Wednesday, May 20, 2015

Feds take a dive on massive fraud even as the bankers confess

So the big news is that five of the biggest banks in the world have now admitted guilt to criminal charges of manipulating the dollar-euro exchange rate (the most important exchange rate in the world) or LIBOR -- (the London InterBank Offered Rate, which is the most important interest rate in the world).

All told, the five will have to pay $5.6 billion in fines. Sounds like a lot, unless you consider that the foreign exchange market alone has a daily trading volume about 1,000 times as high ($5.3 trillion a day in 2013).

Which means, if these swindlers were able to make just one percent of one percent of one percent (0.000001) on those transactions, it would equal more than $5 million a day, or $14 billion over the seven years involved in the charges.

Or, looked at another way, these five banks reported only the first thee months of this year profits of $19.8 billion, once you add back in the "reserves" the banks set aside to pay for the cost of this and other legal problems.

So when you do the math, these guys are paying less than a third of their profits for three months --25 days by my calculation-- for 2,555 days' worth --7 years-- of criminality.

Now, despite the five banks admitting guilt, not a single one of the hundreds or thousands of people involved in these criminal schemes at the banks --not one single human being!-- has been charged or is going to be charged for racketeering, conspiracy, securities fraud, theft or even jaywalking.

Not one!!!

Further, under U.S. police-state "drug war" laws, the government can demand that property used in committing a crime be forfeited to the government unless the owner can prove to the satisfaction of a federal judge that the owner not only did not participate in the alleged illegal act, not only did not know of the alleged illegal act, but had no way of knowing or suspecting that such things were going on in relation to their property.

So if you own a rental house or an apartment building where the government imagines one of your tenants or a visitor sold or even smoked dope, your property can be seized, even if no one is declared guilty of any crime that took place on your property, and even if no one is even charged with a crime.

And mind you, the *owner* has to prove their innocence. (What happened to "innocent until proven guilty?" Well, if you believe that fairy tale, I have a really great business opportunity involving a bridge in Brooklyn that you should look at).

Under the drug war money laundering, racketeering  and criminal conspiracy statutes, those five banks could and should now be our property -- the property of "we the people." There is no question but that they were involved in criminal acts -- and not just as the passive scene of the crime, but the actual instrument of the criminal activity. They themselves have admitted as much.

One hundred percent of the ownership interest in those five banks should have been expropriated without compensation by the federal government. These are recidivist criminal enterprises that have been called on the carpet time and again for securities violations, false swearing, theft, fraud, conspiracy, racketeering and other crimes.

You say, why punish the shareholders by expropriating them? Because they are exempt for all personal liability in exchange for the corporation they have created and the leadership they have elected bearing full responsibility. The shareholders used their ownership stake in the corporation to delegate the full authority to a Board of Directors they elected. Since they cannot be held liable in any other way for their empowerment of an incompetent or even criminal board, this is the price they pay for the board they chose.

In addition, even if not indicted, why are the feds allowing those who organized, tolerated, or were just too incompetent to detect this seven-year swindle in the world's single most important financial market to continue holding their positions or have similar ones in the future?

If I am an accountant who admits guilt to tax fraud, I am never again allowed to practice as such. If I am a lawyer who admits to cheating and betraying my clients, I forfeit my license.

But despite banking and securities being heavily regulated industries, there are no civil sanctions against the *individuals* involved. There is no statement saying that because this board of directors proved unable to prevent or stop this massive fraud, its members are disqualified from ever serving on another board of directors like this one. Nor is there any such penalty against a chief executive officer, chief operating officer, chief financial officer nor any other executive or supervisor. And not even against the traders themselves, even though the five legal "persons" --these banks organized as corporations-- confessed that, while acting on the behalf of, and as authorized agents of the banks, these traders broke the law.
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Meanwhile, in Florida, a 21-year-old waitress faces five years in prison for supposedly finagling the credit card charges for her tips. The DA claims the discrepancy totaled $1,074.15, and anything over $300 is felony "grand theft" and you not only have to pay back those you cheated but do hard time in prison.

The DA forgot to add, unless you're a bank.

From where I sit, the waitress's crime wasn't stealing, but not stealing enough. With a few more zeros to her haul, sure, not only would she have had to turn over every last penny of the spare change in her pocket, but then she would have to listen to a very severe lecture from the Attorney General.

But right after, her chauffeur would have driven her to her private jet to take her to some private island in the Caribbean.

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