Daily Archives: September 17, 2015

It looks like banks might have rigged another huge market

The market for US Treasury bonds may have been rigged.

That’s according to a federal antitrust lawsuit, first reported by Bloomberg’s Alexandra Scaggs and Matthew Leising.

The plaintiffs — Cleveland Bakers and Teamsters Pension Fund, represented by law firm Quinn Emmanuel Urquhart & Sullivan — claim that Treasury dealers including Goldman Sachs, JPMorgan, and Morgan Stanley coordinated to manipulate primary market Treasury auctions.

They cite data from Rosa Abrantes-Metz, who has testified in other market-rigging cases and is an adjunct associate professor at New York University.

According to her analysis, 69% of a certain type of Treasury auction — for so-called reissued Treasuries — look suspicious.

Goldman Sachs and Morgan Stanley declined to comment.

JPMorgan could not immediately be reached for comment.

Read the full story over at Bloomberg »

Citigroup Was Using Taxpayer Bailout Funds While Committing Its Foreign Currency Felony

citi-of-fools

While the U.S. taxpayer was involuntarily shoveling over $2 trillion in bailout funds and loans into Citigroup from 2008 to 2010, the bank was committing at least one admitted felony on its foreign currency trading desk. And if ongoing testimony in a London court is to be believed, the U.S. Justice Department could have brought charges against individuals instead of settling its case for one single felony charge against the banking unit only.

Citigroup’s banking unit, Citicorp, along with three other global banks (JPMorgan Chase, Barclays and RBS) admitted to a felony charge of rigging the foreign currency market brought by the U.S. Justice Department on May 20. Approximately $5 trillion in foreign currency trades are made globally each day, with billions of dollars to be made through advance knowledge of where prices will be fixed.

Last Wednesday, the same day that the U.S. Justice Department unveiled a new plan to go after individuals in banking fraud cases instead of just settling with banks for large sums of money and a promise to behave, Perry Stimpson was telling a London court how foreign currency rigging was endemic at Citigroup and the culture of cheating was passed down by his bosses, one of whom pressured him to participate in a chat room and share information with other banks. Stimpson was also doing something in the courtroom that the U.S. Justice Department has failed to do – he was naming names inside the bank.

Stimpson is a former foreign currency trader at Citigroup who was fired during the global investigations into a cartel of banks rigging foreign currency trading to boost their profits. He is suing Citigroup in an employment claim for unfair dismissal. At least three other Citigroup currency traders are expected to bring similar claims in court. Citigroup has paid a total of $2.29 billion to resolve the allegations with U.S. and U.K. regulators.

According to the felony charge brought by the U.S. Justice Department – which Citigroup admitted to — Citigroup’s illegal behavior in the foreign currency rigging matter spanned a period from December 2007 through January 2013 – that would include the period after 2008 when Citigroup was alive only because of the largest bank bailout by the taxpayer in U.S. history. Cumulatively, Citigroup received $45 billion in TARP funds, over $300 billion in asset guarantees, and more than $2.5 trillion in below-market rate loans from the Federal Reserve. According to the Government Accountability Office (GAO-11-696), in just one bailout program alone, the Primary Dealer Credit Facility (PDCF), Citigroup cumulatively borrowed over $1.75 trillion from March 16, 2008 to February 1, 2010. The U.S. Treasury sold its last bailout era holdings in Citigroup in December 2010. To put it simply, Citigroup was using public funds while it committed its foreign currency felony – to which it admitted guilt in May of this year.

Read Complete Article

Wells Fargo laying off mortgage staff in Charlotte, Fort Mill

Lender is laying off 36 employees in its Charlotte-area mortgage operations

The cuts are part of 182 Wells announced nationwide, including 40 in Raleigh

Banks nationwide continue to pare their mortgage work forces

Wells Fargo on Wednesday announced it is laying off 36 mortgage employees in Fort Mill and Charlotte, as lenders nationwide continue to pare their mortgage workforces.

The cuts are part of 182 the company announced nationwide, Wells Fargo spokesman Josh Dunn said. Of those, 40 were in Raleigh, the only other market in the Carolinas affected, he said.

The San Francisco-based lender attributed the cuts to a decline in delinquent home loans, falling foreclosure rates and lower demand from homeowners to refinance mortgages.

Other banks, including Charlotte-based Bank of America, have announced layoffs of mortgage staff in recent years because of similar trends.

Dunn said in a statement that the layoffs were made after “carefully evaluating market conditions and consumer needs.” Affected employees were given 60 days’ notice, he said.

“The decision to reduce our work force is made with great concern for the team members who are affected,” Dunn said.

Contractors face pay cuts, furloughs as Bank of America slashes costs

Several workers say they were informed last week

Bank says move tied to ongoing simplification of company

In an effort to boost profitability, Charlotte-based Bank of America is cutting back on spending for information technology contractors.

Several workers, who did not want their names disclosed, told the Observer that they were informed last week that their pay rate would be cut by 10 percent and that they would have to take a two-week, unpaid furlough.

“We made business adjustments with some of our strategic partners,” Bank of America spokesman Mark Pipitone said. “This ties directly to our ongoing focus on simplifying the company and delivering for our customers and shareholders.”

Pipitone said it was up to each firm’s discretion to “manage certain aspects of the adjustments.”

It’s unclear how many workers are affected and by how much the bank is reducing its contracting spending to meet year-end goals.

It’s official: Fed punts on interest rate hike

lol! The bank analysts’ prediction in the media that the Feds will raise the interest rate failed!

The Federal Reserve said today it is not raising federal funds interest rate this month.

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4% target range for the federal funds rate remains appropriate,” reads a statement from the Federal Open Market Committee. “In determining how long to maintain this target range, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2% inflation.”

The Fed has not raised interest rates since June 2006. For context, that was before the advent of true smart phones and before the existence of Twitter.

Read on.

New DOJ Policy to Prosecute … Real or Smokescreen?

Perhaps, finally the hue and cry to prosecute those responsible for the 2008 financial crisis is having an impact. It looks as if the Department of Justice is changing its tune. This last Wednesday, the DOJ announced a new policy to go after the individuals who have committed financial crimes.
Deputy Attorney General Sally Yates outlined the new approach in a speech at NYU law school. The DOJ will now pursue criminals “regardless of whether they commit their crimes on the street corner or in the boardroom,” she said. “A crime’s a crime.”
Maybe I’m just being cynical, but I’ll believe it when I see it. My peers have much the same view. Just the day before the announcement was made, Michael Winston, author of World-Class Performance: The Commitment; The Pursuit; The Achievement, commented in the Huffington Post and recounted the DOJ’s frequent changes in position. He said that they throw up “a smokescreen activated every six months or so to create the illusion of law enforcement.” He nailed it and basically predicted what the DOJ would do the very next day!
Regards,
Richard