Sanford (Sandy) Weill, Appearing On CNBC July 25, 2012
In case you haven’t figured it out yet, there is a right way and a wrong way to help yourself to other people’s money on Wall Street. The right way propels you into the one percent replete with mansions and yachts, your name memorialized on buildings, a golden parachute, an office and car for life fronted by defrauded shareholders and regular invitations to appear on CNBC and lecture others on how to structure the financial system.
Then there’s the wrong way – as Gary Foster found out the hard way in June 2012 when he was sentenced to eight years in the slammer for embezzling more than $22 million from Citigroup and compounding his lack of etiquette in the most unforgiveable fashion – he wired the funds to Citigroup’s arch rival, JPMorgan Chase.
Foster broke multiple etiquette rules for stealing money on Wall Street. First, his crime was too simple. He made it just too easy for prosecutors to explain to a jury how he wired funds from various corporate accounts at Citigroup, using fake contract numbers, to his personal accounts at JPMorgan. A man lacking so little criminal creativity is eschewed on Wall Street; he clearly has no future there so he might as well go to jail.
Foster broke another etiquette rule when he had the audacity to buy a luxury home in Tenafly, New Jersey rather than Greenwich, Connecticut. You’re just not going to build an adequate Rolodex of connections to get you out of jail in Tenafly.
Consider Foster’s simple plan with the bold and wickedly creative plan hatched by Sanford (Sandy) Weill to extract money from Citigroup. Weill’s plan became colloquially known on Wall Street as the Count Dracula stock option plan – you simply could not kill it; not even with a silver bullet. You couldn’t prosecute it because Citigroup’s well-paid Board of Directors was rubber-stamping it.
Stanley Fischer, Former Vice Chairman of Citigroup, Nominated to Serve as Vice Chairman of the Federal Reserve Board of Governors
Last evening, the U.S. Senate Banking Committee made the unexpected announcement that it was postponing the confirmation hearing of Stanley Fischer to serve as Vice Chairman of the Federal Reserve Board of Governors. Two other Fed nominees were to be vetted today. The hearing had been scheduled for 10 a.m. this morning in the Dirksen Senate Office Building. No reason was given for the postponement.
There are surely some veteran lawyers at the Securities and Exchange Commission (SEC) hoping the nomination of Fischer has been scuttled. The thought that Stanley Fischer, a former Vice Chairman of the serially corrupt Citigroup, could become Vice Chairman of the Federal Reserve, a regulator of mega banks like Citigroup, is not a source of comfort. Fischer was nominated for the post by President Obama, whose devotion to failing up on Wall Street regularly sets new heights.
As if as on cue, news broke just yesterday that Federal prosecutors have issued grand jury subpoenas to Citigroup in a money-laundering investigation, a topic with which the bank is intimately familiar.
During Fischer’s stint at Citigroup, from February 2002 through April 2005, he “amassed a personal fortune of between $14.6 million and $56.3 million” according to Bloomberg News. During that same period, Citigroup was repeatedly charged with fraud and embarked on its own exotic financial shenanigans that would end up collapsing the firm in 2008.
Jamie Dimon Testifying at Senate Banking Hearing June 13, 2012, Adorned With His Presidential Cuff Links
It’s difficult to take a major newspaper seriously when its editorial page lives in the land of Oz. Reading “The Morgan Shakedown” yesterday in the editorial pages of the Wall Street Journal is the latest reminder of just how detached from reality these opinion writers are. The editorial attempted revisionist history for JPMorgan by misinforming the public that “Federal law enforcers are confiscating roughly half of a company’s annual earnings for no other reason than because they can and because they want to appease their left-wing populist allies.”
It’s pretty hard for one editorial to get so many facts and the big picture so horribly wrong. First, left-wing populists will be happy with nothing less than Jamie Dimon losing his dapper worsted wools and presidential cufflinks for an orange jumpsuit. Second, JPMorgan’s earnings last year were $21.3 billion so a proposed “confiscation” of $13 billion is significantly more than (not “roughly half of”) the company’s earnings for last year. The Federal government is not doing this “for no other reason than because they can.” They’re doing it because JPMorgan is both a serial miscreant and a too-big-to-fail bank that refuses to change its jaded ways. The only language this bank understands is the pain of losing profits which translates into the pain of losing fat banker bonuses.
Yesterday, the National Credit Union Administration (NCUA) filed suit in U.S. District Court for the District of Kansas against 13 foreign banks and U.S. based JPMorgan Chase, charging the group with violating federal and state anti-trust laws through their manipulation of interest rates in the setting of the London Interbank Offered Rate (LIBOR), a benchmark used to set rates on everything from student loans to interest rate swaps to adjustable rate mortgages.
NCUA, the regulator of U.S. credit unions, alleges the defendants conspired to achieve multiple benefits for themselves to the detriment of their customers and investors. According to the complaint, the motives were to suppress LIBOR in order to benefit their trades that were tied to LIBOR, to reduce their borrowing costs, to deceive the market as to the true state of the banks’ creditworthiness, and to deprive their counterparties of the level of interest rate payments to which they were entitled.
On the issue of benefitting their own trading position, NCUA specifically mentions JPMorgan, noting: “Derivatives traders within the Defendant banks held extensive trading positions tied to LIBOR. For instance, Defendant JPMorgan had interest rate swaps with a notional value of $49.3 trillion. By artificially manipulating LIBOR, Defendants were able to book enormous unearned profits…JPMorgan acknowledged in 2009 that a difference of 1% (or 100 basis points) was worth over $500 million to the bank.”
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only. ~Charles Dickens, A Tale of Two Cities
The above passage is the opening paragraph of Charles Dickens’ classic novel about the French Revolutionary period, A Tale of Two Cities. I read the book back in tenth grade and it has stuck with me ever since. It wasn’t required reading for the class, rather it was the outgrowth of an assignment where each student had to independently choose a book to read. I had no idea what to pick so I went into the local book store and looked around. Charles Dickens was calling out at me from the shelves and I immediately purchased it. I quickly regretted my decision upon calling my best friend and learning that he had chosen his book, TheScarlet Letterbased on its brevity. A Tale of Two Cities looked biblical by comparison.
All of my immature trepidation quickly dissipated as I started reading the novel and discovered that I simply couldn’t put it down. I was mentally and emotionally infected by the characters, the history, and the hard lessons learned. It created an indelible impression upon me that has never gone away.
Whether we want to admit it or not, we find ourselves in pre-revolutionary times at the moment. This doesn’t mean I predict violent upheavals everywhere followed by chaos and bloodshed, it means that the current paradigm is no longer sustainable because it is not longer working. More and more people now recognize this.
Half a decade has now passed since the great Wall Street collapse of 2008. Millions of words have attempted to capture the epic greed, arrogance and corruption that brought on the greatest financial implosion since the Great Depression. The Financial Crisis Inquiry Commission issued 662 pages on the subject. The U.S. Senate and House of Representatives have held an endless stream of hearings. Dozens of books by authors who had a front row seat to the chaos line our bookshelves and libraries.
And yet, despite all this, the President of the United States can’t seem to remember who caused the collapse of our financial system; who caused the collapse of the housing market and millions of foreclosures and the resulting joblessness that still grips the country.
President Obama can’t seem to recall that it was the financial de-regulators of the Clinton administration who bullied and ridiculed their opponents and strong-armed through the repeal of the Glass-Steagall Act. It was that repeal that paved the way for financial Armageddon in America. The outcome has left 46.2 million Americans living in poverty and the greatest wealth disparity in a century.
Surely if the President understood how this great collapse occurred he wouldn’t seriously be considering putting Lawrence (Larry) Summers into the post of Chairman of the Federal Reserve. Would he?
The economic implosion of Europe is accelerating. Even while the mainstream media continues to proclaim that the financial crisis in Europe has been “averted”, the economic statistics that are coming out of Europe just continue to get worse. Manufacturing activity in Europe has been contracting month after month, the unemployment rate in the eurozone has hit yet another brand new record high, and the official unemployment rates in both Greece and Spain are now much higher than the peak unemployment rate in the United States during the Great Depression of the 1930s. The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as austerity continues to take a huge toll on the economies of the eurozone. It would be hard to understate how bad things have gotten – particularly in southern Europe. The truth is that most of southern Europe is experiencing a full-blown economic depression right now. Sadly, most Americans are paying very little attention to what is going on across the Atlantic. But they should be watching, because this is what happens when nations accumulate too much debt. The United States has the biggest debt burden of all, and eventually what is happening over in Spain, France, Italy, Portugal and Greece is going to happen over here as well.
The following are 20 facts about the collapse of Europe that everyone should know…
#110 Months: Manufacturing activity in both France and Germany has contracted for 10 months in a row.
#211.8 Percent: The unemployment rate in the eurozone has now risen to 11.8 percent – a brand new all-time high.
#317 Months: In November, Italy experienced the sharpest decline in retail sales that it had experienced in 17 months.
#420 Months: Manufacturing activity in Spain has contracted for 20 months in a row.
#520 Percent: It is estimated that bad loans now make up approximately 20 percent of all domestic loans in the Greek banking system at this point.
#622 Percent: A whopping 22 percent of the entire population of Ireland lives in jobless households.
Citigroup said Friday that the former CEO, who resigned last month in a management shakeup, will receive an “incentive award” of $6.7 million for his work at the bank this year.Former president and chief operating officer John Havens, who stepped down along with Pandit, is getting $6.8 million, according to a filing with the Securities and Exchange Commission.
The two men will also continue collecting deferred cash and stock compensation from last year, awards valued at $8.8 million for Pandit and $8.7 million for Havens.
In this episode, Max Keiser and Stacy Herbert discuss David Cameron appointing former bankers to Treasury. We look at another former banker who became a Treasury Secretary only to become a bankster – Robert Rubin – and his role in Citigroup bilking Abu Dhabi of billions. In the second half of the show, Max Keiser talks to Reggie Middleton about Facebook, fraud and financialization.