| MARKET ROUNDUP | |
| Dow | -9.82 to 16,937.26 |
| S&P 500 | -.26 to 1,962.61 |
| Nasdaq | +.64 to 4,368.68 |
| 10-YR Yield | -.001 to 2.623% |
| Gold | +$1.40 to $1,318 |
| Crude Oil | -$.66 to $106.17 |
The late, great Illinois Senator Everett Dirksen is credited with saying: “A billion here, a billion there, pretty soon, you’re talking real money.”
He was talking about government spending and deficits. But he might as well have been referring to the mega-penalties the world’s mega-banks keep being forced to pay out!
Take French giant BNP Paribas SA (Weiss Ratings: BNPQY, unrated)! According to today’s Wall Street Journal, BNP will cough up $8 billion to $9 billion for facilitating transactions that violated U.S. sanctions. The bank will reportedly plead guilty to conspiring to violate the International Emergency Economic Powers Act, and more than 30 bankers will leave, as part of the deal with U.S. authorities.
These charges stem from tens of billions of dollars in money transfers by companies and government agencies in Sudan, Iran and other nations we’re not exactly friendly with. And according to the Journal, BNP was far from alone. RBS of Scotland paid a $100 million fine in 2013 … Standard Chartered of the U.K. paid $667 million in 2012 … and Dutch bank ABN Amro paid $500 million in 2010.
It’s not like these are the only charges leveled against mega banks in Europe or the U.S., either. Barclays (Weiss Ratings: BCS, C-) of the U.K. paid $454 million in 2012 as part of an investigation into the rigging of the benchmark LIBOR interest rate. LIBOR is used to determine everything from derivatives pricing to corporate loan rates and payments.
The European Union also fined six banks, including JPMorgan Chase (Weiss Ratings: JPM, A-), Citigroup (Weiss Ratings: C, A-), and Germany’s Deutsche Bank (Weiss Ratings: DB, C-), another $2.3 billion for their roles in manipulating benchmark rates.
Meanwhile, banking regulators are investigating a dozen U.S. and European banks for rigging still another market — this time, foreign exchange. The allegations center around the values the banks assigned to various currency pairs at crucial fixing times during the day.
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| Fines against the world’s mega banks for rigging foreign exchange trades could total $35 billion. |
One research firm recently estimated fines related to that investigation could total a whopping $35 billion! Potentially vulnerable banks include Deutsche Bank, Citigroup, and UBS of Switzerland (Weiss Ratings: UBS, B).
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“Is there any market these guys didn’t manipulate for their own gain?” |
Still not enough for ya? Well, how about the up to $10 billion that Citigroup is reportedly facing for practices related to the bundling and sale of mortgage securities? Or the up to $12 billion that Bank of America (Weiss Ratings: BAC, A-) might have to pony up?
Smaller U.S. banks like SunTrust (Weiss Ratings: STI, A-) are also getting swept up. The Southeast regional lender just agreed to pay $968 million related to its mortgage practices.
Where does it all end? Is there any market these guys didn’t manipulate for their own gain? Or any standards and practices they didn’t violate? Those are fair questions all around, given the ongoing flood of investigations, charges, fines, and penalties.
So what do you think? Are today’s mega-banks corrupt through and through? Or are these just isolated cases of wrongdoing by a few bad apples?
Furthermore, what impact do you think more government investigations and multi-billion dollar fines will have on bank stocks? Are they reasons to sell and not look back? Or are they just the cost of doing business for large financial institutions, and therefore, no reason to avoid the big bank stocks?
You can share your opinions in the comment section!
| OUR READERS SPEAK |
With the inflation trade reappearing in the markets after a long absence, many of you shared your opinions and asked questions about how investors can capitalize.
Reader Lea said: “As I am holding silver and gold bars, how long will it be for it to really take a hike up? I am 75 years old, I don’t want to miss out.”
I personally believe the initial move in a new, gold bull market is getting underway now. That’s a big shift from the past few years, when gold steadily fell from around $1,900 an ounce down to $1,200. So I’d hold on tight!
But Reader Tom was less enthusiastic about the potential for rising gold prices and rising interest rates. He said: “I don’t have the same exuberance for gold as Mr. Larson. I think interest rates will remain at historically low levels for a long, long time. Which means stocks are the place to be, at least for the foreseeable future. I’m allocating 5 percent to gold and precious metals, the rest in a diversified portfolio of equities.”
Those kinds of diverse opinions are what make markets, so thanks for sharing! If you would like to add your two cents, please do weigh in here.
| OTHER DEVELOPMENTS OF THE DAY |
 Existing home sales rose 4.9 percent in the month of May to 4.89 million units at a seasonally adjusted annual rate. That topped expectations, and was the biggest one-month rise in almost three years. Prices rose by the smallest year-over-year margin since March 2012.
Reminder: You can let me know what you think by putting your comments here.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
{ 67 comments }
The crony global capitalism is outrageous. The corruption is paid for by taxpayers. The federal reserve should be stopped from bailing out the bankers.
The crony global capitalism is outrageous. The corruption is paid for by taxpayers. .
Who will get all this fine money?
Dear Mike, you’re right, it was Everrit Dirksen, but he first said it as “a million here, a million there. Pretty soon, your talking some real money.” That’s the quote I remember.
Brent Bills, DeBary, FL
I remember it as billions.
I was there at the time.
These large fines are just a racket to fill the empty Treasury coffers. International banks are easy prey because they have to go through NY to conduct dollar payments. What I do not understand is why US banks submit to this extortion, because that’s what it is.
US banks’ incompetence and endless satisfy-their-gambler-investors’-desire-for-big-gains-instead-of-solid-value mentality has made this unholy mess.
Bernanke’s destruction of all incentive to save money and penalize savers (via zero interest rates) who relied on interest income for upcoming retirement etc & pushed them into a rigged casino stock market has made this unholy mess.
USA regulators–a mixture of agencies & agendas–enforcing byzantine often conflicting regulations with sometimes duplicating penalties for the purpose of treating banks both as gigantic milk-cows to fill empty federal coffers and as untouchable pumped-up assets who would collapse into public disrepute if those banks REALLY ADMITTED GUILT & fired officers as part of their penalties–have made this unholy mess.
USA empire-makers who desperately want to force the dollar to retain status as the international trade medium and to enforce scrutiny & control over every penny spent worldwide–and eventually to position their greedy hands on the global spigot of GLOBAL taxation–including by strong-arming allies into submitting to FATCA(T)–have made this unholy mess.
American citizens by their submission to the mirage of corporations and country as working together for the common good rather than stopping their endless leaching of the many for the benefit of the ever-rapacious few–have made this unholy mess.
Only those same deluded citizens can wake up & stop this unholy mess. Your efforts do help–by showing ways to profit & provide for retirement life’s needs & retirement without kissing up to the corrupt. Thanks.
Absolutely no question the large banks are systemically corrupt, feeling they can behave according to their own rules.
THE question is why some of these folks are not doing jail time, as they have commited offences that would see lesser mortals behind bars for extended periods of time.
THE answer is simple – they own the politicians through campaign finance.
When do the rating agencies have to pay for their total lack of ethics in the rating of these CDOs without which no one would have bought them? And, what slush fund in the Gov’t do these fines end up in and who is accountable for how the fines are spent? And, that would be yet another failure of Congressional oversight (after sight) committees.
Congressional oversight is not a real thing. It’s the worst, most blatant lie ever perpetrated on the citizens of the republic.
And I suspect the fines all wind up in the same slush fund as our Social Security slush fund.
Congressional oversight is not a real thing. It’s the worst, most blatant lie ever perpetrated on the citizens of the republic.
And I suspect the fines all wind up in the same slush fund as our Social Security slush fund.
Why are the shareholders of morally corrupt banks paying again with no restitution against the individuals who behaved unethically and enriched themselves? Why has no one in the C-Suite been held responsible for the rotten culture and inappropriate remuneration structures?
Thank you for continuous updates in developments.
There are very few of us who could have imagined that all asset classes could be so upside down in the market, with very few rules of investing still intact.
For those of us who have continued to accumulate physical gold and silver and to hold our mining stock positions, we have been patient, and we will be rewarded.
For pilots looking at the weather, clouds have developed from white cirrus, to grey stratus to dark cumulus and now to cumulus nimbo thunder storm build ups, black and tall and mean.
Tighten your seat belt and be prepared to ride out the storms ahead.
It has taken longer than we knew or thought, but we will remember these difficult tines for all of our years.
I think the Weiss ratings on all should be no higher than a D. How can liars, thieves, and cheaters earn an A rating? There are certainly more creditable corporations that belong in one’s portfolio.
It’s all corrupt now. Big business, the White House, the Senate, the DOJ, DOE, BLM, … pretty much all government agencies. They have all turned against the citizens. It seems to me that the Founding Fathers had some advice about what to do when such a situation confronts the people.
Nowadays, whenever I see the federal government fining or imprisoning someone, I often see it as unfortunate that they got caught because of the double standard. The government is now the bad guys (“…we have no records, 8 hard disks crashed…” – yeah, right). The recent hearings of IRS officials made me absolutely sick of what our once wonderful government has become. The IRS officials sneer at our reps and basically tell them to #$%@ off…..and that they will do whatever they want to do in “their” agency. Even FDR warned about unions getting into government. Corruption would run wild…..and now it is doing just that as some of these agencies are now totally lawless. Our government has become so corrupt it is no longer recognizable. We now have what Mexico had in the 60s and 70s….probably even worse.
Yep Fred, it’s quite a paradox. The citizens are learning that our present government and its governing criminals are not our friends, and they don’t want to be. They want to be our rulers, and they have become that. Fascism is coming at us like an express train, and no one seems to notice, even with all the bells and whistles blowing.
You’re absolutely right. The government and its governance has become so corrupt it is no longer recognizable as a republic, much less as America.
Fewer regulations and serious jail time for law breakers is in order. Clearly the cost of fines to banks is just passed on.
The solution to this problem is simple. It’s the same solution used in every other case of malfeasance and illegal practices. Indict and try the officers and directors of each company with criminal charges. When they are found guilty, they go to freakin’ jail, or prison, just like everyone else who breaks the law and gets caught. Even Martha Stewart was indicted by the quite perverse Elliot Spitzer for only the possibility of insider trading, which he couldn’t prove in court.
It is the purest form of corruption and collusion between the bankers and the politicians to merely levy a fine on the corporate entity. The corporate entity does not do anything, cannot do anything, without the express direction of the officers and boards. It is a sham of the first magnitude to believe and prosecute otherwise.
Bernie Madoff is in prison for precisely the same actions as these miscreants, but he was visible and cheated famous people, so he got the book thrown at him. These moral dwarfs hide behind their corporate entity and do the same things.
What? If Bernie Madoff had incorporated, his corporation would only have been fined, and he’d still be in his office? Seriously? Same thing.
Right now, I will bet you (and loan the money to you for the bet) that these bankster criminals are sitting in their offices hatching another scheme to make themselves richer, because they know that the worst that can happen is they lose other people’s money and the corporation gets a slap on the wrist. That kind of “punishment” does not dissuade the typical kind of sociopaths we have running these banks. Such a pathology means the person doesn’t care, or feel guilt.
We, the public, need to hear the names of these criminals — hear their real names and their families’ names, in the news media, right out in public as would be the case if you were indicted and sent to prison for doing the same thing.
Where are the culpable shareholders of these institutions? Yes, the actual owners bear much of the responsibility, even though they may not have known anything about these crimes. They’d better make it their business to know.
And why do these corporations continue to be listed on stock exchanges? Many other companies have been blacklisted for a lot less. How can they continue with their membership in the Federal Reserve, the ABA, the FDIC and the SEC? Have we no regulations any stronger for these outright criminal acts than a fine?
When will the gov. come down on Morgan for price fixing gold & silver ?
The repeal of the Glass-Steagal Act was what opened the door to our current destruction. The end of this path is very likely to be terrible beyond most of our imaginations. A complete wipeout of the American middle class? That, I believe, is the goal of the “elites” the want to take total control over our lives.
The elites, as you call them have always ruled the USA.
Do you imagine that George Washington and Tom Jefferson and that whole lot were not all elites?
Of course they were.
Now, I suppose it is just todays elites that bother you.
They all bother me.
Incidentally, you are dead right about Glass-Steagal. The stupidest thing Clinton ever did was sign off on its effective repeal.
None of the articles I have read pertaining to fines for the banks say who the fines are paid to and what that money will be used for. How many people who lost their homes and savings because of the banks actions will ever see any of it?
Another day, another story about why these banks and their execs are to big to fail and to big to jail. We have yet to see individual or corporate punishment that rates as appropriate for the crimes committed. Until then, some banks will continue regarding the fines as a cost of doing their evil business and the looting and corruption will go on and on.
What is most curious about all the fines is the fact that these banks are all part of the financial cartel sponsored by the Federal Reserve and other central banks. Like other monopolies and cartels sponsored by governments the very existence of the cartel itself encourages competitors to get together. One suspects that the Fed merely prints some more money for these banks to pay the treasury of the particular country seeking the penalties. Break up the cartel, do away with the Fed and allow banking to compete in a free market.
Bank penalties? No problem. Rehypothecate some “assets” another 50 times or so to create the “money.” Glass and Steagall, where are you when we need you? Banking is in double-entry heaven, notionally.
What I want to know is where this penalty money goes. Sounds like Government has a significant hidden budget from fines and penalties.
All the announcements regarding fines: who is tracking whether these fines are actually being paid and where does the money really go if they are paid?
In a world of Central Banks printing unlimited amounts of supposed reserve currencies, the title of your article “Mega-Banks Paying Out Real Money! ” struck me as oxy-moronic.
Second question: aren’t these fines like pennies compared to the vast amounts of money generated by these criminal activities? Questioned scenario is “I’m fined $10 for bilking others and making $5 billion. The fine will really make me stop my moneymaking bilking operations—NOT”!!!! Major prison time and major fines that would be used to reduce national debt (that’s not owed by the people) would be a much more powerful motivator to stop criminal behavior.
So these banks get fined, WHERE DO THE PROCEEDS GO ?
Lea and Tom seem to have missed the fact that these same crooked bankers are responsible for manipulating the prices of Gold and Silver. Todays precious metal prices
are not realistic.
“So what do you think? Are today’s mega-banks corrupt through and through? Or are these just isolated cases of wrongdoing by a few bad apples?”
Our own “Federal” Reserve (a consortium of PRIVATE banks) continues to find its way around a total independent audit. It makes money on every dollar our Treasury prints, LENDING ALL THE MONEY BACK TO THE TREASURY!
During the banking crisis THE FED sent money to European banks and not to the citizens here.
There is reportedly no inflation. But you can’t find a FIVE pound bag of sugar anymore, cereal boxes are smaller and lighter and do you think that those are REALLY double and triple sized rolls of toilet paper?! I don’t think so.
Gas is more expensive.
One good thing, candy bars really do have 1/3 fewer calories like the commercials say because they are 1/3 smaller.
So the “too big to fail” banks are corrupt and they’re now even bigger and pose an even greater threat to the international banking system. And yet Weiss rates some of them quite highly. Please, Mike, tell us readers how to handle this latest grim revelation. Thanks.
I think there should be some bankers going to jail for fraud
These huge banks find it easier to pay a few million dollars to go on cheating and lying. It is time they got shut down and have their money confiscated. If the Government would do that they just might be able to pay their own debts.
Corporate fines are evil; they do not punish the criminals, they punish innocent stockholders and depositors!
The criminals should go to jail and be individually liable for the fines!
The answer to the question is as obvious as the question itself. Yes the big banks are predominantly corrupt, as are most of the mid-sized banks, and to a lesser degree the small local community banks. Why, they are comprised of people, the same people who comprise a culture that has been in decline for decades. A culture of people who no longer care about right and wrong, honor, dignity, respect for others, or fair play. Most people of today are only interested in winning and enriching themselves as quickly as possible. You can see it in every walk of life. So who really has the morale and ethical high ground to prosecute these criminal activities? Sure as hell not government. The banking activities you refer to are merely symptoms of a much larger problem.
The school system in the US breeds the bad behaviour. The schools promote competitive sports. That has nothing to do with physical and emotional health. The pupils are indoctrinated to win at all cost. Furthermore, they are already taught corruption because they engage in fund raising, soliciting advertising, and other activities that do not teach them to live humbly with what they have.
The US government knows it can’t conquer the world militarily, so it is using agencies such as the FTC and IRS to do the job. Why don’t the other governments forbid their companies to cooperate with US government agencies at the cost of their sovereignty; and if the US doesn’t like it, she can take a hike? Ah! Those governments already depend on the US for just about everything economically. Talk about corruption! All politicians, everywhere are corrupt – PERIOD! Why do we let them have the control they have taken over our lives?
I want to know who did the investigation to find these allegations? Who ordered the investigation? I want to know what happens to the fine money? Bet it does not go to all those who lost money because of the fraudulent actions. What prevents this from happening again and again?
Gold and Silver are for dollar destruction insurance and little else. That little else means
short and medium term trading. Dollar destruction means the imploding derivatives
market or perhaps classical hyperinflation as it occurred in the past. As for the issue of
big bank behavior; that’s the powder keg appearing on the world’s economic horizon.
Who or what will light the fuse? Anybody’s guess!
It seems to me that the executive members and board members of a bank would rather the bank paid fines than expose themselves to personal financial loss and potential jail time for fraud. Until the most senior members of the bank become personally vulnerable for any criminal activities of the bank, nothing will change.
Rod Griffiths
Believe it, do it, it is never fail
A little manipulation here, a little underhanded assist to our enemies there, a little bending the rules on mortgages so that the borrower gets screwed and pretty soon you see that there is no conscience in the land of money. Anything to get a bonus. I wouldn’t touch a bank stock.
I would like to know what the government is doing with all of these fines they are collecting?
The financial institutions and the government regulation that try to govern good practices are so intricate these days that no one knows what in the hell is the current standard of practices that are considered legal. Add to that the need to show a profit and incentives to show those profits and we have total chaos. The every day investor is involved in a crap shoot and they should realize that they could loose it all in a moment. This added to computer trading by investor houses that control billions and can manipulate market segments by large trading amounts and you have no real solid idea of where markets may go on any given day. We need t simplify the laws in all manners of life and make the penalties for financial wrong doing ever harsher – much harsher -. Peoples lives have been totally destroyed by wrong doings and the penalties have to be stiffened. PLEASE – Simplify the laws, and stiffen the penalties…
To me it is simple: If you are in doubt about legality – don’t do it.
WHAT role do you see precious metals playing in the gathering challenge to the fiat US Dollar as the world’s reserve currency………also, WHO is going to win ????
First time home buyers are being squeezed out of the market by the 20% down payment.
There is no good without God and he’s been kicked to the curb. Blessing has left the room. We’re on our own now. What comes next is we learn our lesson.
As long as the share holders pay the bills and the management can keep their ill obtained bonuses nothing will change. I do not understand why personal responsibility is touted all the time but nobody in the banks is being held responsible. Throw some of the guys into prison and the remaining guys may start thinking about consequences. Still, I believe that none of the banksters has any morals.
The banks manipulated markets to make billions. They will pay a small percentage back in fines to regulators, not the people they stole it from. In addition, they will need to recoup these “losses” (fines) in the near future by finding new ways to steal from their customers.
Watch and see.
No doubt that the banks are corrupt through and through. To even consider that all the mentioned cases are isolated incidents, when it is quite likely that those cases are just the tip of the ice berg, is simply naive.
Probably, the only way to stop the madness would be by making top managers personally responsible in a way that not only would strip them of financial gains, but also put them in jail.
I guess all these Bakers haven’t learned their lesson yet, but with all these mega fines
I keep wondering to whom or where these fines go to and how it is used. If it’s the government coffers the deficit should be reduced considerably Anyone know exactly
where and how the money goes?
The bankers, central banks, and governments are all in it together. These fines are the way the governments get there cut and look good at the same time. They sat to the people, look what we are doing to these crooks, of course none will ever see any jail time and those that lose their jobs will have another cushy one waiting on them.
Banks and business will do anything to increase profits to support management compensation plans, illegal or not. What is sad is that the business gets fined but nobody goes to jail. Which means, it will only happen again.
That’s all fine and good but what about the people that got screwed through it all? Sending that fine money to people just as corrupt as they are doesn’t do much for the people. And, if they can afford those kind of fines, just exactly how much did they steal to begin with? I won’t feel any better until I see the hole plugged and losses returned to the people. I don’t trust any of them, and for good reason.
While the banks are very adept at gaming the system, the regulators are empowered to find revenue streams wherever they can at the behest of their employers, bankrupt governments. So, in a perverse way, it is in the interest of governments for banks to be bad actors in order to collect cash from the golden geese. And what is totally unknown is how the government actually uses the fines. What reasons do we have to think they will be used in a fiscally responsible manner?
The banks got in trouble and are headed that way again when they are forced by law to extend credit to those unworthy. A proper action would be that the absurd laws be reversed immediately and let inflation run to catch up with reality. In this US the wages paid have no correlation to value of production (or skill). The rest of the world still seems to have things under control. But following in our footsteps they are letting their altruistic, noble notions (and greed) overtake their abilities to pay. Debt abounds! There seems to a major crash coming. Precious metals and jewels and other holdings cannot be called investments. The most they can be are mediums of exchange after the crash. Then they will be fully negotiable and have no fixed value. HELP.
Regarding the fines proposed and/or assessed on some of the largest worldwide banks:
What entity receives the payments and what entity will have the use of the monies ?
يرجا ارسال بشيك واØد
What did you say?
The investigations and resulting fines are just part of the game. No real people are ever prosecuted for their criminality. It appears there is a tacit agreement that the regulators will assess the fines, but grant immunity to the perpetrators.
These financial institutions have been manipulating everything from oil, food crops, precious metals, to bad mortgage debt since the government allowed them to tell it how to regulate them. It’s no wonder that they have such huge bad debt and investments on their books (many of which only show up on what is called the off balance sheets). They, with our own governments backing have manipulated this nation into unavoidable financial failure. Hell, the Fed manipulates the financial numbers as bad as the rest of the financial industry does. We are headed for what I call the Obama slide into oblivion and that’s exactly what his agenda is. After all, when the masses depend on the govt. to survive they can be controlled. Get ready! All hail king Obama. I wouldn’t be surprised to see a collapse and martial law declared before he has to leave office. Who can get him and his socialists out of D.C. then?
Hi Mike thanks for the news and good information
How about 80% return on Uruguay win against Italy
Cheers
Well… as the old saying goes… Money talks and BS walks.
Monetary penalties don’t mean much of anything to these guys. It’s just a cost of doing a lucrative business. until jail time and loss of personal assets occur this will continue. Not much different than the Mob except than it has been nicely “legalized and regulated”. Oh! and made “transparent”… yeah, right. Just put’em in jail and seize their assest like they would do the rest of us… that’s when the end will begin.