Bankers' Trillion-Dollar Crime Scene

Britain's Bankers Win Double Victory on Bonuses and Overdraft Charges

November 26, 2009

Times Online - Britain’s bankers received a double boost yesterday as they celebrated a landmark court victory over unauthorised overdraft fees and saw off the threat of a crackdown on pay.

Consumer groups reacted with dismay as the Supreme Court ruled in favour of the banks in the long-running legal battle over £10 billion in overdraft charges. Millions of customers had hoped to be reimbursed. Instead, the banks can keep the cash.

In addition, the Government’s Walker review stopped short of draconian plans to name hundreds of the highest-paid bankers and dropped or watered down other proposals.

The two judgments will come as relief to Britain’s bankers who feel under siege — resented for taking £1.3 trillion in public money, loans and guarantees and blamed for triggering the longest recession of modern times.

Lloyds Banking Group and Royal Bank of Scotland, in which taxpayers have a 43 per cent and 70 per cent stakes respectively, will be two of the biggest beneficiaries of the Supreme Court ruling because each has millions of current account customers.

The surprise ruling ends a test case brought jointly two years ago by the Office of Fair Trading, high street banks and Nationwide Building Society. The OFT had challenged the legality of banks charging up to £35 for a bounced cheque when the administrative cost could be as little as £2.50.

More than one million claims have been put on hold since the case was launched in 2007. A further eight million people are estimated to have paid the charges since July 2001 but not submitted claims for reimbursement.

Peter Vicary-Smith, chief executive of Which?, said:

“This is a bitter blow for the millions of people who have been patiently waiting to get their bank charges back. Not only does it give banks licence to charge what they like for unauthorised overdrafts, but it could have ramifications for other areas of personal finance.”

The five members of the Supreme Court, the highest court in Britain, ruled unanimously that the charges were not covered by “unfair contract” rules and so were not subject to regulation by the OFT.

Banks had threatened to introduce charges for all current accounts if they could no longer count on the revenue from unauthorised overdraft charges.

The review into bank pay and governance headed by Sir David Walker is published today. Banks will have to disclose the existence of all £1 million pay packages, but the recipients can remain anonymous. The new regime only comes into force for the 2010 calendar year. Many bankers in London are expecting bumper bonuses for this year, payable next spring. These will not be disclosed.

$4.8 Trillion – Interest on U.S. Debt

November 19, 2009

CNNMoney.com — Here’s a new way to think about the U.S. government’s epic borrowing: More than half of the $9 trillion in debt that Uncle Sam is expected to build up over the next decade will be interest.

More than half. In fact, $4.8 trillion.

If that’s hard to grasp, here’s another way to look at why that’s a problem.

In 2015 alone, the estimated interest due – $533 billion – is equal to a third of the federal income taxes expected to be paid that year, said Charles Konigsberg, chief budget counsel of the Concord Coalition, a deficit watchdog group.

On the bright side – such as it is – the record levels of debt issued lately have paid for stimulus and other rescue programs that prevented the economy from falling off a cliff. And the money was borrowed at very low rates.

But accumulating any more interest on what the United States owes at this point is like extreme sport: dangerous.

All the more so because interest rates will rise when private sector borrowers return to the debt market and compete with the government for capital. At that point, the country’s interest payments could jack up very fast.

“When interest rates rise even a small amount, the interest payments go up a lot because of the size of the debt,” Konigsberg said.

The Congressional Budget Office, which made the $4.8 trillion forecast, already baked some increase in rates into the cake. But there is always a chance those estimates may prove too conservative.

And then it’s Vicious Circle 101 – well known to anyone who has gotten too into hock with Visa and MasterCard.

The country depends heavily on borrowing to fund what it wants to do. But the more debt it racks up, the more likely it becomes that creditors could demand a higher interest rate for making new loans to the government.

Higher rates in turn make it harder to pay off the underlying debt because more and more money is going to pay off interest – money, by the way, which is also borrowed.

And as more money goes to interest, creditors may become concerned that the country can’t pay down its principal and lawmakers will have less to fund all the things government is supposed to do.

“[P]olicymakers would be less able to pay for other national spending priorities and would have less flexibility to deal with unexpected developments (such as a war or recession). Moreover, rising interest costs would make the economy more vulnerable to a meltdown in financial markets,” the CBO wrote in its most recent long-term budget outlook.

So far, that crisis of confidence hasn’t happened. And no one can predict with any certainty whether or when it could occur.

But should it occur, the change could be abrupt.

That’s because the government frequently rolls over – or refinances – the debt it has issued as it comes due...

IEA Puts $500 Billion a Year Cost on Copenhagen Failure

November 11, 2009

Carbon Finance Online - Each year of delay in cementing a global post-2012 climate deal will add $500 billion to the cost of the low-carbon energy revolution, the International Energy Agency (IEA) has warned.

As international negotiators seek to manage expectations that the UN climate talks this December will result in a finalised Copenhagen protocol or treaty, the IEA said in its World Energy Outlook 2009 that the $10.5 trillion energy investment needed between 2010 and 2030 will increase by $500 billion for each year of delay “before moving to a more sustainable emissions path.”

A delay of “just a few years” would make it impossible to reach the IEA’s scenario for stabilising carbon dioxide equivalent in the atmosphere at 450 parts per million. Keeping greenhouse gas concentrations at this level will produce a 50% chance the global temperature rise can be kept below the crucial 2°C threshold.

Speakers at the Environment 09 conference in London on Monday were doubtful a comprehensive legally-binding deal would be reached in the Danish capital, however. Japan’s head negotiator Kuni Shimada said that the “most probable” outcome now is that Copenhagen will “agree on the elements for key issues which must be within the outcome. We can still negotiate the nitty gritty details next year.” A final protocol or treaty could be hashed out in 2010 or even 2011, he added.

“[Copenhagen] won’t solve all the issues,” agreed Chris Smith, chairman of the UK’s Environment Agency. “Some of the most significant emitting countries aren’t yet ready to conclude a deal – not least the US, where the Senate won’t have made its decisions until the New Year.”

“What we have to aim for, though, is a number of clear ‘in principle’ decisions, agreed by the participating nations, with a commitment to agree actions arising from those principles in the course of the following nine months,” he added.

But José Maria Figueres, former president of Costa Rica, told delegates:

“I’m absolutely certain we can still achieve a high quality agreement at Copenhagen.”

“If we can’t get the [key] elements by the end of this year, we can’t get these kind of elements ever,” Shimada said.

Goldman's Global Oil Scam: $1 Trillion Every Single Year Is Stolen Through Market Manipulation (Excerpt)

November 12, 2009

Phil’s Stock World - Goldman Sachs (GS), Morgan Stanley (MS), BP (BP), Deutsche Bank (DB), Royal Dutch Shell (RDS.A), Societe General (GLE), and Total (TOT) founded the Intercontinental Exchange in 2000. ICE is an online commodities and futures marketplace... They just ratchet up the price with leveraged speculation using your TARP money... No commodity ever changes hands... These trades are sham deals where nothing was exchanged... This is nothing more than massive fraud, pure and simple...

You can chart the damage done by Goldman Sachs and their gang of thieves by looking at commodity pricing pre- and post-ICE... And in just five years after commencing operations, Goldman Sachs and their partners managed to TRIPLE the price of commodities... It is not surprising that a commodity scam would be the cornerstone of Goldman Sach’s strategy...

In a competitive, amoral environment, middle managers in these mega-organizations have the authority to hijack an institution’s reputation and the financial clout to manipulate the market—and they do... Over the course of an average month at the NYMEX, 5 BILLION barrels of oil will be traded, with a fee being collected on every single transaction which is ultimately passed down to US consumers, yet less than 40M barrels will actually be delivered. That is just 8 tenths of 1 percent of actual demand for the product that is being traded—99.2% of the oil transaction fees being paid by the American people do nothing more than create fees for the traders and record profits and bonuses for the trading firms!...

Before ICE, the average American family spent 7% of their income on food and fuel. Last year, that number topped 20%. That’s 13% of the incomes of every man, woman and child in the United States of America, over $1Tn EVERY SINGLE YEAR stolen through market manipulation... Politicians all over the world look the other way while GS and their merry men rob from the poor and give to the rich on such a vast scale...

There is NO shortage of oil... ICE partners Total and JPM are part of the cartel that is totally skewing the global demand picture by storing 125M barrels of oil in offshore tankers...

Where is the shortage? Mainly, it is media hype pushed by “analysts” at the very firms that profit the most from high oil prices. Goldman Sachs issues bullish opinions on oil and builds large positions in oil, while it is the cartel’s job to hide oil in off shore tankers, and then sell forward all the oil, with futures contracts, locking in the high price...

It truly takes a global village of manipulators and their lackeys to pull off a con on the scale of oil, but it’s also the most profitable scam ever perpetrated on the people of this planet as they take control of a vital resource and then create artificial shortages and drive speculative demand in order to charge you an extra dollar per gallon of gas...

And now the same Goldman energy cartel is bidding to take over your clean air (through Carbon Credit trading) and your clean water. Maybe when they are charging you $80 a gallon for water and 10 cents a breath you’ll want to do something about it.

ICE Buys 4.8% Stake In Climate Exchange

June 23, 2009

Dow Jones Newswires - IntercontinentalExchange Inc. (ICE) revealed Tuesday that it had taken a minority stake in Climate Exchange PLC (CLE.LN), which operates emissions trading platforms in the U.S. and Europe.

The move pushes ICE deeper into an asset class that some experts believe could become among the largest in the derivatives sector as governments adopt trading schemes to reduce greenhouse gas emissions.

ICE already has a partnership with the Chicago-based but London-listed company, which disclosed in a filing that its partner had acquired 2.3 million shares, equating to a 4.8% stake.

Atlanta-based ICE provides the platform for the Chicago Climate Exchange and its European equivalent to trade contracts based on a range of greenhouse gases. ICE clears trades for the European Climate Exchange via its ICE Clear Europe service, while transactions on the Chicago Climate Exchange are cleared by the Clearing Corp., which ICE acquired in March.

Climate Exchange pays ICE a license fee for the U.S. arrangement; in Europe, ICE receives a 27% share in the European Climate Exchange's revenue by way of payment.

Shares in Climate Exchange rose 16.6% to GBP7.51, while ICE shares were 0.8% higher at $106.90.

ICE's equity stake in Climate Exchange puts it up against rival CME Group Inc. (CME), which plans an expanded role for its Green Exchange venture in the U.S. and Europe. NYSE Euronext (NYX), Nasdaq OMX Group Inc. (NDAQ) and Deutsche Boerse AG (DB1.XE) also have made inroads to carbon trading in Europe through a series of ventures.

The Climate Exchange dominates exchange emissions trade on both sides of the Atlantic, benefitting from early-mover status as cap-and-trade legislation was adopted in Europe, and building activity on its voluntary U.S. platform ahead of a similar scheme expected from the Obama administration.

Climate Exchange has been in expansion mode this week, announcing a new venture in scrap steel futures while brokerage MF Global Ltd. (MF) joined the Chicago Climate Exchange to participate in carbon offset aggregation.

An MF Global spokeswoman said the company's new role in overseeing offset projects, which let polluting companies displace greenhouse gas emissions by investing in projects that reduce pollution, is part of an expansion into U.S. exchange-traded carbon markets.

Previously, MF Global's focus had been on over-the-counter emissions trading in the U.S., she said.

Citigroup, JPMorgan, Wells Fargo End Extra Checking Insurance

November 12, 2009

Bloomberg - Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. will stop insuring checking accounts in the U.S. above the standard $250,000 limit, a year after the government set up the program to ease fears of deposit runs.

The banks will exit the Federal Deposit Insurance Corp.’s Transaction Account Guarantee Program on Dec. 31, spokesmen for the three companies said today. The program was among emergency measures created in October 2008 to shore up confidence in the banking system and avert a collapse of financial markets. Bank of America Corp. had said Oct. 16 it would opt out.

In August, the FDIC said it would increase fees for banks that stay in the TAG program past Dec. 31. U.S. officials are trying to wean banks off bailout programs and guarantees that were intended to be temporary. Banks may declare plans to exit partly because staying in would signal weakness, Standard & Poor’s analyst Tanya Azarchs said.

“It’ll be construed as a sign of being worried about something,” Azarchs said.

The checking-account insurance program is set to end on June 30, 2010, and the FDIC ended its guarantees of bank bonds on Oct. 31. New York-based Citigroup, the third-biggest U.S. bank by assets, was the leading user of that program, selling $65 billion of FDIC-backed debt over the past year. It accepted a $45 billion bailout last year.

“As the economic environment normalizes, and with Citi now one of the best-capitalized financial institutions in the world with a deliberately liquid and flexible balance sheet, certain temporary programs have served their intended purpose,” Citigroup spokesman Alex Samuelson said. He declined to say how much the bank will save in fees.

Alerting Customers

Citigroup plans to notify corporate customers this week and next, Samuelson said. Visitors to the branches will see posters and other signs explaining the change, he said. The bank posted a notice on its Citibank Online sign-on site.

The TAG program covers non-interest-bearing accounts, such as checking, when balances exceed the $250,000 cap available for standard deposit insurance. About 7,100 banks signed up, and about $700 billion of deposits were covered that otherwise wouldn’t have qualified for insurance, according to the FDIC.

Charlotte, North Carolina-based Bank of America, the biggest U.S. bank by assets, disclosed plans to opt out of the program in October. Christine Holevas, a spokeswoman for No. 2 JPMorgan, said in an e-mail today that the New York-based lender will opt out. San Francisco-based Wells Fargo, the fourth- biggest bank, also will exit, spokeswoman Richele Messick wrote in an e-mail.

Banks Opt Out

U.S. Bancorp, based in Minneapolis, and New York-based Bank of New York Mellon Corp. said Nov. 2 they would opt out as of Dec. 31.

Banks have complained about the cost of the guarantees, Azarchs said. In Citigroup’s case, the extra insurance might be unnecessary because most corporate customers believe the government won’t let the bank fail, she said.

“The environment around them has improved a lot, and people generally feel that the government ownership provides a lot of comfort,” Azarchs said. “It is simply an economic cost-benefit analysis, as to whether they think they’re getting enough value for the price that the guarantee carries.”

In November 2008, following a run that forced Wachovia Corp. to seek a rescue, Citigroup had to seek $20 billion of bailout funds, on top of $25 billion received the previous month from the Troubled Asset Relief Program. Both regulators and Citigroup officials worried at the time that the bank might run short of funds needed to pay obligations and meet expected withdrawals, according to a Nov. 6 report by the Congressional Oversight Panel.

Citigroup has raised $93 billion of capital since late 2007, including government funds. It has almost doubled its cash to $244.2 billion, the biggest such stockpile of any U.S. bank.