BEWARE! THE BANKS ARE OUT TO GET YOU!

[Stanley]

Very good major investigation into money laundering in this week's PE. Well worth reading. (LINK)

[Tardis]

Interesting that the investigations says that LIBOR could be dropped

Wonder what the BoE will do then?

[Stanley]

LIBOR moves on. More banks subpoenaed by US state authorities. Observers say that this is more complicated than it seems. The regulators are giving the banks a chance to fess up and negotiate a compensation figure. If they do this (in effect admitting liability) they escape full trial and disclosure of all documentation including emails. The smart money says they will go down this route. However, this isn't the end of it. The regulators are trying to put a figure on how much the rate manipulation cost investors and this could lead to further demands for compensation. Serious stuff because it could amount to billions of dollars. This isn't over yet!

[Tizer]

An interesting brief interview on the radio this morning with the man who was finance minister in Iceland when their banks got into trouble. He said they didn't bail them out but froze the funds, set up new banks instead and then transferred the funds to them. Everyone could still access their savings, business as usual. He was asked if they were worried the bankers would leave Iceland. He said most of them wanted to stay and help rebuild Iceland's economy but the few who didn't "were the ones we could do without". Pity we couldn't have followed the same route (he was surprised Britain hadn't done the same)

[Stanley]

I heard him and thought how sensible his arguments were, especially the one about fleeing bankers! If you want to get really depressed about banks read PE this week.... You couldn't make it up and evidently there is more trouble coming from the US regulators....
There was a discussion on R4 this morning about possible regulation of the flood of 'claims lawyers' offering 'free' services. The regulator said that they were already seeing some of these lawyers offering no win no fee claim management against other claims lawyers who had not performed ethically or economically. Where does this iniquitous circle end? You couldn't make it up....

[Tizer]

Where does this iniquitous circle end? You couldn't make it up....

Perhaps they'll all disappear up their own law suits!

[Stanley]

One of the worst effects of the claims industry is that when a small employer gets a claim form an employee flying a kite in the hope of a pay-out the employers insurance premium immediately rises as soon as the claim goes in to the insurance company whether it has merit or not. I am told that in this climate it is virtually impossible to change to another policy. This policy causes the insurance companies no pain and while they rail against the effect on premiums there is no incentive to actually do anything about it.
Pressure builds on Barclays as they are investigated because the suspicion is that when they got the Arabian money to escape a government bail-out during 2007/2008 they paid 'commissions' to the middle men which look suspiciously li9ke bribes. Remember that the LIBOR affair is still hanging over the banks. They are going to be hit by large fines but as yet don't know the scale.
Note how the Bankers Association is keeping its head below the parapet at the moment but still fighting the rearguard action against structural changes.

[Stanley]

The new man at Barclays will be earning his money. See this LINK for the news that they were making money on food futures, ie. raising the price of food to some of the poorest people on the planet. Dirty money!

[Stanley]

Reports this morning of the huge volume of com plaints being received b y the banking ombudsman about the banks and PPI. Add this to the other ongoing problems and you really have to start questioning how long it will be before something concrete is done about making them fit for purpose. What is holding up this process? The British Banking Association have gone quiet but I think we can assume that behind the scenes they are lobbying furiously to modify any changes in the way they operate.

[Tizer]

It's even worse than it appears at first sight. Not only are the banks being slow at compensating people who were mis-sold PPI but they've continued mis-selling these policies even after the problem came to light. And one of the people responsible for this is the bloke who replaced Diamond Bob at Barclays.

Another serious problem in the banks is that they've been unwilling to admit the amount of fraud by their own staff and they've hidden behind a special relationship with the police. If your account has been drained of your life savings and you're sure you haven't divulged your PIN number etc to anyone else you know that it's fraud at the bank, either by the bank staff themselves or due to a failure of bank security allowing access by outsiders. But when you contact the bank they deny it and if you contact the police they refuse to investigate unless the bank asks them to do so. A nice little dodge, eh!

[Stanley]

Frightening Tiz. I gradually reduce the amount of money I trust to the main street banks. Things like the Wonga scam frighten me as well. Isn't it a shame, at one time you could trust the bank implicitly, can we say the same thing now?

[Tizer]

More trouble with the banks. Although they agreed to pay compensation quickly to all those people who were mis-sold PPI (payment protection insurance) they are making up all sorts of excuses not to do so. The Financial Ombudsman is receiving thousands of complaints from people who have been refused their compensation by the banks and has had to double the number of its staff to cope with the flood. The banks are even telling some people they don't have PPI even though the bank sold it to them.

Telling lies is becoming the norm in many organisations. Remember the `year' of discounted payment that Npower promised its customers but turned out to be only 10 months? Recently we've had the `free forever' bank account from Santander whose customers suddenly found themselves having to pay for - a line tucked away in pages of small print in the Terms & Conditions said that Santander could change any aspect of the account as and when they wished. There was also a `free brake checks forever' offer from a garage chain that will probably turn out to be a lie too.

[Stanley]

Read this week's PE for details of the safe havens, many in government, that have been found by men who had such bad track records in the banking sector. It is a national disgrace. Iceland was heavily criticised when they defaulted but at least they are hunting the miscreants down and prosecuting them. There's an interesting piece about the fact they couldn't find anyone for the job of supervising the search and dragooned an obscure public official who has surprised everyone by rising to the challenge and now has his own department with 100 employees chasing the bad bankers. Thank God for PE!

[Stanley]

I note another retreat from transparency on my bank statement. HSBC has changed their rules of engagement. The bank statement no longer has the address of the bank on it. Instead we have an international bank account number and a 'branch identifier code. In contact details on the back of the statement all we have is the telephone banking service (for which you have to register) and the internet site address. Deep Joy!

[Tizer]

Andrew Wighton writing in the leader in the business section of The Times on 22 September 2012...
He writes that released FSA records show:
"a conversation between the FSA and Mr Agius (Barclay's chairman) in 2010 in which the Barclay's chairman said that Mr [Bob] Diamond would `mature and relax' now that he had achieved his ambition of becoming chief executive. One can only think that his comment was misreported by the FSA. It is hard to believe that the Barclay's chairman really thought it was OK to have an overexcited and immature banker running one of the world's leading financial institutions."

[Stanley]

What strikes me at the moment is the lack of any political will to implement the Vicars Report. The British Bankers Association are keeping a low profile but must be doing a wonderful lobbying job. It's a scandal.

[Tardis]

The Vickers report will need to become a white paper before anything is imposed on the banks. I'm sure that there is some negoitiation happening as despite RBS being 'cool' about returning to the black they are still fundamentally bust

[Tizer]

BBC online new today...
`JPMorgan sued for fraud over mortgage-backed securities'
"The New York Attorney General has sued JPMorgan Chase for allegedly defrauding investors who lost more than $20bn (£12bn) on mortgage-backed securities sold by Bear Stearns. JPMorgan bought the investment bank Bear Stearns in March 2008."
"It relates to securities sold by Bear Stearns in 2006 and 2007 - before it was taken over by JPMorgan. The legal action claims the bank `systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans'. It says that this led to the inclusion of mortgages on which borrowers were likely to default, and that investor losses in 2006 and 2007 totalled more than a quarter of the original £87bn value of the securities."
More here: http://www.bbc.co.uk/news/business-19795646

[Stanley]

Mind-boggling isn't it..... The only good thing is that the process in the US appears to be capable of bringing the miscreants to the bar of justice. I can't help thinking that gaoling a few bankers would have more effect on ethics that wrist-slapping. If I dipped into your wallet I would be culpable. Where is the difference?

[Stanley]

Adaire Turner, the outgoing head of the FSA is in line for Mervyn King's job at the BofE. In a speech yesterday at the Mansion House he laid out his thoughts on the way out of the crisis. (LINK) He says that if we don't do something radical we are doomed to an extended low energy economy. He advocates using new thinking and one route is to liquidate debt bought up by the BofE using QE. Bold stuff and I agree with him but the effect would be to devalue the pound and this would hit the wealthiest hardest. One can imagine things like a mass migration of capital so it is not an easy option. However, I think he's making the right noises. Christine Lagarde of the IMF warns again about the dangers of austerity depressing economies and there is a lot of sense in what she says. One thing is certain, the present measures aren't working and perhaps some unorthodox thinking is necessary. The economists will throw their hands up in horror but anything that gets us away from the present policies of in effect sterilising capital by throwing it into the black holes of the banks would be welcomed by me.
Consider what the effect would be if the money being used in QE was channelled into local authorities. It would be injected directly into the economy, alleviate problems caused by the cuts and generate a multiplier effect. This is anathema to the Right Wing but good economics. Forget allegations of waste, in terms of injection of capital this doesn't matter, the money will be in the economy at a level where it would do most good. There is no point locking it away in banks when what the UK needs is cash for investment. If it can't be got to industry via the banks why not try a different, much cleaner, route?

[Tizer]

The Germans have a great system of small, local banks that are very effective at supporting business, especially the small engineering companies that are so common there and do so much for the economy and employment. Why can't we have the same system? Vested interests, that's why not. We have a cadre of bankers brought up in the boom years, expecting massive salaries and bonuses and not willing to let anyone `deprive' them of it all.

[Stanley]

Exactly so Tiz. Reinforced by the fact that by pumping money into party contributions and seconding 'advisers' to government they have too influential an input into government. The administration is in the same position it was with being too close to the media pre-Leveson. They are hooked. Problem is that it is all legal and the only way forward out of this is a wholesale reorganisation of party funding. Bit like the expenses scandal, it will take some sort of singularity to trigger the Big Bang off. Roll on the day!
I see that Santander have thrown their hand in and RBS is left back at square one. Hester says that customers won't suffer. Does he mean more than they are at the moment or not suffer at all?

[Tizer]

Lobbying government! I hate it. Perhaps it's the world's second oldest profession after prostitution and politics. I've nothing against people or organisations putting their case to government but it should all be done in the open, transparent and available to anyone who wants to know.

[Stanley]

Did anyone see the wonderful story about the man who was cold-called by a law firm offering to reclaim compensation for PPI which he hadn't got? He was on call preferences as well so shouldn't have been contacted. He told the caller he hadn't got a claim and warned them that if they persisted he would charge them £10 per minute for his time. They called him again and he warned them again. He sent in a bill for £195 and the company paid up after he threatened to take them to court. What a good man! Always worth a try, I once charged Barclays bank for my time during an argument about a bank account, they were in the wrong. They paid up.

[Tizer]

He was on the Paul Lewis Money Box programme. He must have been very surprised when the company paid up!