tagged w/ UBS
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Police called to gas-related disturbance-Outsourcing injustice in apparel-American Guns,’ drops Nugent-Delhi bus gang rape-Michigan appoints financial review team for Detroit-Court upholds Strauss-Kahn baby pimping inquiry in France-UBS TO PAY $1.5 BILLION OVER RATE-RIGGING SCANDAL-OBAMA SOCIAL SECURITY OFFER AT ODDS WITH TOP DEMSPolice called to gas-related disturbance-Outsourcing injustice in apparel-American... more
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A trillion here, a trillion there and pretty soon you're talking about big money like the half a quadrillion dollars Barclays Bank manipulated by illegally fixing interest rates. That makes Jamie Dimon's JPMorgan losses look like lost change from a lemonade stand.A trillion here, a trillion there and pretty soon you're talking about big money... more
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The news that a "rogue trader" (I hate that term – more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading. Here’s how the WSJ put it:
The Swiss banking giant has been struggling to rebuild trust after running up vast losses in the original financial crisis. Under Chief Executive Oswald Grubel, the bank claimed to have put in place new risk management practices, pulled back from proprietary trading and focused on a low-risk client-driven model.
All the troubled banks, remember, made similar promises in the wake of the financial crisis. In fact, some of them used the exact same language. Some will recall Goldman’s executive summary from earlier this year in which the bank pledged to respond to a "challenging period" in its history by making changes.
"We reviewed the governance, standards and practices of certain of our firmwide operating committees," the bank wrote, "to ensure their focus on client service, business standards and practices and reputational risk management."
But the reality is, the brains of investment bankers by nature are not wired for "client-based" thinking. This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts.
Investment bankers do not see it as their jobs to tend to the dreary business of making sure Ma and Pa Main Street get their $8.03 in savings account interest every month. Nothing about traditional commercial banking – historically, the dullest of businesses, taking customer deposits and making conservative investments with them in search of a percentage point of profit here and there – turns them on.
In fact, investment bankers by nature have huge appetites for risk, and most of them take pride in being able to sleep at night even when their bets are going the wrong way. If you’re not a person who can doze through a two-hour foot massage while your client (which might be your own bank) is losing ten thousand dollars a minute on some exotic trade you’ve cooked up, then you won’t make it on today’s Wall Street.
Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on.
These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money.
They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling.
The only thing that differentiates a "rogue" trader like Barings villain Nick Leeson from a Lloyd Blankfein, Dick Fuld, John Thain, or someone like AIG’s Joe Cassano, is that those other guys are more senior and their lunatic, catastrophic decisions were authorized (and yes, I know that Cassano wasn’t an investment banker, technically – but he was in financial services).
In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.
In other words, "rogue traders" are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by dergulatory legislation giving them access to our bank accounts.......
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http://www.rollingstone.com/politics/blogs/taibblog/the-2-billion-ubs-incident-rogue-trader-my-ass-20110915The news that a "rogue trader" (I hate that term – more on that in a... more
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Wait, it gets worse: Swiss Bank UBS said on Sunday that "rogue trader" Kweku Adoboli actually lost $2.3 billion in unauthorized trades, a bit more than the maximum of $2 billion that was originally estimated. "The loss resulted from unauthorized speculative trading in various S&P 500, DAX and EuroStoxx index futures over the last three months," UBS said in a statement. The bank also clarified that no clients' assets were affected, and that the equities business is back to running as normal. Meanwhile, Adoboli's disastrous trades have spurred new action in the push to separate retail banks from their investment divisions.
http://www.thedailybeast.com/cheats/2011/09/18/ubs-rogue-trader-lost-2-3-billion.htmlWait, it gets worse: Swiss Bank UBS said on Sunday that "rogue trader" Kweku... more
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Writing for the Huffington Post, reporters Jason Cherkis and Zach Carter published a jaw-dropping story yesterday about a scheme by Gov. Rick Perry (R-TX) to “set up a business of teacher death speculation.” Perry and his officials entered negotiations in 2003 with the Switzerland-based multinational bank UBS to allow the firm to buy life insurance policies on public teachers, then package the policies into securities that could be sold to speculators across the world. As teachers died, the securities would become profitable, and the money from the plans would be split between UBS and the Texas government.
An intriguing twist to the story is former Sen. Phil Gramm (R-TX), who joined UBS as a top executive after he left the Senate and has served as a political mentor to Perry since the late ’80s. Gramm, an architect of Wall Street deregulation while in Congress, aggressively lobbied the “gruesome” deal:
Gramm and UBS had concocted a gruesome combination of what are now regarded as two of the most infamous Wall Street scams on record. The resulting package closely resembled the growing market for mortgage-backed securities, but instead of allowing Wall Street to bet on peoples’ homes, it would enable bets on peoples’ lives. [...]
http://tinyurl.com/3d6e6beWriting for the Huffington Post, reporters Jason Cherkis and Zach Carter published a... more
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Según los analistas de Research for Traders, las bolsas mundiales avanzan moderadamente apoyadas en los buenos resultados corporativos del primer trimestre.Según los analistas de Research for Traders, las bolsas mundiales avanzan... more
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Latest News Updates Danaher closed at $47.98, approximately 1.1% above its previous closing price. U.S. stocks were set to open slightly higher on Monday, boosted by merger news and rising metals prices as investors bet on a stronger global economy.Latest News Updates Danaher closed at $47.98, approximately 1.1% above its previous... more
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Swiss bank accounts offered people, including U.S. tax cheats, a safe place to hide money. But the largest Swiss bank has released formerly sacrosanct data on its U.S. customers because of tips provided by whistleblower Bradley Birkenfeld, who tells Steve Kroft some of the secrets Swiss bankers never tell.Swiss bank accounts offered people, including U.S. tax cheats, a safe place to hide... more
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By Zach Carter, Media Consortium blogger
Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled his latest financial reform proposal on Monday, and the stakes for the new legislation couldn’t be higher. After consumer groups raised a major ruckus, Dodd has dropped one of his most egregious concessions to the bank lobby—cutting enforcement authority from the proposed Consumer Financial Protection Agency (CFPA). That’s good news: Without a major regulatory overhaul, the U.S. economy’s destructive boom and bust cycle will start all over again.
We’ve been down this road before. The Enron fiasco should have served as a wake-up call for policymakers, but instead, the weak federal response to Enron’s major fraud helped pave the way for the current economic slump.
What does Enron have to do with the crisis?
As Megan Carpentier emphasizes for The Washington Independent, one of the key “reforms” Congress enacted in the Enron aftermath was a law requiring every CEO to sign-off on their company’s accounting statements—but it has accomplished almost nothing.
Enron collapsed due to accounting fraud. Its executives weren’t stupid or careless—they made their money by engaging in deliberate and coordinated acts of illegal deception. But CEOs of companies like Enron had always been able to deny that they knew about the shenanigans that were playing out in their accounting departments. By forcing CEOs to sign off on their accounting statements, Congress was attempting to “deny them plausible deniability,” as Carpentier puts it.
But accounting fraud has plagued the U.S. economy, even after the Enron scandal. It also plays a major role in the Wall Street crisis. A recent court report from Lehman Brothers’ bankruptcy examiner reveals that the company arranged a series of complicated transactions to hide $50 billion in debt, making Lehman appear healthier than it was. By hiding this debt, Lehman was able to make bigger bets on the mortgage market. The defense issued by Lehman CEO Richard Fuld? He apparently didn’t know the accounting hijinks were happening
An epidemic of fraud
Most U.S. policymakers are still having a hard time coming to grips with the fact that our financial system is rife with fraud at almost every level. Writing for AlterNet, Joe Costello reports on a recent Roosevelt Institute conference featuring several major economic luminaries. Costello argues that some of Wall Street’s biggest problems were driven by run-of-the-mill fraud. And a key vehicle for this fraud, Costello notes, was the derivatives market—the same market that allowed Enron to perpetrate its own frauds. Many of the scams aren’t even particularly new or creative. They’re simply the same cons that helped usher in the Great Depression.
“If we’re going to get our economy up and running again, the first thing we’re going to have to do is end the fraud,” Costello writes.
Protecting Whistleblowers
But astonishingly, even after the worst financial crisis in history, bigwig bankers have been able to avoid fraud charges and investigations. Even when the Justice Department went after Swiss banking Giant UBS for a massive tax evasion scheme, they let the company’s U.S. executives off the hook and instead jailed the very whistleblower who told the government about the fraud.
The whistleblower, Bradley Birkenfeld, is by no means innocent of wrongdoing—he even smuggled diamonds in a toothpaste container for a wealthy UBS client. But as Corbin Hiarr notes for Mother Jones, jailing the man who blows the whistle sends exactly the wrong message to anybody in Big Finance who recognizes a problem. Not only will your employer come at you with everything it has, but the government you aid will actually send you to prison. The fraudsters you finger get to retire to the Caymans.
This is part of the reason that successful financial reform is not just what the rules are, but who gets to enforce them. There were many reasonable rules against predatory lending that bank regulators at the Federal Reserve and the Office of the Comptroller of the Currency (OCC) could have used to thwart the financial crisis early on, but neither agency was interested in doing so. They were more concerned with short-term banking profits, and up until 2007, sketchy accounting was allowing banks to book big gains on the subprime market.
Why we need a CFPA
That’s why all the way back in June of 2009, President Barack Obama proposed establishing a CFPA focused exclusively on defending consumers against banks. With no concerns for bank profitability, CFPA regulators could go after unfair practices and fraud because they were wrong, regardless of what they did for bank balance sheets.
The proposal was watered down significantly in the House, as Kai Wright notes for The Nation, and just a week ago it appeared that Dodd was ready to completely torpedo the new regulator in an effort to craft bipartisan support for a so-called “reform” bill.
He’s backed off since then, but without strong enforcement authority, nothing is gained—the same corrupt regulators will simply continue to look the other way. But Dodd would still house the new agency at the Federal Reserve. Dodd insists the Fed would have no authority over the CPFA, but if that were the case, why would he introduce the provision at all?
“Reform in name alone will be useless to both consumers and politicians,” writes Wright.
Strong financial reform is overwhelmingly popular. While it’s good to see Dodd backing away from some of the gifts he’d previously proposed to bank lobbyists, progressives must keep the pressure high to ensure that financial reform is strengthened as it moves through the Senate.
It’s easy for a corrupt lawmaker to vote against a weak bill: He can always plead that the bill wasn’t good enough and be right. But serious, popular reform is not so easy to oppose. If Dodd and the Democratic leadership make the politicians backed by the bank lobby—that’s literally every Republican, plus a handful of conservative Democrats—stand up and vote against a good bill, many of them will have to choose between their lobbyist friends and their political future.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.By Zach Carter, Media Consortium blogger
Senate Banking Committee Chairman Chris... more
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Feb. 10 (Bloomberg) -- UBS AG's loss in 2009 will trigger the bank’s bonus claw back mechanism for the first time, depriving senior bankers of 300 million Swiss francs ($282 million) of deferred pay they were due to receive this year.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXPA95YPD4.0&pos=5Feb. 10 (Bloomberg) -- UBS AG's loss in 2009 will trigger the bank’s bonus... more
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More than 14,700 U.S. taxpayers came forward to disclose billions in offshore bank accounts in 70 countries under a voluntary Internal Revenue Service program allowing most to avoid criminal prosecution as long as they pay what they owe, IRS officials said Tuesday.
A flood of people came forward in the last days before the amnesty program expired Oct. 15, IRS Commissioner Doug Shulman said. The final total far surpasses the number who disclose offshore accounts in a typical year -- about 100 -- and comes amid a broad U.S. crackdown on international tax evasion at Swiss bank UBS AG and other institutions.
"To put it simply, this is a historic milestone for the nation's hardworking taxpayers," Shulman said in a conference call from Washington.
The total in taxes, interest and penalties collected from those in the voluntary disclosure program will be in the "billions of dollars," Shulman said. The disclosures involved accounts on every continent but Antarctica.
Taxpayers flocked to the amnesty program after the U.S. reached an agreement in August with the Swiss government and UBS to obtain names of 4,450 U.S. taxpayers believed to be hiding assets in secret bank accounts. Earlier this year, UBS paid a $780 million penalty under a deferred prosecution agreement filed in a Florida federal court that included disclosure of an additional 150 names.
Seven of those people have been charged criminally, with at least two getting sentenced to prison time.
Shulman said the combination of the UBS disclosures and the amnesty program have fundamentally changed the offshore tax landscape, particularly in Switzerland where bank secrecy was the tradition for centuries.
"It shows we are serious about piercing the veil of bank secrecy," he said. "The whole game has changed."
Also Tuesday, the IRS and Swiss unveiled the criteria being used to determine which American UBS accounts will be disclosed under the August agreement.
Accounts being targeted include those that contained 1 million or more Swiss francs at any time between 2001 and 2008; instances in which there was clear fraudulent actions, such as false documents; and accounts that earned an average of 100,000 francs a year for at least three years.
The equivalent amounts in U.S. dollars vary widely depending on the year, as the dollar lost over a third of its value against the Swiss franc during that period. One million francs was worth about $600,000 in 2001, compared with about $900,000 seven years later.
U.S. Sen. Carl Levin, who chairs Senate Permanent Subcommittee on Investigations, called the criteria "disappointing" because it means some of Switzerland's bank secrecy will remain intact.
"It complicates and muddies what should have been a straightforward agreement by UBS and the Swiss government to disclose Swiss accounts hidden from the United States by U.S. account holders," said Levin, D-Mich.
The Swiss have until the end of August to hand over the names. Swiss officials said the first 400 names will be chosen by the end of this week, with another 100 expected to be ready by the end of the month. Those taxpayers who are picked for disclosure can appeal to Switzerland's top administrative court.
http://www.huffingtonpost.com/2009/11/17/offshore-bank-accounts-re_n_361136.htmlMore than 14,700 U.S. taxpayers came forward to disclose billions in offshore bank... more
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Deputy Attorney General David W. Ogden released the following statement regarding the announcement today by the Department of Justice and the Internal Revenue (IRS) regarding the results arising from previous settlements of civil and criminal cases against Swiss banking giant UBS AG.
The Justice Department and IRS announced that over 14,700 taxpayers have come forward to report previously-undisclosed foreign bank accounts under the voluntary disclosure program the IRS implemented following the settlement. This figure represents almost double the initial numbers the IRS announced in October and dwarfs the number of voluntary disclosures received in 2008.
“The Department of Justice is pleased with the extraordinary results achieved from this landmark settlement,” said Deputy Attorney General Ogden. “The message to American taxpayers is clear: the era of bank secrecy and hidden assets is over. We will continue to work closely with the IRS and our international partners to ensure that our tax laws are enforced fully and fairly, and that the rule of law is vindicated. We congratulate the IRS and the Department’s Tax Division, as well as our partners in the Swiss government, for this achievement.”
These voluntary disclosures, while extremely significant, are but one more step in the IRS and the Department’s efforts to hold those U.S. taxpayers who have undisclosed foreign accounts responsible for their actions. These efforts began in February 2009, with UBS AG’s agreement to enter into a groundbreaking deferred prosecution agreement, admitting guilt on charges of conspiring to defraud the United States by impeding the IRS. As part of the agreement, UBS immediately provided the United States with the identities of, and account information for, a number of U.S. UBS customers and paid $780 million in fines, penalties, interest, and restitution. The Department’s Tax Division worked hand-in-hand with the U.S. Attorney’s office in the Southern District of Florida to obtain these unprecedented results.
To date, the Justice Department has successfully prosecuted six U.S. customers of UBS whose information was provided pursuant to the Deferred Prosecution Agreement, and is conducting investigations of dozens of other UBS customers.
In addition to the deferred prosecution agreement, in August of this year, the IRS, the Justice Department, UBS and the Swiss Government, entered into a similarly landmark agreement, in the John Doe summons action, whereby the IRS was to receive thousands of additional undisclosed UBS accounts.
These criminal and civil efforts have, for the first time, breached Swiss bank secrecy and prevented taxpayers from hiding from the IRS regardless of the cross border nature of their accounts. Within the United States, there has been an unprecedented increase in the number of taxpayers who have come forward to voluntarily disclose the existence of their foreign bank accounts and agree to pay tens of millions of dollars to the treasury.
The Department of Justice and IRS also made public the criteria set out in the settlement reached in the civil John Doe summons suit against UBS, which governed the selection of account holders to be identified as part of the settlement. The criteria cover accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership. These criteria allow the IRS and the Justice Department to target the most egregious foreign account holders.
http://pubrecord.org/law/6080/nearly-15000-citizens-enter-settlement/Deputy Attorney General David W. Ogden released the following statement regarding the... more
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He seemed, in many ways, like a man from another time, a Gatsbyesque figure who glided through a world of old money, private clubs and pedigree horses, his family name emblazoned on Ivy League halls.
Then, in an instant, he was gone — his privileged life ended, by his own hand, with a single gunshot to the head.
No one can know exactly what Finn M. W. Caspersen, a prominent philanthropist and the heir to the Beneficial Corporation fortune, was thinking when he decided to take his life on Labor Day. Although Mr. Caspersen, 67, was battling kidney cancer, his suicide shocked his family and friends, The New York Times’s Lynnley Browning writes.
But Mr. Caspersen, a patron of Harvard and Princeton who gave away tens of millions of dollars to charity, apparently harbored a secret: He was suspected of dodging many millions in federal taxes. The authorities, it seemed, were closing in.
At the time of his death, investigators were building a case against Mr. Caspersen on suspicion of using secret offshore bank accounts to evade taxes.
The authorities had asserted he might have owed as much as $100 million in back taxes and fines or, possibly, even have faced prison, The Times said, citing a a person briefed on the investigation who was granted anonymity because of the delicacy of the case and the events surrounding Mr. Caspersen’s death.He seemed, in many ways, like a man from another time, a Gatsbyesque figure who glided... more
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It's not just the U.S. government that wants to get its hands on the list of Americans who hold secretive Swiss bank accounts. Ex-wives, creditors and former business partners are also salivating over the idea that a settlement between the U.S., the Swiss government and a Swiss bank may lead to the public disclosure of as many as 4,450 U.S. individuals that used the foreign bank accounts to hide money. Prominent New York City divorce lawyer Raoul Lionel Felder says he is already getting calls from clients who want to know what they can do to get their portion of the money they always suspected their ex–loved one had tucked away overseas.
"You see allegations of Swiss bank accounts in divorce proceedings all the time," says Felder, whose clients have included Rudy Giuliani, Robin Givens and the former Mrs. Martin Scorsese. "A lot of divorces are going to get opened up."It's not just the U.S. government that wants to get its hands on the list of... more
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The United States has reached an outline settlement with Switzerland's most powerful bank, UBS, on their long running $20bn (£12bn) tax evasion dispute that has severely damaged relations between the two countries.
It is thought that UBS will be ordered to hand over to US investigators about 5,000 American accounts suspected of tax evasion. Originally the US demanded 52,000 accounts from UBS in a move that forced the Swiss government to intervene.
If Switzerland does hand over accounts, it will in effect end any pretence of Swiss bank secrecy and may prompt an increase in cash withdrawals as the super-rich rush to protect their identities.
The case dates back two years when US tax investigators arrested Florida real estate tycoon Igor Olenicoff for tax evasion. Olenicoff accepted an offer of a reduced sentence in return for information about who organised the tax fraud.
His evidence established that UBS personnel devised sham companies to hide wealth and even smuggled diamonds in toothpaste tubes through customs.
In February, UBS paid $780m to settle criminal charges that it helped wealthy Americans evade taxes on nearly $20bn in offshore accounts. One day later, it filed the civil suit seeking to force UBS to disclose 52,000 client names.
There is no guarantee that an outline agreement will lead to a settlement, however. On Friday US secretary of state Hillary Clinton will meet Swiss foreign minister, Micheline Calmy-Rey.
Andreas Missbach of the Berne Declaration, a Swiss economic justice campaigner, said the increasing involvement of the Swiss foreign ministry in the dispute was a sign that the country's more confrontational ministry of finance had failed to head off the row.
Switzerland has also attracted co-ordinated international action for its role as a tax haven and has pointedly not been invited to participate in G20 meetings to restore the world's economy. UBS, is not commenting on the case.The United States has reached an outline settlement with Switzerland's most... more
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UBS is going to hand over names of greedy tax cheaters because they encouraged the cheaters to cheat!!
Don't you know there are some greedy cheaters that are waiting for the Feds to come a knockin'!?
Isn't Phil Graham on their Board??
[See above link for story]UBS is going to hand over names of greedy tax cheaters because they encouraged the... more
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