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Big Banks Out of Control--Libor rigged, money laundering & insurance scam

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  • Big Banks Out of Control--Libor rigged, money laundering & insurance scam

    Bank deregulation comes back to bite. A series of recent scandals shows just how bad the situation is.

    The nastiest is the Libor scandal:

    This dwarfs by orders of magnitude any financial scams in the history of markets. -- Andrew Lo, MIT Professor of Finance

    The Libor scandal is a series of fraudulent actions connected to the Libor (London Interbank Offered Rate), and the resulting investigation and reaction. The Libor is an average interest rate calculated through submissions of interest rates by major banks in London. Libor underpins approximately $350 trillion in derivatives. It is controlled by the British Bankers' Association (BBA).

    The banks are supposed to submit the actual interest rates they are paying, or would expect to pay, for borrowing from other banks. The Libor is supposed to be an overall assessment of the health of the financial system because if the banks being polled feel confident about the state of things, they report a low number and if the member banks feel a low degree of confidence in the financial system, they report a higher interest rate number.

    Because mortgages, student loans, financial derivatives, and other financial products often rely on Libor as a reference rate, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide.

    Libor scandal - Wikipedia, the free encyclopedia

    Soon after money laundering at HSBC bank was rvealed. The bank expects to be fined $1 billion.

    BBC News - Senate report: HSBC 'allowed drug money laundering'

    16 July 2012 Last updated at 18:53 ET

    Senate report: HSBC 'allowed drug money laundering'

    A US Senate probe has disclosed how lax controls at Europe's largest bank left it vulnerable to being used to launder dirty money from around the world.

    The report into HSBC, released ahead of a Senate hearing on Tuesday, says huge sums of Mexican drug money almost certainly passed through the bank.

    Suspicious funds from Syria, the Cayman Islands, Iran and Saudi Arabia also passed through the bank.

    HSBC said it expected to be held accountable for what went wrong

    The insurance mis-selling scandal broke several weeks ago.

    BBC News - FSA finds banks guilty of mis-selling to small firms

    The Financial Services Authority says banks mis-sold specialist insurance, known as interest rate swaps, to thousands of small businesses.

    The FSA said it had found "serious failings" in the sale of the products, designed to protect firms taking out loans against rising interest rates.

    The FSA said it had reached agreement with Barclays, HSBC, Lloyds and RBS over providing "redress".

    The mis-selling is the third case of serious malpractice at the UK's banks.

    This comes after manipulation of lending rates and the PPI insurance mis-selling.
    To be Truly ignorant, Man requires an Education - Plato

  • #2
    BBC News - HSBC used by 'drug kingpins', says US Senate


    Senator Carl Levin: "HSBC's chief compliance officer knew what was going on"

    Its report said suspicious funds from countries including Mexico, Iran and Syria had passed through the bank.

    Ms Dorner apologised "for the fact that HSBC did not live up to the expectations of our regulators, our customers, our employees, and the general public".

    Some of the things I found frankly took my breath away”

    The bank also said it was in the process of closing 20,000 accounts in the Cayman Islands as a result of the investigation.
    To be Truly ignorant, Man requires an Education - Plato


    • #3
      I wonder if they'll close Romneys? ;)

      Meanwhile, with this chap a non-elected minister for trade in the UK, one wonders just how far the HSBC problems now spread
      In the realm of spirit, seek clarity; in the material world, seek utility.