In the story you may have missed, Matt Taibbi of Rolling Stone took a 1-2 punch at the US Banking industry. His article, available here, is a complete dressing down of the disaster that was the US financial crisis.. one we are still paying for.
http://finance.yahoo.com/...
In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.
"Lord help our [expletive] scam . . . this has to be the stupidest place I have worked at," writes one Standard & Poor's executive. "As you know, I had difficulties explaining 'HOW' we got to those numbers since there is no science behind it," confesses a high-ranking S&P analyst. "If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value," complains another senior S&P man. "Let's hope we are all wealthy and retired by the time this house of card[s] falters," ruminates one more.
In other words, good friends, you've all been had. While we spent the last few weeks focusing on issues of importance too, Texas legislature and Florida.. issues I care about, somehow, this kind of explosive expose never seemed to rise to the attention that radio hosts, tv talking heads or morning papers bothered to touch. Too bad, because it's quite juicy.
So how in bed were the ratings agencies? So far in bed with the banking industry that the banking industry WROTE THEIR OWN RATINGS.
At one point, a Morgan Stanley analyst even claimed that the bank had written, in Moody's name, an entire 12-page "New Issue Report" for the Cheyne SIV – a kind of ratings summary in which Morgan Stanley appears to have given itself AAA ratings for large chunks of the deal. "I attach the Moody's NIR (that we ended up writing)," yawns Morgan Stanley fixed-income employee Rany Moubarak in a March 2006 e-mail. The attached document came proudly affixed with the "Moody's Investors Service" logo. (Both Moody's and Morgan Stanley deny that anyone other than Moody's wrote that report.)
The S&P report was so brazen that it even shocked a Morgan Stanley banker involved in the SIV deals. "I cannot believe these morons would reaffirm in this market," chortled the banker in an e-mail the day after the paper was released.
Surely, someone paid the price for all this fraud, right?
In one damning e-mail chain in November 2005, a Morgan Stanley banker complains to an S&P executive named Elwyn Wong that S&P was preventing him from putting S&P ratings on Morgan Stanley deals that used this grandfathering technique. "My business is on 'pause' right now," the banker complains.
Wong took the news that S&P was holding up deals over the grandfathering issue badly. "Lord help our fucking scam," he said. "This has to be the stupidest place I have worked at." Wong, incidentally, was later hired by the U.S. Office of the Comptroller Currency, our top federal banking regulator.
Oh, so the people who knew they were running the scam ended up working in the US Office of the Comptroller. Well, if that isn't failing up
boggle
Of course, we could assume that Tallibi is just nit-picking email, and nothing really came through to this and everyone ended up whole, right?
I mean, in their settlement paperwork, S&P denied any wrong doing.
http://online.wsj.com/...
The Florida board was one of 14 plaintiffs, led by Abu Dhabi Commercial Bank, to settle with the world's two largest credit-rating firms and Morgan Stanley in April over the Cheyne investment and a 2009 lawsuit regarding an investment vehicle called Rhinebridge. The Florida settlement only involved Cheyne.
The Wall Street Journal reported in April that Moody's, S&P and Morgan Stanley paid $225 million to settle the two lawsuits, according to a person familiar with the matter. The specific amount paid to individual plaintiffs wasn't known. Another plaintiff in the case, King County, Wash., has declined to provide settlement details following a public records request.
....
The three defendants "deny the allegations asserted" and "deny any wrongdoing and any liability," settlement documents show. The three companies entered into the agreement with the Florida board "solely to eliminate the uncertainties, burdens and expenses of further protracted litigation," according to the documents.
S&P and Moody's have rarely settled cases in the deluge of lawsuits that hit the companies after they downgraded en masse thousands of mortgage-linked deals that had previously been assigned top-notch ratings. Lawmakers and investors have said those downgrades helped to deepen the financial crisis.
After the financial crisis, it appears everyone was asking the wrong question. It wasn't that Moody's or S&P's quick downrating of bundles made things worse; it's that for years they had wildly over-inflated the value in order to sucker people into deals.. in some cases, it wasn't even them, they allowed banks to write the assessments for them. Talk about Fox & The Henhouse.
It's OK. We all know that banks learned their lesson and have not tried to screw with people again.
http://www.charlotteobserver.com/...
A lawsuit in federal court in Colorado accuses Charlotte-based Bank of America of racketeering, in what amounts to more fallout for the bank stemming from a federal mortgage-modification program.
The suit, filed Wednesday, claims violations of the federal Racketeer Influenced and Corrupt Organizations Act, also known as RICO. It cites statements that former Bank of America employees made last month in a separate, ongoing federal lawsuit in Massachusetts. Those former employees, including at least one who worked in Charlotte, claim the bank awarded cash and gift cards to them if they denied mortgage modifications to homeowners through the Home Affordable Modification Program.
Except for lying to people about potential mortgage refies to make sure they foreclosed, and rewarding foreclosures.
Banks are struggling, you know, and so they have to find new ways to make money.
Birmingham, Ala.-based Regions Financial rolled out its mobile banking app this spring with a tiered fee structure, based on when the customer needed access to funds deposited digitally. For immediate availability, which is a risk to the bank because it then doesn't have time to verify the fees, customers must pay $5, or a percentage of the deposit—whichever is higher. For access two days later, once the funds are verified, the fee is 50 cents—the same fee Minneapolis-based US Bank introduced for all mobile deposits in 2010. It was the first bank to initiate such fees.
"This is just the beginning of the creative ways banks will try to compensate in a low-rate, low-growth environment," said Todd Hagerman, senior research analyst at Sterne Agee. "They have to look for alternative ways to improve their fee income stream."
http://www.usatoday.com/...
So, charging you to use your mobile banking app.. expect it soon. (or if you're on US Bank, you already have it)
It's important, because despite the fact that the nation was ripped off by a scam to the tune of billions, and despite unfair practices, banks are still hurting and they still need our support.
http://www.forbes.com/...
Bank Of America Shares Hit 52-Week High, Analysts Expect Big Jump In Earnings
Analysts are expecting BofA to report net income of $2.9 billion, or $0.25 per share, on revenue of $22.8 billion.That’s up 32% from last year when net income was $2.1 billion, or $0.19 a share, on revenue of $21.96 billion.
At least one analyst sees BofA exceeding those estimates. Barclays BCS -0.43% analyst Jason Goldberg expects BofA to report $0.27 per share reflecting higher trading revenue.
JPMorgan Chase JPM +0.22% and Citi, which both beat analyst estimates in their second quarter, reported significant increases in trading revenue.
Bank of America, whose shares are up 22% in 2013 and a whopping 78% in the last 12 months, has managed to regain investor confidence over the last year after struggling to convince them it had enough capital.
I mean, what company can survive on $2.9B in profit and only a little bit of fraud and RICO predicates here and there? Really? I mean, come on, it's chump change to where they used to be.
There will continue to be a lot of fury over the actions everywhere in the country in regard to straightforward crime.
But one of the greatest bank heists of the US treasury went down over a period of years.. and no one is going to jail, and everyone is going home rich. You can be bold. You can admit you conducted a fraud in the hundreds of millions. Don't worry about it. You can write a book, continue to make money, and even get a potential blockbuster film where you've got production credits...
Because we tax payers, we love those bankers.. and do we really want CNN to broadcast 24/7 those trials.. I mean BORING. Just let them keep the money. Bring me the next Casey Anthony. More entertaining. Too depressing to think about this kind of crime.
Because no one is... except for Matt Tallibi, so at least that's one.