Blog for Sep. 11, 2015
Another scandal for the banking industry.
Today September 11 is an important date in history for Americans, and as we know in capital markets and international finance, what affects America affects the world.
Today is also an important date for Geoff Goetz and me because today we are releasing our eBooks and sending notices to the 100,000 or more contacts in our email list to announce the new websites and services and a New York office.
As I’m sure you know, I have long taken a stand against the culture of corruption on Wall Street. From the first months of my blogging that started in April 2004, I made the point that the leadership of the banking industry was self-serving, trading against the public with the advantage of conflicts of interest that no other segment of our society would ever permit. Readers of my book will definitely note that as well.
Was I correct in writing in a major piece in June 2006 for the Wall Street Journal editors that stated the self-regulated industry would soon self-destruct? Laughed at at the time by Wall Streeters, my words soon proved true.
Yet, today, what has really changed? Are we not just waiting for the next billion dollar bank scandal? Some of you are even anticipating The Big One, the mother of all capital market crashes caused by banking failures. I cannot disagree. I think you are right. It’s only a matter of time.
Since we cannot avoid capital markets, crooked bankers and central bankers now force us to be constantly on our guard. That is no way to live; however, unless we drop out of life, we must live in fear of those who manage the banks and banking system.
In my book, I list a great many problems that our regulatory agencies must address and correct. I am not referring to the Financial Industry Regulatory Authority (FINRA) but the Securities and Exchange Commission in the US and the Canadian Securities Administrators in Canada. These civil servants protect us, or are supposed to be protecting us from the banks and brokers. It is a colossal task; one that all of us must support, but also make demands of.
As I see FINRA, the organization is a joke. Sure there are some investigations and even some fines that reach into the millions. But FINRA complaints are against mostly the mid-level employees of the banks and brokers. When, if ever, was the CEO of a major bank charged?
FINRA is in place to protect the banks and brokers, not to serve the public, although that is not what they want you to believe. Did you know that FINRA originally tried to use the name Securities Industry Regulatory Authority (SIRA)? Clearly the National Association of Securities Dealers (NASD) wanted you to believe they were your protector rather than the enemy. Following complaints to their regulator, the SEC, in a statement of the NASD “values”, their leader went so far as to say use of the name SIRA could create confusion because of similarity to an Arabic term or a type of wine, so they chose Financial Industry Regulatory Authority (FINRA). Unbelievable!
FINRA’s rules and regulations, like the organization, are also pathetic. As a point I would like to make if you would care to look, here are the FINRA research rules. Each discussion of every point is so subjective, in fact so oblique as to lead any independent and objective person to believe they could drive the proverbial 18-wheeler through them. And of course, the banks and brokers do.
Bottom line: Without stricter controls imposed by the SEC, there will be a progression of bank scandals, all of which will be paid by shareholders and customers of banks, not by the inside perpetrators, until The Big One hits, which will be when all of us pays for the catastrophe these bankers and central bankers foist on us.
This week another major scandal is close to being swept under the table. Today, in fact, a plaintiff’s lawyer told the Judge in Federal Court that a $1.865 billion settlement is close in their anti-trust action against many banks including Bank of America Corp., Citigroup, Credit Suisse, Deutsche Bank, HSBC, JP Morgan and Goldman Sachs. These banks were accused of rigging the credit default swaps market.
Pension funds are also accusing at least 24 banks of conspiring to manipulate the Treasury auctions in another mega-billion dollar claim.
Will the SEC finally take steps to eliminate the cause of these complaints, which is the conflict of interest issue that permeates the financial services industry? I can write about it, and you and I can discuss it; but the fact remains that our only hope is for the SEC to do something about it.
Hopefully, these are subjects you wish me to write about more, here in the blog and in the eBooks. It is up to us to protect ourselves from Wall Street!
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