Matt Taibbi points out the big banks newest crime

Interest rate swaps are were the action is these days, according to Matt Taibbi. And manipulating the Libor should be a crime.

"The plaintiffs, I believe, are confusing a claim of being perhaps deceived," he said, "with a claim for harm to competition." Judge Buchwald swallowed this lunatic argument whole and dismissed most of the case. Libor, she said, was a "cooperative endeavor" that was "never intended to be competitive." Her decision "does not reflect the reality of this business, where all of these banks were acting as competitors throughout the process," said the antitrust lawyer Sokol. Buchwald made this ruling despite the fact that both the U.S. and British governments had already settled with three banks for billions of dollars for improper manipulation, manipulation that these companies admitted to in their settlements. Michael Hausfeld of Hausfeld LLP, one of the lead lawyers for the plaintiffs in this Libor suit, declined to comment specifically on the dismissal. But he did talk about the significance of the Libor case and other manipulation cases now in the pipeline. "It's now evident that there is a ubiquitous culture among the banks to collude and cheat their customers as many times as they can in as many forms as they can conceive," he said. "And that's not just surmising. This is just based upon what they've been caught at." Greenberger says the lack of serious consequences for the Libor scandal has only made other kinds of manipulation more inevitable. "There's no therapy like sending those who are used to wearing Gucci shoes to jail," he says. "But when the attorney general says, 'I don't want to indict people,' it's the Wild West. There's no law."

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Elizabeth Warren tells the OCC and the Fed that their job is not to hide evidence of lawbreaking

Senator Elizabeth Warren educates Daniel P. Stipano, Deputy Chief Counsel, Office of the Comptroller of the Currency and Richard Ashton, Deputy General Counsel, Board of Governors of the Federal Reserve. They look surprised that they should actually be looking out to help out victims of the banks and not helping the banks to hide evidence of law-breaking by those banks that conducted illegal foreclosures. Thank goodness we have Senator Warren on the job.

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Bail-in of big banks as an ongoing strategy

Was Cyprus a one-off situation? At Alternet, Ellen Brown says no, and she indicates that the repeal of Glass-Steagall, "too big to fail" and the subsequent $230 trillion derivatives boondoggle should make many of us wary.

The Cyprus bail-in was not a one-off emergency measure but was consistent with similar policies already in the works for the US, UK, EU, Canada, New Zealand, and Australia, as detailed in my earlier articles here and here. “Too big to fail” now trumps all. Rather than banks being put into bankruptcy to salvage the deposits of their customers, the customers will be put into bankruptcy to save the banks. The big risk behind all this is the massive $230 trillion derivatives boondoggle managed by US banks . . . The tab for the 2008 bailout was $700 billion in taxpayer funds, and that was just to start. Another $700 billion disaster could easily wipe out all the money in the FDIC insurance fund, which has only about $25 billion in it.
Under the guise of protecting taxpayers, Dodd-Frank makes depositors of failing institutions are to be de-facto subordinated to interbank claims. Brown writes: "The FDIC was set up to ensure the safety of deposits. Now it, it seems, its function will be the confiscation of deposits to save Wall Street." The urgent solution, is to repeal the super-priority status of derivatives, so that the banks themselves lose out to the security of the depositors.

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Business as usual at J.P. Morgan Chase

Nothing has changed for the better at J.P. Morgan Chase, as described by Matt Taibbi. It's clearly time to break up the big Wall Street banks.

If you can fight through the jargon, what this basically means is that Chase decided to go into the fiction business and invent a new way to value its crazy-ass derivative bets, using, among other things, a computerized model the company designed itself called "P&L predict" which subjectively calculated the value of the entire fund toward the end of every business day. If this all sounds familiar, it's because it's the same story we've heard over and over again in the financial-scandal era, from Enron to WorldCom to Lehman Brothers - when the going gets tough, and huge companies start to lose money, they change their own accounting methodologies to hide their screw-ups, passing the buck over and over again until the mess explodes into the public's lap. The difference is that Chase is a much bigger and more dangerous company to be engaging in this kind of behavior. An even scarier section of the report regards the reaction of the Office of the Comptroller of the Currency, or OCC, the primary government regulator of Chase. The report exposes two huge problems here. One, Chase consistently hid crucial information from the OCC, including the sort of massive increases in risk the OCC was created precisely to monitor. Two, even when the bank didn't hide stuff, the OCC was either too slow or too disinterested to take notice of potential problems.

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Considering Cults and the Need for Meaning

Recently, I finished reading Lawrence Wright’s new book, Going Clear: Scientology, Hollwood, & the Prison of Belief, about Scientology. It’s a lucid history and examination of the movement. [More . . . ]

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