CHRONICLES OF THE COMING WORLD

An initiative of Eva Joly, Member of the Greens/EFA group in the European Parliament

47 BANKING SCANDALS – PART TWO
by Jon Thorisson. 15.12.2015

Continuing our countdown of ROBERT JENKIN’S 47 banking scandals
here are the next twenty items of his (partial) list.
In 2013 the journalist Matt Taibbi wrote an article titled “Everything Is Rigged:
The Biggest Price-Fixing Scandal Ever” for the magazine Rolling Stone, noting
that: “ [We are] living in an era of undisguised, real-world conspiracy, in which the
prices of currencies, commodities like gold and silver, even interest rates and the
value of money itself, can be and may already have been dictated from above. And
those who are doing it can get away with it. Forget the Illuminati – this is the real
thing, and it’s no secret1.
Time has only proven Taibbi right, reminding us that conspiracy theories do not
always come with tin-foil hats!
11
There is no single legal definition of predatory lending, but in layman´s terms it
is the imposing of unfair and abusive loan terms on borrowers by falsifying or
hiding the actual terms and conditions of the loan, such as inadequate or false
disclosure of terms and fees, high interest rates, broker inflated interest rates,
high fees, hidden fees, prepayment penalties, equity stripping.
In the words of the Tomlinson report2: “The amount of profit business lending
generates for the bank is extremely low compared to the revenue targets bankers
are incentivised to meet – lending to businesses alone will not create large revenue
increases. Therefore, rather than supporting a business, there are times when it is
more profitable for a bank to stress the business. As one banker put it, to “put in a
little cash and take all the value”.
http://www.theguardian.com/business/2013/nov/25/rbs-accused-businessprofits-regulators
http://www.ft.com/intl/cms/s/0/af17f48a-f345-11e3-91d800144feabdc0.html#axzz3tpW47s3v
http://www.ft.com/intl/cms/s/0/f50fac82-c643-11e3-ba0e00144feabdc0.html#axzz3tpW47s3v
http://www.nakedcapitalism.com/2013/10/how-banks-profit-from-distressbritish-edition.html
12

http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggestfinancial-scandal-yet-20130425#ixzz2qbSflhCW
1

2

http://www.tomlinsonreport.com/docs/tomlinsonReport.pdf

Investopedia defines a predatory loan as “one that benefits the lender at the
borrower's expense. The mortgage might have above-average fees, excessive or
unnecessary fees, overly high interest rates given the borrower's qualifications, or
prevent the borrower from accumulating home equity. Convincing a borrower to
refinance or take out a home equity loan when there is little to no benefit, or even
harm, in doing so, are also predatory”.
http://business-ethics.com/2011/05/10/6984-deutsche-bank-lawsuits-thequestion-of-trust/
http://www.sfgate.com/business/article/Wells-Fargo-blasted-for-predatorylending-5440048.php
http://newswire.net/newsroom/financial/69453-Morgan-Loses-Major-LawsuitPredatory-lending.html
http://articles.chicagotribune.com/2013-07-25/news/sns-rt-us-morganstanleyaclu-lawsuit-20130725_1_predatory-lending-adkins-et-al-v-plaintiffs

13
These include “robo-signing” (employees signing and vetting legal documents
without any knowledge of their contents) in so called “foreclosure mills”, third
party businesses hired by banks to handle home foreclosures, leading to massive
fraud and mismanagement of the legal process.
http://www.motherjones.com/politics/2010/07/david-j-stern-djspforeclosure-fannie-freddie
http://www.propublica.org/article/the-great-american-foreclosure-story-thestruggle-for-justice-and-a-place-t/single
http://consumerist.com/2012/02/09/doj-49-states-reach-25-billionsettlement-with-five-largest-lenders-on-robosigning/
http://consumerist.com/2015/03/04/citigroup-forgot-to-compensate-23000consumers-for-abusive-foreclosure-practices-sending-checks-now/
http://www.wsj.com/articles/SB118047548069017647
http://www.huffingtonpost.com/ray-brescia/bank-of-americawhistleblowers_b_3464583.html

14
Several international banks have been involved in helping their customers
establish accounts in tax havens to avoid paying tax. The reported cases not only
involve wealthy individuals but more importantly some of the largest
corporations in the world. According to Tax Justice Network private wealth held
in tax havens is estimated to be between $21 to $32 trillion, adding, that “income

from that wealth was taxed at even a modest rate, we would have an additional
$180 billion per year to fund climate change mitigation”. Funneling money
through tax havens to avoid tax is of course impossible without the help of a
bank!
http://www.icij.org/offshore
http://articles.latimes.com/2014/feb/26/business/la-fi-mo-credit-suisse-taxevasion-senate-hearing-20140226
http://www.forbes.com/sites/beltway/2013/05/21/the-real-story-aboutapples-tax-avoidance-how-ordinary-it-is/
http://theconversation.com/hsbcs-swiss-tax-scandal-is-part-of-a-globalpattern-of-avoidance-37437
https://www.irs.gov/uac/Offshore-Tax-Avoidance-and-IRS-Compliance-Efforts

15
Banks such as Credit Suisse, HBSC, Barcleys, Lloyds, ING have all been exposed in
facilitating illegal transactions for drug cartels. Typically no executives have been
made responsible, but the banks have paid billions in fines in the US.
http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs
http://www.nytimes.com/2013/01/03/opinion/how-bankers-help-drugtraffickers-and-terrorists.html
http://law.fordham.edu/adjunct/27436.htm
http://www.bloomberg.com/news/articles/2010-06-29/banks-financingmexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal
http://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M20121212

16

-regime sanctions

French BNP Paribas along with the Dutch ABN AMRO have been fined for
violating U.S. financial sanctions by processing billions of dollars in financial
transactions for rogue nations. BNP Paribas paid nearly $9 billion in fines in
2014 and ABN AMRO has made a similar deal – and as per usual, no bank
officials were charged. Barcleys, Royal Bank of Scotland and others have been
fined for similar violations of sanctions.
http://www.usatoday.com/story/money/business/2014/06/30/bnp-paribassanctions-announcement/11775681/
http://www.ft.com/intl/cms/s/0/e24afb06-5c7a-11df-bb3800144feab49a.html#axzz3uIzp2h8n

https://www.commentarymagazine.com/foreign-policy/middleeast/iran/banks-make-a-joke-out-of-iran-sanctions/
http://www.reuters.com/article/us-rbs-sanctionsidUSBRE9BA0Y120131211#IKPHJ6QoGd0AKB6V.97
http://www.justice.gov/opa/pr/barclays-bank-plc-agrees-forfeit-298-millionconnection-violations-international-emergency
17
Euribor (Euro Interbank Offered Rate) is the European version of the LIBOR
(London Interbank Offered Rate) establishing borrowing costs all over the world.
Libor and Euribor valuations directly influence the value of trillions of dollars of
financial deals between banks and other institutions. Libor is published on behalf
of the British Bankers' Association (BBA) and Euribor is published on behalf of
the European Banking Federation, based on the averaged interest rates at which
Eurozone banks offer to lend unsecured funds to other banks in the interbank
market, or euro wholesale money market. The scandal first broke in 2012.
The Euribor scandal has led to the first criminal proceedings against individuals,
as the Serious Fraud Office in the UK, announced last month that it had 10
employees of Deutsche Bank under criminal investigation, indicating that more
would be prosecuted.
In the U.S. the first Libor trial started on November 5th where two Rabobank
employees were found guilty of rigging Libor and now face long jail sentences.
According to the Wall Street Journal: “More than $800 trillion in securities and
loans are linked to the Libor, including $350 trillion in swaps and $10 trillion in
loans”.
To put that in context, note that the CIA’s World Fact book informs us that the
global economy – as measured by the world’s GDP (gross domestic product) – is
less than $80 trillion.3
In 2013 the EU Commission fined six financial institutions in the LIBOR fixing
scandal, € 1.7 billion!
https://globalcorporatelaw.wordpress.com/2015/11/19/euribormanipulation-sfo-charges-first-individuals/
http://www.institutionalinvestorsecuritiesblog.com/2015/11/10_former_barcl
ays_and_deutsch.html#more
http://www.ft.com/intl/cms/s/0/3546e878-5cff-11e3-81bd00144feabdc0.html#axzz3uIzp2h8n

3

https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html

https://globalcorporatelaw.wordpress.com/2013/10/19/libormisrepresentation-and-amendment-part-i/
http://www.bloomberg.com/news/articles/2015-11-13/ten-ex-deutsche-bankbarclays-euribor-traders-charged-in-u-khttp://www.spiegel.de/international/business/deutsche-bank-ordered-to-paybig-fine-in-rate-fixing-scandal-a-937260.html
http://articles.chicagotribune.com/2012-10-14/business/sns-rt-us-bankinglibor-lawsuitbre89e01g-20121014_1_libor-manipulation-home-owners-classaction

18
Several banks implicated in the scheme to fix foreign exchange rates agreed to
pay $ 3.4 billion in fines for their roles in the scheme. The banks include UBS;
Citigroup, JPMorgan Chase, Royal Bank of Scotland and HSBC. Bloomberg
published a transcript of a chat between two dealers that explains how this
works: http://www.bloomberg.com/news/articles/2015-05-20/anatomy-of-anfx-manipulation
In May 2015 the Federal Reserve in the U.S. settled the case with UBS AG,
Barclays Bank PLC, Citigroup Inc., and JPMorgan Chase & Co with total fines of $
1.8 billion4
In the UK regulators settled with these same banks issuing $1.7 billion in fines,
and the Swiss Financial Market Supervisory Authority levied a $138-million fine
against UBS.
A partial explanation as to why the big banks seem to get off the hook most of the
time with fines, which have become in the words of Joseph Stigltz "just a cost of
doing business," is that the regulators might be “in on the game” as reported by
Bloomberg:
“Bank of England officials told currency traders it wasn’t improper to share
impending customer orders with counterparts at other firms, a practice at the
heart of a widening probe into alleged market manipulation, according to a person
who has seen notes turned over to regulators.
Traders representing some of the world’s biggest banks told officials at the meeting
that they shared information about aggregate orders before currency benchmarks
were set, three people with knowledge of the discussion said. The officials said there

http://www.bloomberg.com/news/articles/2015-05-20/read-the-forexsettlement-documents
4

wasn’t a policy on such communications and that banks should make their own
rules, according to the people.”5
http://blogs.reuters.com/felix-salmon/2013/06/12/annals-of-marketmanipulation-fx-edition/
http://www.ft.com/intl/cms/s/0/36196e7a-a48e-11e3-b91500144feab7de.html#axzz3uN40ku7F
http://www.latimes.com/business/la-fi-bank-fine-foreign-exchange-jpmorgancitibank-20141112-story.html
http://www.newsmax.com/finance/InvestingAnalysis/Secret-CurrencyTraders-Dollar/2013/12/19/id/542835/
19
Since 1919 the price of gold is determined twice a day in a private conference
call between five of the biggest gold dealers,Barclays, Deutsche Bank, Bank of
Nova Scotia, HSBC and Societe Generale .
New York University’s Stern School of Business Professor Rosa Abrantes-Metz
(who´s 2008 paper “Libor Manipulation?” set off an investigation of the Libor
fixing scandal) early in 2015 published research into the price of gold and found
a pattern of price fluctuations that indicate “fixing”. On days when the authors
identified large price moves during the fix, they were downwards at least twothirds of the time in six different years between 2004 and 2013. In 2010, large
moves during the fix were negative 92 percent of the time.
In an interview on Canadian TV6 Abrantes-Metz states that the patterns seen in
the price fixing of gold can also be seen in the price patterns of silver and other
precious metals.
Germany’s financial regulator Elke Koenig, the president of BAFIN (The German
Federal Financial Supervisory Authority), said possible manipulation of currency
rates and prices for precious metals is worse than the Libor-rigging scandal,
which has already led to fines of about $6 billion.7
https://www.caseyresearch.com/articles/gold-manipulation-the-london-bias1970-2014

http://www.bloomberg.com/news/articles/2014-02-07/boe-staff-said-tohave-condoned-currency-traders-conduct
5

6

http://www.bnn.ca/Video/player.aspx?vid=560313

http://www.bloomberg.com/news/articles/2014-01-16/metals-currencyrigging-worse-than-libor-bafin-s-koenig-says
7

http://www.bnn.ca/Video/player.aspx?vid=560313
In other gold related news the question is being asked how much gold there
actually is, for instance in Fort Knox, as the FT reported:
http://www.ft.com/intl/cms/s/0/1586a7fe-84d6-11e3-a79300144feab7de.html#axzz3uN40ku7F

20
The U.S. Senate Banking Committee held a hearing in 20138 where witnesses
described how the largest Wall Street banks have accumulated massive amounts
of physical commodity infrastructure, ranging from warehouses to oil tankers to
power generation plants, using bottlenecks in warehouses to delay delivery of
aluminum for up to 18 months, for instance, collecting additional rent, paid for
by consumers
Banks are also central players in the financialization of commodity markets, the
treatment of physical commodities as financial assets, which can be manipulated
for trading and investment purposes. At the outset markets in commodities and
commodity derivatives ensured steady prices and consistent availability for realeconomy users of commodities. Since 2004 billions of investor funds have been
poured into commodity investment funds, transforming these markets,
increasing prices, volatility and opportunities for manipulation
“Some of the richest opportunities for such manipulation lie in combining control of
physical commodities with dominance of commodity derivatives and futures
markets. The major banks are, of course, key dealers in these derivatives markets.
Control of physical commodities allows them to both forecast and influence the
spot commodity prices that can determine derivatives pricing. Indeed, some
observers have pointed out that bank involvement in warehousing has allowed
them to conceal information from the markets on the true supply of physical
commodities, creating market squeezes and artificially fueling investor appetite for
commodity futures” according to a U.S. News and World report.

http://www.equedia.com/how-the-commodities-market-is-manipulated/
http://www.reuters.com/article/us-lme-warehousingidUSBRE9760LY20130807
http://www.bizjournals.com/newyork/news/2013/08/12/cftc-looking-intoalleged-commodities.html
http://www.banking.senate.gov/public/index.cfm/hearings?ID=CCA72CB5A8FD-427A-978A-A51140A75CB0
8

http://www.zerohedge.com/article/goldman-jpm-have-now-becomecommodity-cartel-they-recreate-de-beers-diamond-monopoly
http://www.wsj.com/articles/SB100014240527023042449045792768308934
05644
http://articles.chicagotribune.com/2013-08-06/news/sns-rt-lme-warehousing20130804_1_aluminium-prices-glencore-xstrata

THE MANIPULATION OF EVERYTHING
In 2013 Bloomberg published an infographic of how Wallstreet manipulates
everyting – I have not been able to find an update to this, but the list has
undoubtedly grown!
http://www.bloomberg.com/bw/articles/2013-11-14/2014-outlook-banksface-investigations-and-litigation