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No Banker Goes To Jail – Former Barclays Executives Acquitted Of Fraud
No Banker Goes To Jail – Former Barclays Executives Acquitted Of Fraud
Days after Wells Fargo agreed to pay $35 million to settle regulatory claims that its financial advisors pushed clients into risky exchange-traded funds, three former Barclays executives were acquitted of fraud by a London jury after they were accused of paying secret “fees” to Qatar in return for emergency funding during the financial crisis, reported Reuters.
In exchange for rescue financing to avoid nationalization of the bank (which would’ve meant shareholders take deep losses and executives loses their bonuses), Roger Jenkins, Tom Kalaris and Richard Boath (the three former Barclays executives) paid £322 million ($423 million) in “fees” to the Qatari sheikh who arranged the financing. To ensure that the deal went through, the executives allegedly conspired to hide these payments from their investors, the British government, and the press.
We noted several weeks before the first trial began last January, that after more than a decade since the fall of Lehman Brothers, ushering in the financial crisis, and wrecking the finances of tens of millions of middle-class Americans and citizens of other Western nations, “no bank executives have faced criminal penalties – that is, until very recently.”
The three former executives were on the cusp of facing a maximum of 10 years in jail after a 7.5-year investigation by the Serious Fraud Office (SFO) that charged the three in 2017, alleging they paid a “fee” demanded by Qatar in exchange for investing £4 billion ($5.15 billion) in the bank as part of an £11 billion ($14.15 billion) emergency fundraising in 2008. The funding allowed Barclays to avoid nationalization that would’ve been devastating for shareholder value.
The acquittals of the three executives is another loss for SFO, which failed to win a separate 2018 trial against Barclays for unlawful financial assistance to Qatar in 2008.
CDO Redux: Credit Spreads & Financial Fraud
Adam Smith, 1811
Southport | This week in The Institutional Risk Analyst, we return to one of our favorite topics – namely credit spreads – as we consider the most recent statement from the Federal Open Market Committee. Fed Chair Janet Yellen made a presentation last week to the National Association of Business Economists illustrating that while she is puzzled by low inflation, Yellen is entirely clueless as to the workings of the financial markets.
For some time now, we have been concerned that the FOMC’s overt manipulation of credit spreads has embedded future credit losses on the balance sheets of US banks. But now we are starting to see even greater signs of stress as the large Wall Street banks again return to derivatives in order to manufacture the appearance of profitability.
The leader of this effort is none other than Citigroup (NYSE:C), which has surpassed JPMorganChase (NYSE:JPM) to become the largest derivatives shop in the world. Citi has embraced the most notorious product of the roaring 2000s, the synthetic collateralized debt obligation or “CDO” security, a product that fraudulently leverages the real world and literally caused the bank to fail a decade ago.
“It’s an astonishing comeback for the roughly $70 billion market for synthetic CDOs, which rose to infamy during the crisis and then faded into obscurity after nearly destroying the financial system,” reports Bloomberg.
“But perhaps the most surprising twist is Citigroup itself. Less than a decade ago, the bank was forced into a taxpayer bailout after suffering huge losses on similar types of securities tied to mortgages. Now, many in the industry say Citigroup is responsible for over half the deals that come to market, though precise numbers are hard to come by.”
…click on the above link to read the rest of the article…
Official Suspected of Biggest Financial Fraud in China’s History Investigated
Official Suspected of Biggest Financial Fraud in China’s History Investigated
The high-living nephew of a former Chinese communist leader is said to be in the crosshairs of the Party’s anti-corruption investigators, according to a number of reports in the Hong Kong press recently.
Hong Kong press reports are not always reliable, but often enough include details about affairs inside the Party that cannot be reported in the mainland for political reasons. Hong Kong publications are also used as ways for political factions in China to send messages to one another and the public.
Wu Zhiming is a high-level official in the southern city of Shanghai, long a power base of the faction of Jiang Zemin, who ruled the Communist Party from 1989 until 2002, and who then cast a shadow over Chinese politics for the next decade.
The reports say that Wu and Jiang’s eldest son, Jiang Mianheng, were together involved in a notorious financial scandal in 2007. The level of fraud involved reached a mind-boggling one trillion yuan (US $160 billion), the reports claimed.
Hong Kong’s Cheng Ming magazine reported on the matter in its latest monthly issue: Wu Zhiming, currently the chairman of the Shanghai Political Consultative Conference, is being investigated and unable to leave the country, the reports said.
…click on the above link to read the rest of the article…
Greece: Are You Finally Ready to Do the Right Thing and Leave the Euro?
Greece: Are You Finally Ready to Do the Right Thing and Leave the Euro?
The era of living off borrowed money is over in Greece, and the Greek people now have a choice.
Almost four years ago I wrote Greece, Please Do The Right Thing: Default Now(June 1, 2011). Default remains the only real way forward for Greece and Europe.Consider the destructive “gains” reaped by four years of lies, predation, debt-serfdom and austerity in service to kleptocrats: tremendous suffering by many Greek citizens, all for nothing but propping up the evil of debt-serfdom to the Greek kleptocracy and the financial royalty of Europe.
The truth is Greece squandered four years propping up a patently false illusion that using the euro as a currency was worth everything, when it was always worth nothing. As I have described at length for four long years, the euro created a brief (and highly profitable to the kleptocrats and banks) fantasy that marginal borrowers would magically be transformed into solid credit risks simply because they were now borrowing euros instead of drachmas.
It doesn’t matter what is being borrowed–euros, drachmas, quatloos or beads–marginal borrowers are still high credit risks. The entire subprime mortgage fiasco was based on a similar financial fraud: that the housing bubble would enable homeowners with insufficient cash, income and creditworthiness to service gargantuan mortgages–mortgages that were issued with the intent of defrauding buyers of mortgage-backed securities.
Greece is simply an example of the same fraud played out on a larger stage.
…click on the above link to read the rest of the article…
