Category Archives: Regulations and regulators

UK Gets Tough on Missold Swaps; What Excuse Does the US Have?

Even though the executive branch of the English government has as much of a soft spot for its banks as America’s does, its regulators are less craven than ours (admittedly, ours set such a low standard that it is not all that hard, and the UK’s relative advantage may be about to go into reverse with the appointment of the new head of the Prudential Regulation Authority, since the designee presumptive believes big banks can’t be prosecuted).

An Open Letter to David Cameron, the Prime Minister of the United Kingdom of Great Britain and Northern Ireland, from Mrs N Turner

NC readers can find some of the background on Nikki Turner’s story here. 18 months later, five years after her own business was destroyed, and a full decade after the very beginning of the HBOS fraud story, she is still waiting for the police investigation to lead to a prosecution. Mrs Turner’s open letter was […]

Neil Barofsky Meets with Occupy Wall Street

Neil Barofsky met with several Occupy Wall Street working groups Sunday for nearly two hours. Barofsky is relaxed, thoughtful, and direct a Q&A format.

One of his major themes was that the unwillingness to mete out meaningful punishments to miscreant banks means that the authorities are providing incentives to engage in criminal activity.

Deutsche Bank’s $12 Billion in Hidden Losses: Why Whistleblower Charges Have Merit and Why They Matter

I’ve read the Department of Labor complaint of former Deutsche Bank employee Eric Ben-Artzi that, among other things, alleges that the German bank violated SEC, GAAP and IFRS (International Financial Reporting Standards) requirements and probably also Sarbanes Oxley, and have had follow up conversations with him and his counsel. The charges are specific and sufficiently well supported to merit serious investigation. In their efforts to dismiss his charges, defenders of the bank’s position overlook the public reporting requirements for complex financial transactions like the one in question, a leveraged super senior (LSS) trade. Nor does their Panglossian “everything worked out for the best” argument stand up to scrutiny.

Quelle Surprise! OCC Confirms that Big Banks are Badly Managed, Lack Adequate Risk Management Controls

American Banker has an article up that is astonishing in that it tells us that the main regulator of national banks, the OCC, has confirmed one of our ongoing complaints: that the controls at the biggest banks are inexcusably weak. The OCC is the last place you’d expect to hear this from; historically it’s been a major enabler of banks playing fast and loose with the rules. And the implication is that bank execs should be wearing orange jumpsuits rather than getting multi-million pay packages.

Neil Barofsky: Too Big to Jail – Our Banking System’s Latest Disgrace

By Neil Barofsky, former Special Inspector General for the Troubled Assets Relief Program, currently a senior fellow at the NYU School of Law and the author of Bailout. Cross posted from The New Republic with author permission

You can be forgiven if you watched the Department of Justice’s announcement yesterday of a $1.92 billion settlement with HSBC with a sense of disappointment–and déjà vu.

Occupy the SEC Submits Amicus Brief to the Supreme Court in Gabelli v. SEC

Occupy the SEC submitted an amicus brief in Gabelli v. SEC, a case before the Supreme Court. The plaintiffs are appealing a Second Circuit decision over the issue of the statute of limitations.

Is Obama Getting Rid of the FHFA’s Ed DeMarco to Bail Out the Banks?

Believe it or not, sometimes I’m not cynical enough.

DOJ Refuses to Indict HSBC For Money Laundering Explicitly Because It is Too Big To Fail

By Matt Stoller, a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller

This is a straight up admission.

State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system.
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Basel III: Dead on Arrival?

In my last post on Basel III, I suggested that we would soon see a silly game played out over the coming months whereby banks on either side of the Atlantic would alternate in securing more and more concessions on Basel III until the whole thing became manifestly pointless and got sidelined.

In fact it is all happening rather faster than that.

Obama and Boehner’s Grand Bargain: Gullible Democrats are Falling for the Ol’ “Good Cop, Bad Cop” Routine

By Michael Hoexter, a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency.

What is happening now in American politics surrounding the political theater called “the fiscal cliff”, must be understood with the utmost clarity because, in part, the organizers of what James K. Galbraith aptly calls a “scam” are counting on confusion and rash action to complete their scheme. If we can understand what is going on with greater clarity, we may be able to highlight to more people the import of the events occurring and hopefully short-circuit the efforts of politicians to damage the social safety net and the economy more generally.

HSBC to Pay $1.9 Billion Fine for Money Laundering

It seems the Federal Government has finally woken up and is making a show of being serious about one type of bank misbehavior, that of money laundering. The striking element about the agreementwith various Federal agencies and the Department of Justice is that nearly $1.3 billion of the $1.9 million fine comes in the form of a deferred prosecution agreement.

Barbara Roper Weighs in on the SEC Vacancy

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.

In the comments of my last post on the SEC nomination issue, director of investor protection for the Consumer Federation of America, Barbara Roper, laid out a rationale for different choices at the SEC. R

Matt Stoller: Why It’s Worth Fighting Over Who Runs the SEC

Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller

I’ve been trying to figure out what is going on with the Securities and Exchange Commission for the past month or so, because it is the biggest weakness in our regulatory apparatus. In an interview with Neil Barofsky at Salon, he says that he would take the SEC job if offered. His plan for reform would involve rearranging enforcement priorities at the agency, and reexamine the policy whereby the SEC does not bring cases against corporations but settles without forcing an admission of guilt on particular facts.

This policy has turned the SEC into an agency that issues parking tickets.

Khuzami Deathwatch: SEC Ignores Tips About $12 Billion of Hidden Losses at Deutsche Bank

Two days ago, we said it was time to fire the SEC’s chief of enforcement Robert Khuzami, who has not provided the tough policing warranted by the biggest financial crisis in the agency’s history. We didn’t anticipate that the story of Khuzami’s negligence would blow so big so quickly. Today, the Financial Times reported that three separate whistleblowers charged that Deutsche Bank had mismarked up to $12 billion in exposures to make it look healthier in 2008 and 2009 than it was, yet the agency had not acted on these allegations. And had Deutsche carried its positions at the levels these former employees suggest was more accurate, Germany’s biggest bank may well have needed a bailout.