconstantinou for allegedly removing the names of three of his relatives from a list of Swiss bank account holders whose tax records were to be re-examined.

Seventy-one deputies from the three-party coalition signed the proposal to indict Papaconstantinou for allegedly tampering with a public document and breach of duty — offenses that would carry a maximum 10-year jail term, according to legal experts.

Papaconstantinou, 51, served as finance minister between 2009 and 2011 in the previous Socialist government. But his party, which is part of the new conservative-led administration, is backing the proposed indictment.

The former minister has angrily denied the allegations, insisting the names were removed without his knowledge.

Not gonna happen.

It’s not gonna happen because if he is put in the dock, he will talk, and if he talks, he will implicate most of the corrupt Greek ruling class, as well as the German and British banksters who were complicit in the fraud.

As an aside, for next year, can we please have our newsmakers have easier to spell names next year?

Let Us Start the Year the Way that Iceland Ended Theirs

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And by that, I mean throwing our f%$#ing bankers into f%$#ing jail:

Two former executives at an Icelandic bank which collapsed in the 2008 financial meltdown were sentenced to jail on Friday for fraud which led to a 53 million euro loss, in the first major trial of Icelandic bankers linked to the crisis.

All three of the small North Atlantic island’s top banks collapsed in quick succession in October 2008 due to big debts incurred during a rapid overseas expansion.

Glitnir was the first to fall after the collapse of Lehman Brothers caused international credit markets to freeze up.

A Reykjavik court sentenced Glitnir’s former chief executive, Larus Welding, and former head of corporate finance, Gudmundur Hjaltason, each to nine months in jail, of which six months were suspended for two years. They had denied the charges.

Prosecutors said the two approved a loan to a company which owned shares in Glitnir so that the company could in turn repay a debt to Morgan Stanley.

The decision, taken outside the regular decision-making process, meant Glitnir was too exposed to the company and cost the bank at least 53.7 million euros (43 million pounds), the prosecution said.

It’s a good idea, even if it force me to spell Reykjavik properly.

H/t Americablog.