RBS Managers Condoned Libor Manipulation

Never ending saga of financial scandals with no end in sight! The less said the better! Read on!

RBS Managers Condoned Libor Manipulation

Royal Bank of Scotland Group Plc managers condoned and participated in the manipulation of global interest rates, indicating that wrongdoing extended beyond the four traders the bank has fired.

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A visitor enters the headquarters of the Royal Bank of Scotland Group Plc in London. Photographer: Chris Ratcliffe/Bloomberg

Royal Bank of Scotland Group Plc managers condoned and participated in the manipulation of global interest rates, indicating that wrongdoing extended beyond the four traders the bank has fired.

Regulators are now probing RBS’s yen, Swiss franc and U.S. dollar sales-and-trading businesses, all part of the fixed-income division Fred Goodwin expanded before he was ousted as CEO in 2008, said two people who asked not to be identified. Photographer: Raul 

In an instant-message conversation in late 2007, Jezri Mohideen, then the bank’s head of yen products in Singapore, instructed colleagues in the U.K. to lower RBS’s submission to the London interbank offered rate that day, according to two people with knowledge of the discussion. No reason was given in the message as to why he wanted a lower figure. The rate-setter agreed, submitting the number Mohideen sought, the people said

Mohideen wasn’t alone. RBS traders and their managers routinely sought to influence the firm’s Libor submissions between 2007 and 2010 to profit from derivatives bets, according to employees, regulators and lawyers interviewed by Bloomberg News. Traders also communicated with counterparts at other firms to discuss where rates should be set, one person said.

“This kind of activity was widespread in the industry,” said David Greene, a senior partner at law firm Edwin Coe LLP in London. “A lot of the traders didn’t consider this behavior to be wrong. They took it as the practice of the trade. This is how things operated, and it seemed harmless.”

Internal Investigation

RBS, 81 percent owned by the British government, is one of at least a dozen banks being probed by regulators worldwide over allegations that traders colluded to manipulate the benchmark interest rate so they could profit from bets on interest-rate derivatives. Barclays Plc (BARC), Britain’s second-biggest bank, was fined 290 million pounds ($470 million) in June for rigging the rate, used for more than $300 trillion of securities ranging from mortgages to student loans. Chief Executive Officer Robert Diamond and Chairman Marcus Agius resigned in the aftermath.

Regulators are now probing RBS’s yen, Swiss franc and U.S. dollar sales-and-trading businesses, all part of the fixed- income division Fred Goodwin expanded before he was ousted as CEO in 2008, said two people who asked not to be identified because the bank’s internal investigation, begun more than two years ago, is still in progress. Investigators are focusing on the firm’s swaps, inflation-trading and foreign-exchange teams, as well as on money-market traders who made daily Libor submissions, the people said.

Source -- read more:  http://www.bloomberg.com/news/2012-09-24/rbs-managers-said-to-condone-manipulation-of-libor-rates.html

I knew it would eventually come to this! Some heads must roll and the Chief Investment Officer (CIO) is the first person that has to go! I am glad that Jamie Dimon is also feeling a bit more contrite -- actually I think he feels very humbled.now that it is clear to him that the financial world as he knew it has changed in terms of the expectations of the people on "Main Street", Congress and the regulators. It is no longer business as usual. 

The days of swashbuckling traders that take excessive risks so they can have bragging rights at happy hour are definitely over! Therefore, the so-called "London Whale" must now find another line of work! Putting shareholder capital and depositors funds at excessive risk in not acceptable in the new order of things!

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JPMorgan CIO To Retire Over $2-Billion Loss

Two other executives are also expected to lose their jobs in the wake of the stunning loss.

By Daniel Politi and Abby Ohlheiser | Posted Monday, May 14, 2012, at 10:27 AM ET

JPMorgan Chase headquarters in New York

Photo by Michael Kappeler/AFP/Getty Images.

UPDATE:  JPMorgan Chase's chief investment officer will lose her job in the wake of the company's $2 billion loss.

Bloomberg reports that Ina Drew, 55, will retire. The head of global fixed income at the company, Matt Zames, will take over the CIO position. According to the Associated Press, sources say that Drew had offered to resign "several" times since the disclosure on Thursday of the loss.

Drew made $15.5 last year and $16 million the year before, and was one of the company's highest-paid employees, as well as one of two women on its operating committee. The Wall Street Journal is reporting that two other executives are expected to resign over the loss as well, including Bruno Iksil, aka the "London Whale."

Sunday, May 13 Jamie Dimon, the CEO of JPMorgan Chase acknowledged Sunday he had been “dead wrong” to dismiss concerns about the bank’s trading loss as a “tempest in a teapot.” Dimon added: "We got very defensive. And people started justifying everything we did." Although the country’s largest bank lost at least $2 billion, the bank isn’t threatened, Dimon said in an interview that aired Sunday on NBC’s Meet the Press.

Still, Dimon emphasized that he understood the loss was no small matter. “We made a terrible, egregious mistake,” Dimon said, according to the Associated Press. “There's almost no excuse for it.”

Source -- click to read more:
http://slatest.slate.com/posts/2012/05/12/jpmorgan_2_billion_loss_could_lead_to_more_oversight_regulations.html?wpisrc=obinsite

Related articles

• FBI opens inquiry into JPMorgan's $2B loss (cbsnews.com)
• No sign of shareholder revolt against JPMorgan Chase CEO Jamie Dimon (cbsnews.com)
• JPMorgan Trading Loss: 2 Shareholder Suits Filed Alleging CEO Jamie Dimon Misrepresented Risk To Investors (huffingtonpost.com)
• JPMorgan Chase chief Jamie Dimon acknowledges 'terrible, egregious mistake' - Washington Post (washingtonpost.com)
• What Jamie Dimon didn't tell you on 'Meet the Press' (latimes.com)
• Elizabeth Warren: Letting banks self-regulate is "wrong and dangerous" (cbsnews.com)
• JPMorgan investment chief Ina Drew to retire - Washington Post (washingtonpost.com)

Andrew Nikiforuk on the "Tar Sands" of Alberta!

I listened to an NPR interview of Andrew Nikiforuk where he talked about his book "Tar Sands". He made very interesting points about the effect of petroleum use on the world's economy, democracy, and freedom. He asserted that ever since the auto was invented and the US became the first Petrostate in the world, the world's affairs have revolved around the pursuit of extraction of oil.

Andrew noted the use of divine provenance to justify the extraction and use of energy. He made an analogy between energy and slave labor. He indicated that divine provenance was also used to justify the slave trade which eventually led to the US Civil War. He drew parallels between the leaders of most of the PetroStates, and US States and Canadian Provinces where oil dominates the economy. He noted that apart from Norway where there was an open dialog about the social and political implications of the effect of the North Sea oil, the citizens of the Petrostates have conceded power to the few companies that dominate the petroleum industry.

"Tar Sands" by Andrew Nikiforuk is about the extraction of petroleum from the tar sands located in Alberta Canada. With most of the low hanging oil fields close to depletion, the oil industry has turned its attention to extraction of petroleum from Alberta's tar sands. This has fueled a boom with significant social and environmental consequences for Alberta.

Frank Kaminski's review of Tar Sands indicates that the hype about Alberta's tar sands becoming an important source of oil supply is just that -- hype! According to Frank, the soaring greenhouse gas emissions, colossal ponds of toxic waste that are known to leak, the spike in health problems that has been seen in communities downstream from these leaking ponds is the result of local and national politicians bending to the will of the tar sands lobby.

Tar Sands helps to sharpen the discussion about whether the negative environmental and health impact of extractive industries is worth the risk!

Related articles

• Canadians are saying no to tar sands pipelines: risks outweigh the benefits (switchboard.nrdc.org)
• The Truth About the XL Pipeline... Is Complicated (esquire.com)
• Climate Change? Blame Canada (turcanin.wordpress.com)
• Climate Justice Forum: Andrew Nikiforuk 6-18-12 (wildidahorisingtide.org)

JPMorgan Chase Total Losses Eclipse $30 Billion!

Well, initially, I said I felt sorry for Jamie Dimon, CEO of JP Morgan Chase -- now not so much! With CNN Money reporting that the initial trading loss estimate of $2 billion is now closer to $6 billion -- we are talking speculation and not hedging! There is a big difference!


When market trading losses from the decline in the market price is considered it is estimated that the overall loss is close to $30 billion! So with a trading loss that is estimated to be close to $6 billion,  we are no longer talking about a loss from hedging  This must be due to major speculative trading -- gambling, so to speak! 


There really is no excuse for this sort of trading activity post 2008! The market reforms were intended to protect investors and depositors from precisely this type of speculative trading. 


Jamie Dimon has some major questions to answer to JP Morgan Chase's Board, shareholders and regulators!


Source: Please read the snippet below and scroll down to click on the link to read more --

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Jamie Dimon Complains More, As JPMorgan Chase Losses Eclipse $30 Billion

Posted: 05/21/2012 12:23 pm

Champion American complainer Jamie Dimon complained on Monday about Wall Street regulation, while also insisting he not be described as a complainer. All the while, his bank's losses, partly resulting from lax regulation, continued to grow.

An initial $2 billion trading loss has likely resulted in a total loss of more than $30 billion, when you include a 19 percent drop in the bank's stock price. By itself, the trading loss alone might balloon to more than $6 billion, according to one estimate.

To strengthen the Cognitive Dissonance Vortex he had created, the JPMorgan Chase CEO's comments came as the ink was still drying on news reports that reminded everybody of why the Wall Street regulation he complains about constantly is necessary in the first place. Namely, theWall Street Journal reported that a top risk-management officer at JPMorgan apparently had a spotty track record of risk-management. And CNNMoney said estimates of the bank's initial $2 billion loss due to poor risk-management have tripled to at least $6 billion.

But first, to the Dimon Complain-Bot 9000: Speaking at the Deutsche Bank Securities Global Financial Services Investor Conference in New York, Dimon rolled out several of his standard complaints about post-crisis efforts to regulate the financial sector, according to the Wall Street Journal's Deal Journal blog, which live-blogged his comments.

On the Volcker Rule, which -- if it is ever actually put in place in any real way -- would prohibit banks with federally insured customer deposits from being able to blow billions of dollars on stupid market gambles, Dimon warned that regulators should be very careful not to "throw the baby out with the bathwater." Typically in this analogy, which he has used more than once before, Dimon implies that JPMorgan is the squeaky-clean baby and other banks are the nasty bathwater. But now that JPMorgan Chase has done exactly the sort of thing the Volcker Rule was designed to stop, the analogy is less effective -- the baby a bit scummier, if you will.

Source: http://www.huffingtonpost.com/mark-gongloff/jamie-dimon-jpmorgan-chase_b_1533126.html

Geithner Says Dodd-Frank Opponents Add to Market Uncertainty - Businessweek

Geithner Says Dodd-Frank Opponents Add to Market Uncertainty

February 09, 2012, 12:20 AM ESTBy Cheyenne Hopkins and Ian Katz 

U.S. Treasury Secretary Timothy F. Geithner criticized opponents of new financial industry regulations and said the first non-banks deemed systemically risky will be named this year.

“Those who are working to slow the pace of reform will only increase uncertainty, and they will damage our efforts to try to get the rest of the world to adopt a level playing field,” Geithner said in Washington yesterday.

Geithner defended the 2010 Dodd-Frank Act and said regulators are “making considerable progress in implementing reform.” The law has come under attack from Republicans in Congress and presidential candidates.

“We have forced a necessary and fundamental restructuring of the financial system,” Geithner told reporters at the Treasury Department. “But even with these changes, and even with the remaining damage caused by the financial crisis, our financial system is once again helping support economic growth by meeting the growing demand for credit and capital at lower cost.”

The financial industry has fought Dodd-Frank, arguing that the regulatory overhaul imposes excessive capital requirements on banks. President Barack Obama and congressional Democrats say it tightens oversight of financial markets and companies in the wake of the credit crisis that led to the 2008 collapse of Lehman Brothers Holdings Inc.

Source: Click to Read More -- 

Geithner Says Dodd-Frank Opponents Add to Market Uncertainty - Businessweek

NY Fed sells AIG bailout assets to Merrill Lynch | Reuters

NY Fed sells AIG bailout assets to Merrill Lynch | Reuters

Proposed money market mutual fund rules!

A money market fund manager's worst nightmare is large redemptions which can cause a money market fund to break the proverbial "buck", particularly, in a volatile market. The new rule that the SEC is considering would make shareholders much more mindful of the actual value of each share held in a money market mutual fund portfolio, generally, referred to as the net Asset Value or NAV. 

If shareholders panic unnecessarily in a volatile market and make redemption requests, it could actually force the Portfolio Manager of the Money Market Fund to redeem securities whose current market value may have declined significantly or below par in order to raise the cash needed to meet redemptions.When a money market fund sells securities prior to the security's redemption date, a gain or loss is recognized which is then distributed to all shareholders. Therefore, the actions of some shareholders can result in tax consequences for all the shareholders of a money market fund.

As a Portfolio Manager of a Money Market Fund, I once had to placate a large shareholder that was irate because a family member did not receive a duplicate statement that he requested from the funds' shareholder services subsidiary. He was a Trustee of a large family trust that represented 60% of a state specific tax-exempt money market fund. Liquidating 60% of the entire portfolio in and making the funds available in three business days would cause the fund to break the buck.

I decided not to panic! First, I called the Shareholder Services people and read them the Riot Act! The amazing thing is that they still hadn't sent the shareholder the duplicate statement! They had merely entered a change in the statement so he would receive duplicate statements at the beginning of the following month. I asked them to send duplicate statements for the previous six months, an apology letter signed by a Vice President, and a small gift. Turned out they had a Starbucks coffee boxed gift that included a mug! Perfect -- who does not like Starbucks!

Next I called the shareholder, he was entertaining friends to an early dinner --  his AARP club! He was very irritated by the call -- I had interrupted his dinner! This wasn't looking good -- not going according to my plan! I told him I was the Money Market Portfolio Manager and asked him politely, if I could call back the next day -- making sure that I said, "Sir", "Please" and "Thank you" in the most perfect English accent. By the time I put the phone down, he was very calm. 

The next day I called the Shareholder -- thank God for FedEx and Starbucks! FedEx had already delivered the duplicate statements, the apology letter, and the Starbucks gift. Mr. Shareholder was beaming and very proud that he was actually talking to the Money Market Portfolio Manager! After a profuse apology and assurance that duplicate statements would be delivered going forward, Mr. Shareholder decided not to withdraw the funds. 

I was so relieved  -- a Starbucks gift and an apology had saved the day! There was no need to sale securities to generate cash to meet the large redemption request! Phew! One of the Vice Presidents of Shareholder Services called to congratulate me for pulling it off; otherwise, we would have had a major disaster and all because of a duplicate statement!

Scroll down to read the snippet below and the full article at the link.

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Proposed money market mutual fund rules draw fire

By John Waggoner, USA TODAY

Updated 2/19/2012 3:43 PM
The Securities and Exchange Commission is considering proposals they say will make money market mutual funds safer — and the mutual fund industry loathes them.

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Money market funds, unlike bank money market accounts, are uninsured mutual funds that invest in high-quality, short-term debt issued by the government, corporations and municipal entities. The funds have $2.6 trillion in assets. The two proposals, each considered an alternative to the other, will be put out for public comment in late March or early April.

•Money funds would abandon the accounting convention that lets them keep share prices at a constant $1. The change would drive home the point to investors that money funds aren't federally insured, thus discouraging panic if a fund's share price fell below $1 — breaking the buck, in fund parlance.

Money funds already have to calculate and disclose their "shadow net asset value" — what the share price would be if each security were priced each day as a stock fund's is. For example, the Fidelity Cash Reserves money fund had a shadow price of $1.0002 on Nov. 30, according to a filing with the SEC. You can find a money fund's shadow price by looking at form N-MFP via the SEC's Edgar system.

The change could make every money fund transaction into a taxable event, forcing investors to calculate miniscule gains and losses in share prices, the fund industry argues. And institutional investors don't like the risk of losing money. "One company treasurer told me, 'If I don't get a dollar in and a dollar out, you don't get my dollar,' " says Paul Stevens, CEO of the Investment Company Institute, the funds' trade group.

•Money funds would have to keep a capital reserve in case of large redemptions. They would also put a 30-day hold on 3% to 5% of an account — a move also aimed at discouraging massive redemptions.

Source -- click on the link to read more:
Proposed money market mutual fund rules draw fire – USATODAY.com