HSBC Scandal-- Outrageous These Bankers Didn't Go To Jail

The banking giant HSBC has escaped indictment for laundering billions of dollars for Mexican drug cartels and groups linked to al-Qaeda. Despite evidence of wrongdoing, the U.S. Department of Justice has allowed the bank to avoid prosecution and pay a $1.9 billion fine. No top HSBC officials will face charges, either. We’re joined by Rolling Stone contributing editor Matt Taibbi, author of "Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History." "You can do real time in jail in America for all kinds of ridiculous offenses," Taibbi says. "Here we have a bank that laundered $800 million of drug money, and they can’t find a way to put anybody in jail for that. That sends an incredible message, not just to the financial sector but to everybody. It’s an obvious, clear double standard, where one set of people gets to break the rules as much as they want and another set of people can’t break any rules at all without going to jail."

How Does Japan Do It?

In an April 2012 article in Forbes titled "If Japan Is Broke, How Is It Bailing Out Europe?" Eamonn Fingleton pointed out that the Japanese government was by far the largest single non-euro zone contributor to the latest Euro rescue effort. This, he said, is "the same government that has been going round pretending to be bankrupt (or at least offering no serious rebuttal when benighted American and British commentators portray Japanese public finances as a trainwreck)."

Noting that it was also Japan that rescued the International Monetary Fund (IMF) system virtually single-handedly at the height of the global panic in 2009, Fingleton asked: How can a nation whose government is supposedly the most overborrowed in the advanced world afford such generosity? ...

The betting is that Japan's true public finances are far stronger than the Western press has been led to believe. What is undeniable is that the Japanese Ministry of Finance is one of the most opaque in the world ...

Fingleton acknowledged that the Japanese government's liabilities are large, but said we also need to look at the asset side of the balance sheet: [T]he Tokyo Finance Ministry is increasingly borrowing from the Japanese public not to finance out-of-control government spending at home, but rather abroad.

Besides stepping up to the plate to keep the IMF in business, Tokyo has long been the lender of last resort to both the U.S. and British governments. Meanwhile it borrows 10-year money at an interest rate of just 1.0 percent, the second lowest rate of any borrower in the world after the government of Switzerland.

It's a good deal for the Japanese government: it can borrow ten-year money at 1 percent and lend it to the United States at 1.6 percent (the going rate on US ten-year bonds), making a tidy spread. Japan's debt-to-GDP ratio is nearly 230 percent, the worst of any major country in the world. Yet Japan remains the world's largest creditor country, with net foreign assets of $3.19 trillion. In 2010, its GDP per capita was more than that of France, Germany, the UK and Italy. And while China's economy is now larger than Japan's because of its burgeoning population (1.3 billion versus 128 million), China's $5,414 GDP per capita is only 12 percent of Japan's $45,920.

How to explain these anomalies? Fully 95 percent of Japan's national debt is held domestically by the Japanese themselves. (snip)

All of this has implications for Americans concerned with an out-of-control national debt. Properly managed and directed, it seems, the debt need be nothing to fear. Like Japan, and unlike Greece and other euro zone countries, the United States is the sovereign issuer of its own currency.

If it wished, Congress could fund its budget without resorting to foreign creditors or private banks. It could do this either by issuing the money directly or by borrowing from its own central bank, effectively interest-free, since the Fed rebates its profits to the government after deducting its costs.

A little quantitative easing can be a good thing, if the money winds up with the government and the people rather than simply in the reserve accounts of banks. The national debt can also be a good thing. As Federal Reserve Board Chairman Marriner Eccles testified in hearings before the House Committee on Banking and Currency in 1941, government credit (or debt) "is what our money system is."

"If there were no debts in our money system," said Eccles, "there wouldn't be any money."

Properly directed, the national debt becomes the spending money of the people. It stimulates demand, stimulating productivity. To keep the system stable and sustainable, the money just needs to come from the nation's own government and its own people, and needs to return to the government and people.

When Firms Pay CEOs More Than Uncle Sam, the Tax System Is Broken

Outrageous!

Twenty-five of the 100 highest-paid U.S. chief executives pocketed more in pay last year than their companies paid in federal income taxes. I don't know about you, but that's the kind of stat that really gets my bacon sizzling — yet more evidence of how the 1% live in a bizarro parallel universe where the normal rules don't apply. A recent report from the left-leaning Institute for Policy Studies found that weak profits weren't to blame for the 25 companies' relatively low tax bills. All had more than $1 billion in pretax income, according to regulatory filings. Yet thanks to a variety of tax breaks and loopholes, each of these companies was able to lavish an average of $20.6 million on its CEO and pay less than that amount to Uncle Sam. And two of the companies — Citigroup and American International Group — have received billions of dollars in bailout cash from taxpayers.

The Secret to Mitt Romney’s Fortune-- Greed, Debt and Forcing Others to Foot the Bill

A new article by reporter Matt Taibbi in Rolling Stone sheds new light on the origin of Republican presidential candidate Mitt Romney’s fortune, revealing how Romney’s former firm, Bain Capital, used private equity to raise money to conduct corporate raids. Taibbi writes: "What most voters don’t know is the way Mitt Romney actually made his fortune: by borrowing vast sums of money that other people were forced to pay back. This is the plain, stark reality that has somehow eluded America’s top political journalists for two consecutive presidential campaigns: Mitt Romney is one of the greatest and most irresponsible debt creators of all time. In the past few decades, in fact, Romney has piled more debt onto more unsuspecting companies, written more gigantic checks that other people have to cover, than perhaps all but a handful of people on planet Earth."

Link to RS article.

The Evil of Offshore Tax Havens

Robert Morganthau in the NYTimes:

The favorable tax rates encourage corporations to avoid paying American taxes by structuring complicated international transactions, like Apple’s “Double Irish With a Dutch Sandwich,” recently described by The New York Times. But it’s not just the low tax rates that make these jurisdictions attractive to those following the rules. The secrecy of offshore jurisdictions allows some individuals and corporations to engage in outright tax fraud, costing America at least $40 billion each year. And that secrecy makes offshore tax fraud almost impossible for law enforcement to detect. When I was the Manhattan district attorney, we learned of offshore accounts only through whistle-blowers, cooperators and serendipity. Legislation shaped by Senators Carl Levin, Kent Conrad and Sheldon Whitehouse that would curb some of these tax abuses by giving the Treasury Department the muscle to respond when foreign governments hampered our tax enforcement was recently passed by the Senate, but awaits House action. Those reforms are long overdue but do not fully address the larger problem: financial secrecy laws in offshore jurisdictions. The secrecy laws in these tax havens are at the root of serious crimes: fraud, money laundering and international terrorism.

Corporate Corruption Increasing Dramatically in the US

Eduardo Porter in the NYTimes:

Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?

The misconduct of the financial industry no longer surprises most Americans. Only about one in five has much trust in banks, according to Gallup polls, about half the level in 2007. And it’s not just banks that are frowned upon. Trust in big business overall is declining. Sixty-two percent of Americans believe corruption is widespread across corporate America. According to Transparency International, an anticorruption watchdog, nearly three in four Americans believe that corruption has increased over the last three years.

(snip)

In 2001, Transparency International’s Corruption Perceptions Index ranked the United States as the 16th least-corrupt country. By last year, the nation had fallen to 24th place. The World Bank also reports a weakening of corruption controls in the United States since the late 1990s, so that it is falling behind most other developed nations.

The most pointed evidence that breaking the rules has become standard behavior in the corporate world is how routine the wrongdoing seems to its participants. “Dude. I owe you big time!... I’m opening a bottle of Bollinger,” e-mailed one Barclays trader to a colleague for fiddling with the rate and improving the apparent profit of his derivatives book.

To Run a Bank Is to Steal

All banking executives should be put in jail. The latest reason-- the LIBOR scandal:

LIBOR stands for the London InterBank Offered Rate. So what does that mean? It's basically the rate that banks around the world are lending money to each other. And the way it's calculated is each day - the banks submit what rate they can afford to borrow money at - and the average of what all the banks submit becomes the LIBOR rate. But what's really important to remember here is - LIBOR doesn't just apply to the rate banks lend money to each other. It also applies to the rate that we consumers pay on several different types of loans - including mortgages, car loans, and credit card rates. So if those rates are manipulated by banks - and artificially driven higher - then it affects a lot of people - and leads to working people paying more on their loans. Which is exactly what happened. Earlier this week - the CEO and COO of Barclays bank resigned after it was revealed their bank was routinely manipulating LIBOR rates between 2005 and 2009. Barclays has since been hit with a $450 million fine for this criminal activity. But the question is - was Barclays alone in this? Or were other banks involved as well - and not only that - were governments and regulators involved in the scam too? Disgraced Barclays CEO Bob Diamond is alleging just that. As the Washington Post reported on Wednesday: "Fallen banking titan Bob Diamond on Wednesday described regulators on both sides of the Atlantic as partly complicit in a scandal involving the manipulation of a key interbank lending rate, telling a British parliamentary committee that government watchdogs had failed to act after his bank, Barclays, informed them of industry-wide irregularities during the U.S. financial crisis." So just how deep does this scandal go - and how much money did the banksters make this time screwing us?

Basically, the LIBOR rates were rigged, to screw over smaller fish-- in other words, all of us, via City and Local governments:

We know that the big banks conspired to manipulate Libor rates, with the approval of government authorities. We know that the Libor manipulation effected the world’s largest market – interest rate derivatives. But who are the biggest victims? Sometimes the big banks manipulated the Libor rates up, and sometimes down. Different groups of people got hurt depending which way the rates were gamed. Bloomberg’s Darrell Preston explained last year how cities and other local governments got scalped when rates were manipulated downward: In the U.S., municipal borrowers used swaps to guard against the risk of higher interest costs on variable-rate debt by exchanging payments with another entity and tying how much they pay to an underlying value such as an index. The agreements can backfire if rates move in unexpected directions, resulting in issuers making larger payments.The derivatives were often designed to offset the risks of increases in the short-term rates tied to auction-rate securities, fixing borrowers’ costs by trading their debt- service payments with another party. Instead, rates dropped. The yield on two-year Treasury notes fell from about 5.1 percent in June 2007 to a record 0.14 percent on Sept. 20. On Oct. 6, the U.S. Treasury sold $10 billion of five-day cash- management bills at 0 percent. Ellen Brown adds: For more than a decade, banks and insurance companies convinced local governments, hospitals, universities and other non-profits that interest rate swaps would lower interest rates on bonds sold for public projects such as roads, bridges and schools. The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels. This was not a flood, earthquake, or other insurable risk due to environmental unknowns or “acts of God.” It was a deliberate, manipulated move by the Fed, acting to save the banks from their own folly in precipitating the credit crisis of 2008. The banks got in trouble, and the Federal Reserve and federal government rushed in to bail them out, rewarding them for their misdeeds at the expense of the taxpayers. [The same thing happened in England.]

In other words, the banks convinced borrowers to insure against interest rates going UP, by engaging in swaps. However, the Fed LOWERED interest rates, which the banks knew about, meanwhile encouraging taxpayers to buy these insurance swaps and screwing over ordinary people.

How the swaps were supposed to work was explained by Michael McDonald in a November 2010 Bloomberg article titled “Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire”: In an interest-rate swap, two parties exchange payments on an agreed-upon amount of principal. Most of the swaps Wall Street sold in the municipal market required borrowers to issue long-term securities with interest rates that changed every week or month. The borrowers would then exchange payments, leaving them paying a fixed-rate to a bank or insurance company and receiving a variable rate in return. Sometimes borrowers got lump sums for entering agreements. Banks and borrowers were supposed to be paying equal rates: the fat years would balance out the lean. But the Fed artificially manipulated the rates to the save the banks. After the credit crisis broke out, borrowers had to continue selling adjustable-rate securities at auction under the deals. Auction interest rates soared when bond insurers’ ratings were downgraded because of subprime mortgage losses; but the periodic payments that banks made to borrowers as part of the swaps plunged, because they were linked to benchmarks such as Federal Reserve lending rates, which were slashed to almost zero.

The whole thing is fairly complicated, and the last link has a lot more, but hopefully you will get the basic idea. Robert Scheer calls this the "Crime of the Century"

JPMorgan Trading Loss May Reach $9 Billion

More trouble for the welfare queen* Jamie Diamond:

Losses on JPMorgan Chase’s bungled trade could total as much as $9 billion, far exceeding earlier public estimates, according to people who have been briefed on the situation. When Jamie Dimon, the bank’s chief executive, announced in May that the bank had lost $2 billion in a bet on credit derivatives, he estimated that losses could double within the next few quarters. But the red ink has been mounting in recent weeks, as the bank has been unwinding its positions, according to interviews with current and former traders and executives at the bank who asked not to be named because of investigations into the bank.

*www.bloomberg.com/news/2012-06-18/dear-mr-dimon-is-your-bank-getting-corporate-welfare-.html

More Bank Scams-- Barclays

Banksters at work:

Barclays was fined £290m ($450m) on Wednesday by the UK and US authorities after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.
Investigators say that Barclays' traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.
Barclays had acknowledged that its actions between 2005 and 2009 had fallen "well short of standards".

The head of Barclays naturally just blames it all on a few bad traders.

The Wall Street Crime Family Syndicate

Taibbi's latest:

....this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.

Read more: http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620#ixzz1yjVG55QD

Jamie Dimon, Welfare Queen

Bloody outrageous, especially considering the losses they've had recently:

When JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon testifies in the U.S. House today, he will present himself as a champion of free-market capitalism in opposition to an overweening government. His position would be more convincing if his bank weren’t such a beneficiary of corporate welfare.

To be precise, JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets. The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy. (snip) In recent decades, governments and central banks around the world have developed a consistent pattern of behavior when trouble strikes banks that are large or interconnected enough to threaten the broader economy: They step in to ensure that all the bank’s creditors, not just depositors, are paid in full. Although typically necessary to prevent permanent economic damage, such bailouts encourage a reckless confidence among creditors. They assume the government will always make them whole, so they become willing to lend at lower rates, particularly to systemically important banks. Implicit Subsidy With each new banking crisis, the value of the implicit subsidy grows. In a recent paper, two economists -- Kenichi Ueda of the IMF and Beatrice Weder Di Mauro of the University of Mainz -- estimated that as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts. To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education. JPMorgan’s share of the subsidy is $14 billion a year, or about 77 percent of its net income for the past four quarters. In other words, U.S. taxpayers helped foot the bill for the multibillion-dollar trading loss that is the focus of today’s hearing. They’ve also provided more direct support: Dimon noted in a recent conference call that the Home Affordable Refinancing Program, which allows banks to generate income by modifying government-guaranteed mortgages, made a significant contribution to JPMorgan’s earnings in the first three months of 2012. Like all subsidies, the taxpayer largesse distorts supply. If the government supports corn farmers, you get too much corn. If the government subsidizes banks, you get too much credit. As of March, households, companies and government in the U.S. had amassed debts of $38.6 trillion, or 2.5 times the country’s gross domestic product. That’s up from 1.3 times in 1980. The picture is similar in the euro area, where debt outstanding is 1.8 times GDP, double the level of 1995.

I would have more faith in our system, if free-market capitalism actually actually didn't depend so heavily on government subsidies... as it is, this system is rotten, rotten, rotten, and fuck the enablers of this grotesquery.

Wall Street Psychology and Politics

No one went to jail, so why is Wall Street so mad? Not prosecuting any of the parties responsible for the recession has just served to embolden them. 

 America’s idiot rich: The 1 percent is complaining louder than ever. There can be no reasoning with people this irrational

How billionaires destroy democracy. Wall Streeters have rigged the economy and the government against the people. Here's how they did it.

Crony Capitalism: After Lobbying Against New Financial Regulations, JPMorgan Loses $2B in Risky Bet


Why Can't Obama Bring Wall Street to Justice?

The absence of prosecutions, and the fact that the cops on the beat hail from the place that represents the banks, does not sit right with many who hoped Obama would fulfill his promise to hold Big Finance accountable. The left's frustration fuels the Occupy movement, and chills the Democratic base. And it gives Romney, the career capitalist, an opening he is avidly exploiting. Through last fall, Obama had collected more donations from Wall Street than any of the Republican candidates; employees of Bain Capital donated more than twice as much to Obama as they did to Romney, who founded the firm. By this spring, however, resolution had come to the GOP contest, and Wall Street could see a friendly alternative to Obama. While most of Romney's contributions so far come mainly from the financial sector, Obama's donations from Wall Street have dropped sharply. But this turn may yet help Obama, playing into the Romney-as-plutocrat theme. Just the other week, the Republican candidate quietly slipped into a fundraiser at the home of hedge-fund king John Paulson, who made a killing shorting mortgage futures (including about $1 billion on the Abacus deal). The Obama campaign pounced. Obama may yet fully liberate his inner populist--that Obama who in 2010 in an off-Prompter moment uttered a sentence that made blood run cold on Wall Street: "I do think at a certain point you've made enough money."

Democrats and Bain-- Executives at Romney's old private-equity firm have donated more to the Democratic Party than the GOP. Why?
(friendly treatment in Washington, of course)

About That "JOBS Act"

It's a recipe for scamming investors and fraud, and shame on Obama for passing it.

The "Jumpstart Our Business Startups Act" (in addition to everything else, the Act has an annoying, redundant title) will very nearly legalize fraud in the stock market.

In fact, one could say this law is not just a sweeping piece of deregulation that will have an increase in securities fraud as an accidental, ancillary consequence. No, this law actually appears to have been specifically written to encourage fraud in the stock markets.

Ostensibly, the law makes it easier for startup companies (particularly tech companies, whose lobbyists were a driving force behind its passage) to attract capital by, among other things, exempting them from independent accounting requirements for up to five years after they first begin selling shares in the stock market.

The law also rolls back rules designed to prevent bank analysts from talking up a stock just to win business, a practice that was so pervasive in the tech-boom years as to be almost industry standard.

Even worse, the JOBS Act, incredibly, will allow executives to give "pre-prospectus" presentations to investors using PowerPoint and other tools in which they will not be held liable for misrepresentations. These firms will still be obligated to submit prospectuses before their IPOs, and they'll still be held liable for what's in those. But it'll be up to the investor to check and make sure that the prospectus matches the "pre-presentation."

Bank of America-- Too Crooked To Fail

Totally outrageous and unacceptable--

In his new article, "Bank of America: Too Crooked to Fail," Rolling Stone reporter Matt Taibbi chronicles the remarkable history of the rise of Bank of America, an institution he says has defrauded "everyone from investors and insurers to homeowners and the unemployed." Taibbi describes how the Bush and Obama administrations have repeatedly propped up the financial institution, which received a $45 billion taxpayer bailout in 2008. Bank of America has also received billions in what could be described as shadow bailouts. The bank now owns more than 12 percent of the nation’s bank deposits and 17 percent of all home mortgages. Taibbi also recounts how fraudulent practices by Bank of America and other companies ravaged pension funds. "Most people think of [the mortgage crisis] as some airy abstraction — you know, bankers ripping off bankers," Taibbi says. "That’s not what it is. It’s bankers stealing from old ladies and retirees."

The Rolling Stone piece.

Related-- NYTimes editorial on the banks settlement: "The Banks Win Again"

Jon Corzine's $1.6 Billion Rip-Off

By now, it has been well established that Corzine’s former firm, MF Global, committed the sin of sins for a broker-dealer. In late October, during the final, desperate days before it entered bankruptcy proceedings, its executives took money from segregated customer accounts — money that belonged not to MF Global but to the farmers and commodities traders that were its clients — and used it to prop up its rapidly collapsing business. Nor was this petty cash: of the $6.9 billion in customer assets that MF Global held, a stunning $1.6 billion is missing. There is virtually no chance that the full amount will ever be recovered.

Let’s not mince words here. These executives committed a crime. Virtually every knowing violation of the Commodities Exchange Act is a crime, but taking money from segregated customer accounts is at the top of the list. And for good reason. Customer money is supposed to be sacrosanct. If a broker-dealer goes bankrupt, the segregated accounts are supposed to remain safe, a little like the way bank deposits remain protected if a bank goes under. Indeed, customers need to be able to trust the fact that their money is segregated and protected at all times. Otherwise, the markets can’t function.

Yet, a few weeks ago, Azam Ahmed and Ben Protess, who have done a remarkable job covering the MF Global bankruptcy for The Times, wrote an article suggesting that prosecutors were having trouble putting together a criminal case against anyone at MF Global. So far, wrote Ahmed and Protess, they’d been “unable to find a smoking gun.” In fact, they continued, “a number of federal prosecutors have expressed doubts” that MF Global “intentionally misused customer money.” Apparently, the current theory is that it was all just a big accident, the chaos of those final days causing the firm’s executives to tap into customer funds without realizing it.

Excuse me while I roll my eyes. Of course there isn’t a smoking gun. As a general rule, financial professionals tend not to write e-mails that say, “Hey, we’re desperate. Let’s break into the customer accounts!” And, of course, they are always going to say it was unintentional. They are saying it already, starting with Corzine, who told Congress last year that “there was no intention to violate segregation rules.”

Goldman Sucks, Continued

Truth and consequences:

Goldman Sachs employee Greg Smith excoriated the investment bank in a New York Times op-ed, resigning due to the banks “toxic and destructive” culture, one in which the bank’s trading profits took precedence over its customers’ financial well-being. Goldman managers allegedly called customers “muppets,” and traders routinely asked how much was being made ripping off one customer or another.

Goldman has been quick to push back on Smith’s claims, portraying him as just a disgruntled employee. Some employees told Fox Business’ Charlie Gasparino that Smith doesn’t know what he’s talking about because he “never made more than $750,000 a year.”

Smith's piece here.

Taibbi on this story here.

AIG Still a Scam

Disgusting-- "Despite Salary Caps, Treasury Approved Lucrative Exec Payouts at Dozens of Bailed-Out Firms"

I was shocked that this got very little attention earlier this week when the inspector general for the TARP program released his audit. The audit showed that as many as 49 executives at a handful of firms that received the biggest bailouts received from $5 million and up in compensation, approved by the special master that the Treasury Department appointed, Kenneth Feinberg, to review executive compensation. And we’re talking about the firms that got the largest payouts, including AIG, General Motors, the largest bailouts. And AIG was by far the worst. In fact, Feinberg told the auditors that that company represented 80 percent of his headaches over the past few years.

The most interesting part of the audit, though, I thought, was that Feinberg reported that the Treasury Department and officials at the Federal Reserve Bank of New York were regularly pressuring him to increase the pay of these bailed-out firms. Now, understand, AIG was 90 percent owned by the federal government, after receiving $180 billion in bailouts. It is still 70 percent owned by the taxpayers. And yet the CEO of AIG, Robert Benmosche, received $10.5 million in ’09, $10.5 million in ’10, and $10.5 million in 2011, including $3 million in cash every year, even though Congress and President Obama had said they were going to limit executive pay to $500,000 a year.

Then this:

A new report by a federal-watchdog agency questions whether the U.S. government will be able to recover over the short term—if ever—the investment it has made in American International Group.

The report by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) was also highly critical of AIG’s compensation policies, and the agency suggests that even after AIG exits the government-aid programs, that its regulators should keep a close eye on its compensation policies.