Thanks to Barry Ritholtz
Wegelin & Co, corporate headquarters, St. Gallen, Switzerland
Daylife/AP Photo used by permission
Wegelin & Co., the 270-year-old Swiss bank facing criminal charges in a U.S. crackdown on firms suspected of aiding tax evasion, failed to appear at a court hearing as prosecutors called the bank a “fugitive.”
Prosecutors said after the hearing…in Manhattan federal court that three Wegelin client managers charged in the case also failed to appear and were considered fugitives.
When no defendants or defense attorneys showed up in court, U.S. District Judge Jed Rakoff asked prosecutors for a proposal on how to proceed. Prosecutors said they will confer with the Justice Department and advise Rakoff on their proposals. “Unlike an individual, arresting a company is somewhat difficult,” Rakoff said…
Wegelin is the first overseas bank to be indicted by the U.S. for aiding tax fraud, federal prosecutors in New York said this month. The three Wegelin client managers at the Zurich branch, Michael Berlinka, Urs Frei and Roger Keller, were also indicted.
The managers serviced “undeclared accounts” for U.S. taxpayers, meaning the income derived from them wasn’t reported to the U.S. Internal Revenue Service, according to the superseding indictment filed this month.
Nothing new about international bankers considering themselves above the law. Especially when an historic function of their services is aiding their clients in defrauding the tax departments of one or another government.
For the first time in modern history we have a Department of Justice that actively seeks to repatriate the funds hidden abroad – instead of just relying on the crooks for fundraising.
Told you Carlo – make waves, you’re history!
The Vatican was shaken by a corruption scandal Thursday after an Italian television investigation said a former top official had been transferred against his will after complaining about irregularities in awarding contracts.
The show “The Untouchables” on the respected private television network La 7 Wednesday night showed what it said were several letters that Archbishop Carlo Maria Vigano, who was then deputy-governor of Vatican City, sent to superiors, including Pope Benedict, in 2011 about the corruption.
The Vatican…confirmed that the letters were authentic by expressing “sadness over the publication of reserved documents…”
Vigano…said in the letters that when he took the job in 2009 he discovered a web of corruption, nepotism and cronyism linked to the awarding of contracts to outside companies at inflated prices…
In another letter to the pope…Vigano says he discovered the management of some Vatican City investments was entrusted to two funds managed by a committee of Italian bankers “who looked after their own interests more than ours.”…In one single financial transaction in December, 2009, “they made us lose two and a half million dollars.”
The program interviewed a man it identified as a member of the bankers’ committee who said Vigano had developed a reputation as a “ballbreaker” among companies that had contracts with the Vatican, because of his insistence on transparency and competition…
On March 22, 2011, Vatican Secretary of State Cardinal Tarcisio Bertone informed Vigano that he was being removed from his position, even though it was to have lasted until 2014…
In early April, Vigano went over Bertone’s head again and wrote directly to the pope, telling him that he had worked hard to “eliminate corruption, private interests and dysfunction that are widespread in various departments…”
Despite his appeals to the pope that a transfer, even if it meant a promotion, “would be a defeat difficult for me to accept,” Vigano was named ambassador to Washington in October of last year after the sudden death of the previous envoy to the United States.
The pope is “inspired” by Vigano’s efforts to clean up corruption. Which brings up the question — how does such inspiration lead to taking Vigano off the inspiring job he was doing?
Sorry, papa — sounds like the same old saw from the capo of a deposed and corrupt group of bankers — whining about the new guy who was destroying all the benefits they worked hard to create, lining their pockets.
I’m sorry, Congressman, you’re small-minded, too!
Daylife/Reuters Pictures used by permission
Elizabeth Warren, it’s not you they hate. It’s what you represent. You want to be an honest cop when so many before you in Washington have looked the other way and pretended that the banking industry could police itself.
I can’t think of a better reason why this presidential adviser shouldn’t be the new chief of an unfettered Consumer Financial Protection Bureau…
As the debate about Warren — and what she stands for — rages on, here’s a look at why the banks despise the idea of her as a strong regulator:
Weak consumer regulation was the norm, but banks love the status quo – Prior to the Dodd-Frank financial reform law, which established the consumer bureau, there simply was no real consumer watchdog over banks…
Mortgage abuses were rampant – More than three years after the biggest financial meltdown since 1929, we’re still trying to unravel what the banks did to foul up the global financial system. Did the banks fudge mortgage documents simply to grease the way to securitizing loans? Did they trigger foreclosures even when homeowners were paying their bills? Did they push people into bad loans they knew they would default on? If any or all of these things were true, it certainly wasn’t because the banks were over-regulated…
Credit abuses are rampant – Take a look at your credit card disclosure statement. Do you have any idea how much you will owe if you’re late or lose your job and can’t pay? This is not a mystery to the banks, who have conceived elaborate formulas for charging you more money for credit…
Junk fees are abundant – You ever wonder what all those fees are that creep into your mortgage closing statement? They seem to come out of nowhere. A lot of them are negotiable or completely unnecessary…
Making simple math simple again – Do you know what a LIBOR index is and “lifetime maximum rates?” The banks don’t want you to know this because this is how much your monthly payment can climb based on a variable index. If the index goes up, so does your payment…
It’s not the way you dress or the fact that you teach at Harvard and have been an advocate for banking customers. Or that you’re “so bloody disagreeable,” as one former Wall Street banker put it. It’s just that you’re so darned honest about banking abuses and are one of the best people in the country to enact change.
Bravo! RTFA. I probably disagree with John Wasik as often as I agree – about economics, investing, finance. That’s why it’s called the dismal science. This opinion piece is about honestly and competence. Something Congress knows little about – and cares even less.
CFO of Goldman Sachs on TV monitor on the floor of NY Stock Exchange during testimony
A divided U.S. investigative panel released on Thursday a wide-ranging assessment of what caused the financial crisis that rocked global markets from 2007-2009.
The 10-member Financial Crisis Inquiry Commission was created by Congress to deliver a bipartisan report on the origins of the crisis, but it failed to deliver a consensus view.
The main report was endorsed only by the commission’s six Democratic members, undermining its impact as the post-crisis Dodd-Frank banking reforms of 2010 are being implemented.
I hope no one out there in citizen-land actually expected Republicans to participate in naming their primary sources of income as bearing responsibility for the financial crisis and the Great Recession.
Below are the main points of the…majority report:
* We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation’s financial markets.
* We conclude dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.
* We conclude a combination of excessive borrowing, risky investments, and lack of transparency put the financial system on a collision course with crisis.
* We conclude the government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.
* We conclude there was a systemic breakdown in accountability and ethics.
* We conclude collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.
* We conclude over-the-counter derivatives contributed significantly to this crisis.
* We conclude the failures of credit rating agencies were essential cogs in the wheel of financial destruction.
If you’d like to peek at the beginnings of analysis, try this article over at Bloomberg.com.
A powerful bankers’ association has failed in its attempt to censor a student thesis after complaining that it revealed a loophole in bank card security.
The UK Cards Association, which represents major UK banks and building societies, asked Cambridge University to remove the thesis from its website, but the request was met with a blunt refusal…
The thesis by computer security student Omar Choudary, entitled “The smart card detective: a handheld EMV interceptor”, described a flaw in the chip-and-pin (personal identification number) security system that allows criminals to make fraudulent transactions with a stolen bank card using any pin they care to choose…
But in a reply to the UKCA, Ross Anderson, professor of security engineering at the university’s Computer Laboratory, refused to take down the thesis and said the loopholes had already been disclosed to bankers.
“You seem to think we might censor a student’s thesis, which is lawful and already in the public domain, simply because a powerful interest finds it inconvenient. This shows a deep misconception of what universities are and how we work. Cambridge is the University of Erasmus, of Newton and of Darwin; censoring writings that offend the powerful is offensive to our deepest values,” Anderson wrote.
Right on, Professor Anderson!
Because British bankers are too cheap, too lazy, disinclined to fix problems of their own making – they try to censor those who would expose their incompetence at security.
Frankly, I think fear is a great motivator for lazy corporate interests who probably are more concerned about potential lawsuits from customers screwed by their security failure – than openness and discussion in the world of education and research.
Daylife/Getty Images used by permission
Central bankers from around the world have expressed growing confidence that the worst of the financial crisis was over and that a global economic recovery was beginning to take shape…
“The prospects for a return to growth in the near term appear good,” declared Ben S. Bernanke, chairman of the Federal Reserve, offering optimism both about the United States and the worldwide outlook.
Though the Fed chairman repeated his warning that the economic recovery here was likely to be slow and arduous and that unemployment would remain high for another year, he went beyond the central bank’s most recent statement that economic activity was “leveling out.” Speaking to central bankers and economists at the Fed’s annual retreat here in the Grand Tetons, Mr. Bernanke echoed the growing relief among European and Asian central bankers that their own economies had already started to rebound…
At almost the same time that Mr. Bernanke spoke, the National Association of Realtors reported that sales of existing homes jumped 7.2 percent in July — the biggest monthly increase in more than a decade and much bigger than analysts had expected…
Here in Jackson Hole, the mood of relief and cautious confidence among central bankers and economists on Friday was almost palpable — a stark contrast to the anxiety and tension that permeated their retreat here one year ago.
“It is reasonable to declare that the worst of the crisis is behind us, and that the first signs of global growth have appeared earlier than we generally expected nine months ago,” said Stanley Fischer, governor of the Bank of Israel and a top former official at the International Monetary Fund.
RTFA. Lots of detail. Lots of thought and response. You ain’t going to hear it on Fox Snooze or from most of the other TV talking heads.
Everyone makes a better living trading in doom and gloom. The last thing you can expect to bump into is a reasonable discussion of the Keynesian reforms that worked as well in France and Germany as here.
The nutball Libertarians, cowardly-Lion Republicans – and the ever-queasy Blue Dog Democrats – still aren’t certain FDR had it right leading us out of the Great Depression. And a 20% ratio of deficit to GDP should have meant that Harry Truman could never have brought us wealth after WW2. If you think like someone with his head stuck up inside the 19th Century bowels of RNC economics.
Credit where credit is due – will only be spoken of in quiet corners of the White House. Albeit with big smiles and a little smugness. Off camera for a little while longer.
Banker chic can be described in so many ways: conservative, unimaginative, boring and, next week, downright dangerous. On Tuesday, the mere act of wearing a plain grey suit – be it from Savile Row or Reiss – anywhere within the confines of the London EC1-EC4 postcodes, will apparently be as provocative as donning a flamboyant matador’s costume in a bullring, at least in the eyes of a G20 protester. So think the Metropolitan police, who have advised City workers to dress down on Tuesday and Wednesday to avoid being identified as bankers.
This is likely to present a sartorial challenge to those whose wardrobe skills usually involve deciding which Sketchley’s plastic wrapping to remove. And it is a conundrum that the police seem to be grossly unqualified in giving advice on. So far, City workers have simply been told to avoid suits and dress down in chinos and loafers. That’s it. No word on what to do about the top half, complete silence on accessories, no styling diktats whatsoever.
Not only is the advice incomplete, it is, as anyone who has ever given the glossy pages of Tatler a cursory flick knows, possibly the worst wardrobe advice ever. Chinos and loafers simply reek of money and poshness. Bankers who choose this option might as well wear a T-shirt with a slogan that reads “I spent my bonus on a yacht”. Consider the poster boy for this look: Prince Harry, regularly spotted leaving any given Kensington nightclub wearing beige chinos and brown Sebago loafers – hardly the best disguise with which to fool those anti-capitalist protesters, is it?
Even though I have no personal acquaintance with most of the brands Imogen references, I get the point. RTFA for her suggestions for women bankers, as well.
All of it humorous, though the premise that G20 protestors will all behave like football hooligans is a bit of a stretch. Even dull-normal anarchists who may come from the same gene pool cul-de-sac as, say, the dolts who occasionally embarrass Swansea supporters – generally haven’t the courage to attack much of anything much more likely to retaliate than a shop window.