Five major banks guilty of currency manipulation, acting as a cartel

Is this the beginning of the end for the banking cartel? -LW


jpmorgan-foreign-exchange-investigationjpeg-0cb19_s878x630

Photo by: Seth Wenig
The shadows of a pedestrian is cast under a sign in front of JPMorgan Chase & Co. headquarters in New York on Nov. 19, 2013. JPMorgan Chase on Nov. 3, 2014 said the Justice Department has opened a criminal investigation into its foreign exchange business. (Associated Press) **FILE**

 – The Washington Times – Wednesday, May 20, 2015

They called themselves “The Cartel” and used secret chat rooms to plot strategy and manipulate prices on the world’s trillion-dollar currency markets.

On Wednesday, the worst of the trading abuses came to light as four of the world’s biggest banks based in the U.S. and Britain agreed to pay record fines totaling over $5 billion after pleading guilty to criminally manipulating global currency market over a period of more than five years beginning in 2007.

Justice Department officials called the settlement “historic,” while the top executive of one of the banks caught up in the scheme, which involved a handful of traders, called it “an embarrassment to our firm.”

Traders at Citicorp, JPMorgan Chase & Co., Barclays PLC, and The Royal Bank of Scotland agreed to plead guilty to felony charges, U.S. Attorney General Loretta Lynch said during a May 20 press conference. It’s the first time in more than two decades that global banks have admitted to wrongdoing on such a scale.

“For more than five years, traders in ‘The Cartel’ used a private electronic chat room to manipulate the spot market’s exchange rate between euros and dollars, using coded language to conceal their collusion,” Ms. Lynch said. “They acted as partners — rather than competitors — in an effort to push the exchange rate in directions favorable to their banks but detrimental to many others.”

“The Cartel” traders coordinated their currency trades to manipulate the benchmark rates set at the two major daily snapshots of the eurodollar exchange rates, known as “fixes,” which take place at 1:15 p.m. and 4 p.m., said Assistant Attorney General Bill Baer. Those fixes are supposed to be reported by unbiased third parties, Mr. Baer said.

The group also hatched plans in the chat room to protect themselves at other times during the day by agreeing to hold off buying or selling dollars and euros, he said.

Analysts said the penalties marked a victory for the government and reflect a broader effort by the Justice Department, long criticized as reluctant to prosecute big banks, to tackle financial misconduct.

The banks blamed the currency manipulation scheme on a few bad actors.

“The lesson here is that the conduct of a small group of employees, or of even a single employee, can reflect badly on all of us,” said Jamie Dimon, the chief executive officer of JPMorgan, in a statement.

Citi Chief Executive Michael Corbat said nine employees had been fired and others disciplined in the wake of the settlement.

“The behavior that resulted in the settlements we announced today is an embarrassment to our firm, and stands in stark contrast to Citi’s values,” he said. ” … We will learn from this experience and continue building upon the changes that we have already made to our systems, controls, and monitoring processes.”

The four banks will pay a combined $2.5 billion in criminal penalties to the Justice Department for illegal manipulation of currency rates between 2007 and 2013. The Federal Reserve is imposing an additional $1.6 billion in fines, as the banks’ chief regulator.

Britain’s Barclays is paying an additional $1.3 billion to British and U.S. regulators for its role in the scheme, and Switzerland’s UBS has agreed to plead guilty to manipulating key interest rates and will pay a separate criminal penalty of $203 million.

Federal prosecutors called out UBS in Wednesday’s press conference as a chronically bad actor.

UBS has a “rap sheet” that cannot be ignored, said Assistant Attorney General Leslie Caldwell.

“Within the past six years, the department has resolved criminal investigations of UBS three times, resulting in non-prosecution or deferred prosecution agreements,” she said. “UBS also has entered into civil and regulatory settlements on multiple occasions within the past few years. Enough is enough.”

Department of Justice officials say the banks have each agreed to a three-year period of corporate probation, which will require regular reporting to authorities and cessation of all criminal activity. All banks are to continue cooperating with the government’s ongoing criminal investigations, and the plea agreements do not prevent the Obama administration from prosecuting culpable individuals for related misconduct.

“The penalty all these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct,” Ms. Lynch said. “It is commensurate with the pervasive harm done.”

*Brennan Weiss contributed to this report, which was based in part on wire service reports.

 

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The hidden history of Bob Rae’s government in Ontario

Note: This article is from 2010. Bob Rae’s NDP government was elected in 1990 (25 years ago). Let’s hope that history doesn’t repeat itself with Rachel Notley’s NDP government in Alberta. -LW


GERALD CAPLAN
Special to The Globe and Mail
Published Friday, Oct. 08 2010, 11:06 AM EDT
Last updated Monday, Nov. 15 2010, 2:17 PM EST

 


When the NDP won government in Ontario exactly 20 years ago, it constituted the greatest advance for social democracy in North American history.

It’s true that British Columbia, Saskatchewan and Manitoba had all elected NDP governments and that progressives had won small victories in various parts of the United States. But none of them (I hope this doesn’t hurt their feelings) mattered in the same way Ontario then did. It was the economic heartland of Canada, the home of much of Canada’s industry and finance. What happened in Ontario impacted all Canadians. Now it was under the control of Bob Rae and the New Democrats.

Reflecting this reality, within months Mr. Rae’s government faced an unrelenting, brutal four-year onslaught that was unprecedented in Canadian history.

The attacks came from all sides. It is no exaggeration to say hysterical fear-mongering and sabotage was the order of the day. Launched within the very first year of the new government, the attackers included every manner of business big and small, both Canadian and American-owned, almost all private media, the police (especially in Toronto), landlords and lobbying/government relations firms. Their goal was clear, and they had the money and power to achieve it.

They were determined to undermine the government every step of the way, to frustrate the implementation of its plans and to assure its ultimate defeat. In all three goals they were successful. The considerable achievements of the government – often forgotten or dismissed – were wrought in the face of a deep recession and ferocious obstruction.

The tactics were not necessarily subtle. Though the Soviet Union was ignominiously imploding, right-wing columnists such as Diane Francis and Barbara Amiel actually resorted to old-fashioned red baiting, smearing the government as “red” or “communist.” And after the new finance minister’s very first meeting with the banking community , a bank vice-president told him, in the presence of an aide: “Nice speech, Mr. Minister, but we’re going to kill you.” And they did.

Conrad Black was a leading executioner. Lord Black swore loudly that on principle he’d never invest in Ontario under an NDP government. Other corporate interests threatened a virtual strike of capital unless the government relented on its intentions to introduce higher business taxes and to strengthen union rights, environmental regulations and equity programs.

Mr. Rae and treasurer Floyd Laughren made themselves easily accessible to business representatives, many of whom ran Canadian branch plants of huge American multinationals, only to be threatened with capital blackmail. The premier was warned that their U.S. head offices weren’t about to invest further in Ontario unless the government abandoned most of the programs it had run on.

Bond traders declared that slashing government programs to reduce the deficit was a prerequisite to Ontario borrowing at competitive rates, even though Ontario’s deficit was equivalent to that of Conservative-run Alberta. Suddenly the entire media was fixated on the government’s threatened credit ratings, never mind that Ontario had the only Standard & Poor’s AAA rating in the country. The Social Credit government in British Columbia, the Conservatives in Alberta and Robert Bourassa’s Liberals in Quebec all had lower credit ratings. Yet only in Ontario was the government threatened.

NDP government decision-makers, while innocent about so much, at least understood that the corporate world was not given to bluffing. Time after time they responded to the endless corporate blackmail by compromising on policies and commitments. In this way, they alienated many of their own followers but without ever appeasing business interests. They never could.

Some business protests bordered on the disloyal. Hysterical landlords took out an ad in The Wall Street Journal warning Americans not to invest in “leftist Ontario.” Others demanded the complete repudiation by the government of its most cherished legislation, as when several coalitions of powerful business interests, managed by government relations firms such as Hill & Knowlton, demanded the NDP scrap its entire plan to amend the Labour Relations Act. This was the kind of class warfare Lenin might have admired, especially since the government had already withdrawn many of its intended changes in order to meet business criticism.

One front organization, the “All-Business Coalition,” won headlines for warning that amendments the government had already disavowed would cost 450,000 jobs and cost $20-billion in investment. All the while the same groups were deliberately frightening investment away from the province.

Hostility to these fictional amendments also led to unusual solidarity among Toronto’s rival newspapers. Of course hostile editorials were fully expected. Less predictable were the full-page statements in the press denouncing the labor amendments. Even more unprecedented was the delegation consisting of the publishers of all three dailies who appeared in the premier’s office to express their hostility in person. The media in general played a key role in mobilizing perpetual hostility to the government, with business columnists regularly stirring up their readers while the Toronto Sun especially wallowed in the sheer joy of unrestrained excess and fabrication.

Throughout the five years of the Rae government, the Sun was its most powerful and effective foe, doing everything in its considerable power to damage the government. It repeatedly set the agenda for the entire media, even though competing reporters knew much of it was sheer hooey. The Sun gleefully sensationalized embarrassing facts, mere rumors, vicious innuendos and obvious lies, with no attempt to discriminate among them.

Perhaps the most chilling and underestimated of the government’s enemies were the Toronto police, whose actions at times bordered dangerously on virtual insubordination against the civilian authorities. Here too certain newspapers and radio commentators repeatedly and deliberately inflamed angry officers against the government. Most successful was the Sun’s ongoing, systematic campaign to drive a wedge between the government and the Toronto police force, sometimes with the collusion of the police themselves.

The Sun and senior Toronto police officials maintained a troubling relationship. In one particularly outrageous episode, they colluded in smearing an NDP appointee to the police board on the very evening of her swearing-in. The Sun published intimate information on the appointee that could come, many thought, only from the office of the chief. Sun readers then began their 1991 Victoria Day weekend with a huge banner headline proclaiming “COP COMMISSIONER PART OF OPP PROBE”. The story claimed the new appointee had been discovered in a car in the middle of the night with a very shady operator connected to an even shadier operator.

It was a blatant frame-up. On Victoria Day itself, the Sun came clean . They publicly acknowledged the sheer impossibility of anyone confusing the police commission member with the real passenger the OPP had found in the car. A Sun reporter described an “undeclared but very real state of war that exists between the new, NDP-appointed members of the police board and the great majority of the Metro [Toronto]force.” But that was pure mischief. The only war was the one the Sun was methodically fomenting.

The government introduced regulations that substituted the Constitution for the Queen in the oath that cops had to swear. Many media swiftly exploited the occasion to further exacerbate tensions between the police and the NDP. Yet the change had actually been initiated by the previous Liberal government and had been recommended by a committee consisting mainly of police. Their work had been completed when the NDP took office; the Rae government was simply implementing their recommendations.

I documented these facts publicly after interviewing numerous police reps, every one of whom supported the new oath. Nor could they see what the big deal was about. I asked the Toronto Sun, CFRB radio and CFTO-TV, who had most flagrantly misled the public on the issue, to demonstrate good faith by apologizing. Not one admitted the slightest fault. Good faith was in short supply in those years.

There are a world of studies yet to be written about the Ontario NDP’s difficult and controversial years in office, none more important than the nature of the saboteurs who organized their very own Ontario coup. This includes much of the business community, government relations firms, the media and the police. There are lessons to learn here about the limits of left-wing politics in Canada. None of them are encouraging if you are a left-winger.

 

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Benjamin Fulford: Was World War Three Called Off?

Ben talks about the banking and government changes that are becoming more and more visible, each and every day. This is exciting! -LW

 

More…

Full Disclosure, Hon. Paul T. Hellyer

Thanks for the heads-up, BP! Paul Hellyer makes full disclosure in this video. I can hardly wait for the Disclosure Canada tour! -LW


Note from Mr. Hellyer:

PLEASE DOWNLOAD AND SHARE WIDELY.
Reuse Allowed
UPLOAD TO YOUR CHANNEL.
Use the REMIX video option located in the Licence description on this video to bring the video to your YouTube Channel
THESE WORDS ARE FOR EVERYONE


What You Don’t See Is What You Will Get!

Paul T. Hellyer, Former Deputy Prime Minister and Minister of Defence of Canada, discusses the origin of the New World Order, and the Cabal that have run the United States and much of the world for many decades. He also looks at issues such as the Cabal’s connection to extraterrestrials, their technology, nuclear weapons tampering and national security issues related to this association. Finally, Mr. Hellyer reviews the Plan for a New American Century, and the military-industrial complex and its blueprint for perpetual war leading to complete dominance of Planet Earth – and what, if anything, can be done to stop it.

Disclosure Canada

Disclosure Canada

Nomura Bank Trial: Finally a Bank Goes to Court for Mortgage Fraud

Is the lid about to come off the entire US-based banking system? Could this be precursor to rolling out the new banking system? This case went to court on Monday and is expected to be completed within one month. Could it be? -LW


By

The trial of the century—a long-awaited determination of the damage perpetrated by Wall Street institutions in the financial crisis—began Monday in New York. But it’s only happening because one bank—unlike Goldman Sachs, JP Morgan, Citigroup, and Bank of America—refused to settle out of court. The Japanese firm Nomura stands accused of lying to mortgage giants Fannie Mae and Freddie Mac about the quality of mortgages pooled into securities during the housing bubble. The case will finally reveal hard data on just how much money Nomura, and the rest of the industry, made through fraud.

The Federal Housing Finance Agency (FHFA), conservator of Fannie Mae and Freddie Mac, sued 18 of the biggest banks in the world in 2011. As an investor, Fannie and Freddie purchased $196 billion in mortgage-backed securities from 2005 to 2007, filled with loans that did not meet specific underwriting guidelines. Sixteen of the 18 banks settled with FHFA, netting the agency $18.2 billion. One suit with the Royal Bank of Scotland remains in limbo. Only Nomura pushed FHFA into trial.1

FHFA purchased seven mortgage-backed security deals worth about $2 billion from Nomura, just 1 percent of the total mortgage-backed securities it purchased. But the trial will force the agency to actually show its work. Unlike in the settlements, which offered no details beyond the names of the securities, FHFA must explain why they’re asking for $1.1 billion in damages, over half of what it spent.

In its opening statement, FHFA alleged Nomura prospectuses about the quality of the mortgage pools were materially false. It stated that 68 percent of a sample of loans in Nomura securities had underwriting standards below what the bank advertised. That resembles the findings of Clayton Holdings, a third-party reviewer of mortgage pools for Wall Street banks (FHFA used Clayton estimates in their complaint). FHFA also charged that home appraisals were inflated by an average of 11 percent. Tellingly, Nomura tried to block John Kilpatrick, the FHFA’s expert witness on appraisals, from testifying.

This small set of facts brings sharper focus to the securitization scheme. For context, banks proffered over 1,800 mortgage-backed securities deals during the housing bubble. But all the securitizations were structurally, more or less, the same as Nomura’s; that’s why FHFA sued 18 banks. Under representation and warranty agreements, if the underwriting did not match the securities issuers’ claims, investors like Fannie and Freddie could demand that the bank repurchase the bad loans. That means that FHFA could have stuffed over two-thirds of its securities back into Nomura’s pockets. Federal judge Jed Rakoff made a similar determination in the Countrywide “Hustle” case last year when he ordered damages of $1.3 billion on defective mortgage sales to Fannie and Freddie, based on the percentage of loans that were poorly underwritten.

How much money are we talking about overall? Let’s just look at 2005 and 2006, the two years at issue in the FHFA case, and the biggest years for mortgage-backed securitizations. Banks sold over $1 trillion in mortgage-backed securities each of those years. So, if Nomura’s behavior was typical, then banks would be legally liable to repurchase over $680 billion in securities per year. And if appraisals were inflated by 11 percent on loans in securitization pools in 2005 and 2006, that means that the banks issuing the securities stole over $100 billion a year from investors who purchased the puffed-up mortgage bonds.

This gives a sense of the magnitude of the deception during this period. And if the contractual obligations and relevant laws around mortgage-backed securities were adhered to, the result would have been a complete overhaul of the financial industry. Instead, the Justice Department settled for pennies on the dollar over these same securities violations with banks like with Bank of AmericaCitigroup and JPMorgan Chase.

Nomura, for its part, has a ready defense. The bank argues that falling housing prices, not its actions, caused the diminished value of mortgage-backed securities, ignoring how the shoddy underwriting pumped up prices before they collapsed. The bank also argues that Fannie and Freddie were highly sophisticated investors that could not be duped into purchasing mortgage bonds. The Wall Street Journal editorial page went further, saying Fannie and Freddie received loan-level data to ensure the mortgage bonds satisfied affordable housing requirements. But this misses FHFA’s point: The loan-level data was untrue, regardless of why Fannie and Freddie made the purchase.

U.S. District Court Judge Denise Cote, whose rulings in FHFA cases have so angered banks that they tried to sue her in an appeals court for “gravely prejudicial” rulings, will decide this case. And her verdict will set precedent on how to deal with banks that rip off investors.

If FHFA wins, it will at long last confirm the scale of the fraud, something we’ve only known through anecdote. And it will show that regulators and law enforcement extracted a tiny price for bank misconduct. In the future, it allows investors to use the court system as a deterrent against future swindles. That could make the securities arena safer.

If Nomura succeeds, banks will likely be emboldened to make more misrepresentations in their sales presentations, and investors will find themselves virtually powerless to stop it. Government regulators will probably feel like they cannot enforce securities laws against financial institutions. We could easily see another round of fraud, with banks secure that they can make clever enough arguments in court to get off the hook.

The trial should last a month, and we’ll know shortly thereafter. But it’s positive that we’re finally asking the question, after so many years: How much did the banks make from their securitization frenzy, and how much do they owe those who they wronged?

 

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Postal Banking in Canada: PM Harper Killed the Report

This Op-Ed piece offers more information in the case to re-instate the Bank of Canada. It mentions a report about “Postal Banking” in Canada that PM Harper apparently killed the day before it was to be released. According to the report, Canada Post would offer more locations than the existing banks–small wonder, since so many Shoppers Drug Mart stores now include post offices. Could banking reform be just around the corner? -LW


Jacob Kearey-Moreland, Special to the Packet
Friday, January 30, 2015 7:27:35 EST PM

Veronica Campbell’s sketch shows Rocco Galati during the hearing at the Federal Court of Appeal Monday.

“I’m the bad guy,” I overheard the government lawyer say jokingly, introducing himself to former minister of defence Paul Hellyer in the Federal Court of Appeal this week.

Why do Canadians allow private banks to profit off our public debt when the Bank of Canada is legislated to provide low- or no-interest loans for human capital and infrastructure spending? The Bank of Canada has not issued such loans since 1974, after it funded Canada out of the Great Depression, the Second World War, the infrastructure boom, universal health care, universities and colleges, CBC and more. Monday, three judges upheld the previous ruling of justiciability. The next step is to determine the statutes of the Bank of Canada Act and if they have been subverted by conspiracy.

The monopoly of private banks’ exclusive privilege of lending money to governments will, for the second time in our history, soon be put on trial. The first time it was debated in the House of Commons, it led to the creation of the Bank of Canada. It’s time to restore the Bank of Canada and jail the banksters.

We are in a perpetual-debt crisis because we’ve allowed foreign private interests to control the creation of money and, by extension, federal economic and social policy for their private interests. Banks are guaranteed billions in profits every year as families slide deeper into debt. Forget income splitting; imagine the tax relief once we escape debt bondage and compound-interest payments.

Arguing for the plaintiffs — Ann Emmett, centenarian William Krehm and the Committee on Monetary and Economic Reform (comer.org) — is perhaps Canada’s most prominent constitutional lawyer, Rocco Galati. Galati, who consistently undermines and reverses government decisions and actions, is not shy in declaring Canada “a quiet dictatorship.” The erosion of democracy is not complete without the erosion of justice and the independence of the judiciary, for which this government has received international condemnation. Galati has reason to believe there is a government-issued media blackout on this case. Sorry, Harper; I didn’t get the memo.

Saturday prior to the hearing, there was a five-hour seminar in Toronto City Hall chambers on the subject of money, tax, poverty and public banking, with the keynote speech delivered by Toronto Coun. Kristyn Wong-Tam on the creation of the Toronto Public Bank. We heard from a renowned investigative accountant, Al Rosen, who described the existence of “hundreds of Nortels” that go un-investigated because of a lack of resources to address white-collar crime, tax evasion and more, as the Canada Revenue Agency has been co-opted for partisan purposes to attack charities and birdwatchers critical of the Harper government.

The report Banking: A Proven Diversification Strategy, commissioned by Canada Post, was killed by the Harper government a day before it eviscerated the public institution. After access-to-information requests, the report was released, with more than 701 of 811 pages redacted. The report detailed the win-win nature of postal banking, given Canada Post is the largest distribution network in the country, with branches in more than 6,300 communities, more than all banks combined, said Mike Palecek, the representative from the Canadian Union of Postal Workers. Even grocery stores have their own banks, from which they make hundreds of millions a year. With a few simple software upgrades and ATMs, Canadians from coast to coast to coast could have low-cost, accessible banking services, among 700 pages of other benefits the Harper government doesn’t want you to know about.

Chew on that, Grandma, when you’re trudging through snow to get your mail.

Jacob Kearey-Moreland is a local resident and gardener. He can be contacted at jacobkeareymoreland@gmail.com.

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