Noting deep ties between the country’s top trade negotiator and Wall Street banks, ten groups representing millions of Americans are calling on the White House to make public all communications between U.S. Trade Representative Michael Froman and the massive financial institutions that stand to benefit from proposed trade deals.
In a letter (pdf) addressed to Froman—lead champion of President Barack Obama’s corporate-friendly trade agenda—groups including National People’s Action, Public Citizen, Friends of the Earth, and CREDO Action request “the prompt, voluntary, and proactive disclosure of all records of communication between yourself and representatives of the ten largest U.S. financial institutions—including lobbyists, employees, and trade associations—during your tenure as U.S. Trade Representative.”
Those financial institutions include JP Morgan Chase & Co., Bank of America, Wells Fargo, Goldman Sachs, and Citigroup.
In particular, the letter’s signatories are concerned that provisions in proposed trade agreements like the Trans-Pacific Partnership (TPP) or the TransAtlantic Trade & Investment Partnership (TTIP) would weaken or rollback existing U.S. financial regulations, for the benefit of big banks.
Critics have warned, for example, that Wall Street lobbyists are pushing to undercut the Dodd-Frank banking reforms through international trade negotiations.
“Citigroup snuck a lobbyist-written Dodd-Frank rollback into last December’s CRomnibus, so we already know they’re willing to hijack unrelated bills to weaken regulations on Wall Street,” said Kurt Walters of Rootstrikers. “Wall Street has been lobbying to include financial regulation in ongoing trade negotiations, and Americans deserve to know what Froman has been privately saying to these big banks.”
The recent spate of settlements by big Wall Street banks has underscored their astonishing ability to persuade powerful government officials to let them escape without any real penalty for wrongdoing.
Knowingly assemble shaky mortgages into securities and then market them as safe investments? No problem. Rig the price of foreign currencies? Of course. Manipulate the price of gold, silver, copper and oil? Go ahead. Conspire to set the price of the London interbank borrowing rate, or Libor, to the detriment of tens of millions of corporate and individual borrowers the world over? Sure, especially when the only penalty before getting back to business as usual is a fine paid with shareholders’ money.
There has been no accountability for the individuals who perpetrated these crimes, and it is doubtful there ever will be, even as one Barclays trader proclaimed in a 2010 email cited as part of the foreign-exchange scandal settlement, “If you ain’t cheating, you ain’t trying.” The Justice Department, the Federal Reserve, the Securities and Exchange Commission, the Commodities Futures Trading Commission and other regulators have essentially given Wall Street a pass.
But for one S.E.C. commissioner, the line has finally been crossed. In a scathing dissent this month to a decision to allow Deutsche Bank to avoid being labeled an “ineligible issuer” as a result of the criminal conviction of a subsidiary for manipulating Libor, the commissioner, Kara M. Stein, declared war on special treatment for the big banks. The S.E.C.’s waiver allows Deutsche Bank to keep all the advantages of being a “well-known seasoned issuer” — including instant access to investors in the capital markets and a streamlined securities registration process — that would normally have been revoked once the bank admitted to a criminal role in the manipulation of Libor. Instead, thanks to the waiver, the bank can continue to operate as if it had done nothing wrong.
That struck Ms. Stein as a mistake, and she has summoned up the courage to say so. She did not mince words. “Deutsche Bank’s illegal conduct involved nearly a decade of lying, cheating and stealing,” she wrote in a statement published on the S.E.C.’s website. “This criminal conduct was pervasive and widespread, involving dozens of employees from Deutsche Bank offices including New York, Frankfurt, Tokyo, and London. Deutsche Bank’s traders engaged in a brazen scheme to defraud Deutsche Bank’s counterparties and the worldwide financial marketplace by secretly manipulating Libor. The conduct is appalling. It was a complete criminal fraud upon the worldwide marketplace.”
Ms. Stein went on to decry the recent trend of the S.E.C. to grant waivers to financial institutions that commit crimes instead of barring them from certain lucrative business lines as punishment for their criminal behavior. The Deutsche Bank waiver is the S.E.C.’s third in less than two years — all of which have been granted during the tenure of the agency’s chairwoman,Mary Jo White, who pledged to clean up bad behavior on Wall Street. But like several of her predecessors, she has so far failed to deliver on that promise.
Ms. Stein is incredulous that the S.E.C. voted to grant Deutsche Bank the waiver, and no doubt there will be other ones, too. “Among other factors, the egregious criminal nature of the conduct and the duration of the manipulation (almost a decade) weigh heavily in my mind when considering this waiver,” she wrote. “Additionally, Deutsche Bank is a recidivist, and its past conduct undermines its current promise of future good conduct.” She noted that since 2004, the bank admitted to criminal wrongdoing in the promotion of tax shelters, settled a case involving the misleading of investors about auction-rate securities and paid a fine because its investment bankers were unduly influencing the reports written by research analysts.
“This criminal scheme involving Libor manipulation was designed to inflate profits, and it was effective,” Ms. Stein continued. “It created the impression that Deutsche Bank was more creditworthy and profitable than it actually was. Accordingly, the conduct affected its financial results and disclosures. Because Libor plays such an important role in the worldwide economy, manipulation of it goes to the heart of many aspects of Deutsche Bank’s disclosures. Interest rates represented to clients and the public also were clearly false.” She has her doubts, with good reason, that Deutsche Bank’s “culture of compliance is dependable” or that “its future disclosures will be accurate and reliable.”
Bank of America charged the second-largest amount of overdraft fees in the first three months of this year among the nation’s largest banks, new disclosures required by regulators show.
The Charlotte-based bank, the second-largest U.S. lender by assets, charged consumers $371 million in overdraft fees. Regulators began requiring banks with more than $1 billion in assets to start breaking out the figures this year.
New York-based JPMorgan Chase & Co., the largest U.S. bank by assets, charged the most in overdraft fees, $415 million, according to an analysis of the data by SNL Financial.
San Francisco-based Wells Fargo, the fourth-largest U.S. bank, ranked third with $355 million in fees.
The disclosures come as regulators continue to keep a close watch on overdraft fees five years after federal rules took effect banning lenders from charging the fees without getting customers’ approval.
Mary Jo White has been a major disappointment as the SEC head. Ms. White was a tough prosecutor when she was a U.S. Attorney in NY. And I have to concur with the former SEC officials. She needs to stop bowing down to the repeated crime offenders big banks!
Despite Obama’s propagandist statement about how “you don’t want to mess with Mary Jo,” her background implies she will function as a useful servant to the financial oligarchs. Forget for a second about that fact at her recent firm Debevoise & Plimpton LLP her clients included the usual suspects such as such as JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), and UBS AG, but she is actually known as the prosecutor who popularized the “slap Wall Street on the wrist” approach.
Two years later, and we can see this has come true with flying colors. In fact, “Mary Jo” is such a spineless patsy, three former top officials at the SEC recently wrote her a letter calling her out (thanks to Naked Capitalism for the heads up). Here’s the letter:
May 27th, 2015
Securities and Exchange Commission 100 F Street, NE Washington, DC 20549
Chair Mary Jo White:
We the undersigned, all former Commissioners and Chairs of the Securities and Exchange Commission (SEC), write in support of petition 4-637 (“to Require Public Companies to Disclose to Shareholders the Use of Corporate Resources for Political Activities”).
The petition has received a record-breaking 1.2 million supportive comments, illustrating the wide-spread importance of and need for action by the Commission to compel disclosure of political activities.
Despite the Supreme Court’s decision in Citizens United in 2010, allowing corporations greater freedom to spend shareholder money to influence politics, there have still been no new rules or procedures established to ensure that shareholders – those who actually own the wealth of corporations – are informed of decisions on spending their money on politics.
This lack of regulation is in direct conflict with one of the essential building blocks supporting the opinion in the case. It’s author, Mr. Justice Anthony Kennedy, justified permitting corporate political activities in large part on the expectation that shareholders and citizens would be informed of what those activities entailed. Thus, writing for the Court, he said:
“A campaign finance system that pairs corporate independent expenditures with effective disclosure has not existed before today. With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions…. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are in the pocket of so-called moneyed interests.”
To date, the Court’s expectation of disclosure, which can only be assured by SEC rule, has been denied. It is now five years since Citizens United and almost four years since Petition 4-637 was filed. The Commission’s inaction is inexplicable. Its failure to act offends not only us, who are alumni of this agency struggling to retain our deep pride of association, but investors and the professionals who serve them. And it flies in the face of the primary mission of the Commission, which has since 1934 been the protection of investors. To use a metaphor, mandatory disclosure of corporate political activities should be a “slam dunk” for the Commission.
William Henry Donaldson, 27th Chairman of the U.S. Securities and Exchange Commission,serving from February 2003 to June 2005 (R)
Arthur Levitt, 25th Chairman of the U.S. Securities and Exchange Commission, serving from1993-2001 (D)
Bevis Longstreth, 60th Commissioner of the Securities and Exchange Commission, serving from1981 to 1984 (D)
Law360, New York (May 28, 2015, 1:36 PM ET) — A New York federal judge signed off Wednesday on what is said to be the largest ever class action settlement revolving around the sale of mortgage backed securities, with JPMorgan Chase & Co. agreeing to plunk down $500 million to settle accusations arising from the sale of $17.58 billion in Bear Stearns Cos. securities.
U.S. District Judge Laura Taylor Swain agreed that the terms of the settlement were fair and also agreed to that class attorneys at Bernstein Litowitz Berger & Grossmann LLP and Cohen Milstein…
Law360, New York (May 29, 2015, 9:05 PM ET) — Three Fannie Mae and Freddie Mac investors sued the Federal Housing Finance Agency and the Department of the Treasury in Iowa federal court Thursday in the latest case claiming the government illegally altered its bailout deal to pocket the mortgage finance companies’ profits.
The plaintiffs said the Treasury and the FHFA in 2012 executed a “Net Worth Sweep” of profits from Fannie and Freddie, which had been placed under the FHFA’s conservatorship and bailed out with Treasury investments in September 2008. With the housing market improving…
JPMorgan Chase Chairman and CEO Jamie Dimon‘s contention that some “lazy” shareholders rely on advisory services to inform votes shows an “outdated” attitude, a leading advisory policymaker said Thursday.
“That perspective is really outdated. That doesn’t really happen any longer,” said Robert McCormick, chief policy officer at shareholder advisory firm Glass Lewis, in a CNBC “Power Lunch” interview.
LONDON—The man accused of being the ringleader of a global interest-rate-rigging conspiracy received a helping hand from his boss, according to evidence presented in a London trial Thursday.
Tom Hayes, a former UBS AG trader in Tokyo, got multiple assists from his direct manager, Mike Pieri, to get their UBS colleagues to move their interest-rate data to benefit Mr. Hayes’s trading positions, according to emails shown in court.
The acceptance of large sums of bribery in forms of cash or laundered cash … to make it look legal for his campaigns, and also for his personal use, in order to do certain favors … make certain things happen for foreign entities and foreign governments’ interests, Turkish government’s interest and Turkish business entities’ interests … other activities, too, including being blackmailed for various reasons. … he used the townhouse that was not his residence for certain not very morally accepted activities. … foreign entities knew about this, in fact, they sometimes participated in some of those not maybe morally well activities in that particular townhouse that was supposed to be an office, not a house, residence at certain hours, certain days, evenings of the week.
The former head of Lehman Brothers has insisted it was “not a bankrupt company” at the time of its collapse in 2008.
In one of his first public appearances since the firm’s demise – where it filed for the largest bankruptcy in US history – Dick Fuld claimed that the US Federal Reserve could have saved Lehman Brothers.
The 69-year-old said the bank was “mandated into bankruptcy”, and went on to blame the 2008 global financial crisis on a “perfect storm” of factors – including rising unemployment and higher interest rates, which made mortgages unaffordable for many homeowners.
Mr Fuld also defended his decision-making in the run up to the financial crisis, adding: “Hindsight is 20-20. There is no ‘if this’ or ‘woulda, coulda, shoulda’. You make a decision with the best information you think you have.”
However, the financier admitted that “not a day goes by when I don’t think about Lehman Brothers,” adding: “I’d love to tell you I’m over it, it’s behind me – it doesn’t happen.”