JPM slaps unjust charges on customers. Feds say, “bad boy!”

Johannes Eisele/AFP

Federal bank examiners considered levying fines and sanctions when JPMorgan Chase informed them last year that faulty overdraft charges caused by a software glitch had impacted roughly 170,000 customers…

Rather than openly penalizing Chase, the nation’s largest bank, OCC officials decided to issue a quiet reprimand — a supervisory letter — that would go into the bank’s file and stay out of public view, according to the people and regulatory paperwork…

Since 2017, when President Donald Trump took office, the OCC has found at least six banks wrongly charged overdrafts and related fees, but in each case, the agency quietly rebuked the bank rather than pushing for fines and public penalties, the investigation by ProPublica and The Capitol Forum shows.

RTFA for details on each bank. The OCC was asked if they wished to defend their practices. And said they don’t comment publicly on confidential decisions.

Libor scandal: Bankers discussed concerns over previous century

Bank of England governor Sir Mervyn King and US Treasury Secretary Timothy Geithner discussed their concerns about the Libor inter-bank rate system as early as 2008, documents show.

Mr Geithner, who at the time was head of the New York Federal Reserve, called for changes to the system…He said these should include procedures to prevent misreporting.

Of course, if anyone was really concerned they could have proposed turning LIBOR into an actual benchmark – instead of a traditional reference, vague and fudged for over a century.

Several banks are being investigated for allegedly manipulating Libor, the daily figure which reflects the amount that banks are charging to lend each other money and which is the benchmark for millions of financial transactions.

It stands for London Interbank Offered Rate and is made up of banks’ own estimates of their borrowing costs.

The operative words being “own estimates”.

Barclays has agreed to pay a fine of £290m to UK and US authorities for giving inaccurate figures and trying to manipulate Libor rates between 2005 and 2008, either for profit or to reduce concerns about the extent of financial stress it was under.

Want to “fix” LIBOR? Make it a genuine benchmark. Codify the information desired. Set standards identifying the information settled on for basis at each bank made part of the system. Establish reporting time and methods. Track it, regulate it like any other index. Then, all the who-hah about manipulation has standards to evaluate in court over questions of fraudulent reporting, whatever.

Otherwise, this discussion is foolish – since nothing has changed since the 19th Century.

Exit interview with Sheila Bair as she prepares to leave the FDIC

‘They should have let Bear Stearns fail,” Sheila Bair said.

It was midmorning on a crisp June day, and Bair, the 57-year-old outgoing chairwoman of the Federal Deposit Insurance Corporation — the federal agency that insures bank deposits and winds down failing banks — was sitting on a couch, sipping a Starbucks latte. We were in the first hour of several lengthy on-the-record interviews. She seemed ever-so-slightly nervous.

Long viewed as a bureaucratic backwater, the F.D.I.C. has had a tumultuous five years while being transformed under Bair’s stewardship. Not long after she took charge in June 2006, Bair began sounding the alarm about the dangers posed by the explosive growth of subprime mortgages, which she feared would not only ravage neighborhoods when homeowners began to default — as they inevitably did — but also wreak havoc on the banking system. The F.D.I.C. was the only bank regulator in Washington to do so.

During the financial crisis of 2008, Bair insisted that she and her agency have a seat at the table, where she worked — and fought — with Henry Paulson, then the treasury secretary, and Timothy Geithner, the president of the New York Federal Reserve, as they tried to cobble together solutions that would keep the financial system from going over a cliff. She and the F.D.I.C. managed a number of huge failing institutions during the crisis, including IndyMac, Wachovia and Washington Mutual. She was a key player in shaping the Dodd-Frank reform law, especially the part that seeks to forestall future bailouts.

Since the law passed, she has made an immense effort to convince Wall Street and the country that the nation’s giant banks — the same ones that required bailouts in 2008 and became known as “too big to fail” institutions — will never again be bailed out, thanks in part to new powers at the F.D.I.C.

Just a few months ago, she went so far as to send a letter to Standard & Poor’s, the credit-ratings agency, suggesting that its ratings of the big banks were too high because they reflected an expectation of government support. If a too-big-to-fail bank got into trouble, she wrote, the F.D.I.C. would wind it down, not bail it out…

She didn’t spend a lot of time fretting over bank profitability; if banks had to become less profitable, postcrisis, in order to reduce the threat they posed to the system, so be it. (“Our job is to protect bank customers, not banks,” she told me.) And she was a fierce, and often lonely, proponent of widespread mortgage modification, for reasons both compassionate (to help struggling homeowners stay in their homes) and economic (fewer foreclosures would help the troubled housing market recover more quickly).

I’m just giving you a taste of the beginning of this interview. It’s quite long, detailed, and near as I can tell an accurate picture of the individual who acted throughout the crisis of the Great Recession to defend local community banks, the historic integrity of banking regulation – how this was corrupted and almost destroyed along with our national economy – and as an aside, a reminder to younger folks who know only the deceit and corruption of Bush, Cheney, the racism of Nixonian Republicans, the nutballs of the Kool Aid Party – what a traditional American conservative used to sound like.

Former SEC regulator left – to represent billionaire fraudster

Federal criminal authorities are investigating whether a former U.S. securities regulator inappropriately represented alleged fraudster Allen Stanford after he left the agency in 2005.

Spencer Barasch, former head of enforcement for the U.S. Securities and Exchange Commission in Fort Worth, Texas, is being probed by the U.S. Attorney’s Office and the FBI…

The criminal probe follows SEC internal findings that Barasch made numerous requests after he left the SEC to represent Stanford and was turned down each time.

Barasch persisted in his requests even though he directly dealt with Stanford matters while at the SEC and was partly responsible for ignoring repeated red flags SEC examiners raised about Stanford as early as 1997, Kotz found in a 2010 report. He later eventually did provide some legal counsel to Stanford in 2006, the report found…

The agency finally filed civil charges against Stanford in February 2009. Stanford was arrested in June 2009 and criminally charged with fraud in connection with a $7 billion scheme linked to certificates of deposit issued by his Antigua-based banking company…

The testimony about Barasch came on the same day the Project on Government Oversight, a government watchdog group, issued a report about the “revolving door” at the SEC. It found that 219 former officials at the SEC have left since 2006 to help clients with business before the agency.

Some members of Congress are calling for tighter rules. Not bad idea. But, for decades there was little enforcement of existing rules. Why should we expect that little bit of change to continue – if Congress hasn’t changed essential views about oversight and regulation?

Bank employees used client’s accounts for investments – WTF?

Revolving doors were invented for Wall Street bankers
Daylife/Getty Images used by permission

Swiss bank UBS has been slapped with an $13+million fine, the third-largest ever levied by the City regulator, after it was discovered that four of the bank’s employees were able to use customer money to trade in currencies and metals markets.

As a result of the trading activity, the bank has been forced to pay compensation of more than $42million although the FSA established that it had not itself profited from the trading…

At one stage as many as 50 unauthorised transactions a day were taking place in foreign exchange and precious metals by four employees who were using customers’ money without authorisation and allocating losses to customer accounts. The events took place between January 2006 and December 2007 and were only uncovered by an internal whistleblower…

The FSA concluded that UBS had failed to manage and control key risks, failed to respond to warning signs that the internal controls were inadequate and failed to provide an appropriate level of supervision over customer-facing employees.

The bank made apologies, blah, blah – swore to implement oversight and regulation, blah, blah – it will never happen again, blah, blah.

Regulators are satisfied, blah, blah.

Don’t hold your breath!

Bank regulator by day, children’s writer by night – Sheila Bair

Daylife/Getty Images

Sheila Bair, chairman of the Federal Deposit Insurance Corporation, is one of the few women in the generals’ tent of the nation’s economic war.

Forbes magazine calls her the second most powerful woman in the world, after German Chancellor Angela Merkel but well ahead of both Oprah Winfrey and Hillary Clinton…

By day Bair keeps the nations banks stable. But by night she wears a second hat — writing children’s stories about saving and investing money. She’s regularly published in the children’s magazine Highlights and has written two books: “Isabel’s Car Wash” and “Rock, Brock and the Savings Shock…”

Her once staid agency is now in the middle of the Obama administration’s gambit to bail out the banks and sell troubled assets. The latest move is agreeing to guarantee some of the Treasury Department’s toxic asset sales. Critics say she’s putting the agency’s solvency and taxpayer dollars at risk.

Bair says “the challenge of the program is finding that magic price where banks would be willing to sell and buyers would be willing to buy.”

But she believes the plan will work, explaining, “the prices you’re seeing in the market right now are far below what the actual cash flow is being produced by these assets. So we think by providing some credit … we can get the price up a little better and get to the point where you have a more realistic market value and banks would actually be willing to sell.”

If TARP and the Bailout was forced to match FDIC standards and regulation, there would have been no golden parachutes, incompetent adminstrators would have been fired on the spot, lousy banks would have been folded – and we’d be further along towards resolving the results of a decade or so of sleazy, neocon, deregulated theft.

If Geithner is ever pushed out the door of Treasury, she should take his spot.