Friday, January 20, 2012



The general public is becoming increasingly aware of the extent of fraud and corruption which is endemic within the financial system. We could give the entire sector a Triple CCC rating namely Corrupt Crony Capitalism.

So how have they been able to get away with stealing for so long with so few people asking questions? It is because the whole system is rigged to have the appearance of regulatory governance and oversight. A fine example is the Securities and Exchange Commission (“SEC”).

Let us first look at how the SEC came into existence, (Source text in Italics Wikipedia).

 “Following the 1929 Wall Street Crash, the U.S. economy had gone into a depression, and a large number of banks failed. The Pecora Investigation sought to uncover the causes of the financial collapse. As chief counsel, Ferdinand Pecora personally examined many high-profile witnesses, who included some of the nation's most influential bankers and stockbrokers.
The Pecora Investigation uncovered a wide range of abusive practices on the part of banks and bank affiliates. These included a variety of conflicts of interest, such as the underwriting of unsound securities in order to pay off bad bank loans, as well as "pool operations" to support the price of bank stocks. Does any of this sound familiar?
The hearings galvanized broad public support for new banking and securities laws.
 As a result of the Pecora Commission's findings, the United States Congress enacted the Glass–Steagall Banking Act of 1933 to separate commercial and investment banking, the Securities Act of 1933 to set penalties for filing false information about stock offerings, and the Securities Exchange Act of 1934, which formed the SEC, to regulate the stock exchanges.  Pecora was appointed as one of the first commissioners of the SEC.
In 1939 Ferdinand Pecora published a memoir that recounted details of the investigations, Wall Street under Oath. Pecora wrote: "Bitterly hostile was Wall Street to the enactment of the regulatory legislation." As to disclosure rules, he stated that "Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker's stoutest allies."
History repeats itself every 75 years or so. These very laws, detrimental to banking interests but essential to protecting the general public, were either repealed or ignored by corrupt regulators, congress and executive branch.
To illustrate the point over the past few years the SEC has fined almost all of the top 10 Global Banks for serious offences.
The League Table of crooked banks, fined over USD 100 Million and their fraud specialty is shown below:
UBS                 USD 780 Million                 Offshore banking services tax fraud
Goldman           USD 550 Million                Civil Fraud; (SEC cut only USD 300 Million)
Citi                   USD 285 Million                Bubble Securities
J P Morgan        USD 154 Million                Mortgage securities
Wells Fargo       USD 148 Million                Misleading Investors

The reality is that those banks commit crimes and fraud unabated against their clients and third parties. We only know of the cases where they actually get caught with their hand in the till.
Complaints are lodged with the SEC as regulator who investigates and imposes fines against the banks without either the banks or their management being charged criminally for any wrongdoing.
 Thereafter the banks are charged what to the public seem a lot of money but to a Global bank are a few short weeks of profit in the overall scheme of things, ultimately paid for by the shareholder.
The true beneficiaries of all this are the SEC who pocket literally billions in fines on the back of the crimes committed, while the unfortunate investor loses in general many multiples of said amounts, while leaving their banking cronies in place  to do it all over again.
They should be in the Guinness Book of Records as the world’s most successful re-setter

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