Bankers: America’s most wanted

Lately we have taken to calling business television “America’s Most Wanted”.  In truth though, the endless media parade of banking ‘experts’ from the world’s largest financial institutions is actually more like “The World’s Most Wanted”. Another day, another–no doubt toothless–investigation into more price rigging and illegal activities in global markets, that will no doubt end with another token fine and even more emboldened actors. See: Big banks face scrutiny over pricing of metals

Prosecutors in the Justice Department’s antitrust division are scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, these people said. The agencies have made initial requests for information, including a subpoena from the CFTC to HSBC Holdings PLC related to precious-metals trading, the bank said in its annual report Monday.

HSBC also said the Justice Department sought documents related to the antitrust investigation in November. The two probes “are at an early stage,” the bank added, saying it is cooperating with U.S. regulators.

Also under scrutiny are Bank of Nova Scotia , Barclays PLC, Credit Suisse Group AG , Deutsche Bank AG , Goldman Sachs Group Inc., J.P. Morgan Chase & Co., Société Générale SA, Standard Bank Group Ltd. and UBS AG , according to one of the people close to the investigation.

Given the still widespread complacency and mainstream acceptance of ‘advice’ from the financial sales force, it seems that we, the people, so far still like to play the patsy. Seven years after the Great Financial Crisis first broke out into the light of day, the world’s most wanted are still abusing trust, breaking laws and running balance sheets into the ground pretty much everywhere. For a good update on banking crimes to date, see Matt Taibbi’s latest: A Whistleblower’s Horror Story: Years after blowing the whistle on Countrywide, Michael Winston is bogged down in the courts, and fighting for his life.

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Obama directs fiduciary standard on pension advisors

Obama is finally (at least 7 years late) directing the federally governed Department of Labor to require retirement advisers working under its plans “to abide by a ‘fiduciary’ standard — putting their clients’ best interest before their own profit”.

The need for this change has been painfully obvious since the asset bubbles burst in 2000 and 2008. But nothing happened, and as financial fraud has run rampant since, an emboldened product selling business continues to inflict financial catastrophe on real families and the global economy. And we, the taxpayers, are all paying the staggering financial cost both for repeatedly rescuing reckless firms and in the crushing social burden of under-saved citizens. Maybe at long last, the politicians are worried enough about their own legacies, to start doing the right thing. See: Obama directs labor department to move ahead on Fiduciary rule.

Of course the financial lobby is fighting for its life in this. They insist that imposing a ‘fiduciary standard’ will bankrupt their business and cut working people off from affordable advice: ‘If you make us do what is best for the client, we will not be able to continue operating’ they insist. Laugh out Loud! With advice like this, who needs enemies??!!

A mandated fiduciary standard is absolutely foundational to rebuilding financial strength and stability in the world. The firms and actors who reject a fiduciary standard, cannot be allowed to call themselves ‘advisors’. Full stop.

President Barack Obama on Monday is expected to direct the Department of Labor to move ahead with a proposal that would raise investment-advice standards for brokers handling retirement accounts.

In advance of a speech Mr. Obama is scheduled to give at AARP, the White House released a fact sheet stating that protecting workers and retirees from conflicted investment advice is part of the president’s focus on “middle class economics.”

“A system where Wall Street firms benefit from backdoor payments and hidden fees if they talk responsible Americans into buying bad retirement investments — with high costs and low returns — instead of recommending quality investments isn’t fair,” stated the fact sheet, released early Monday.

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JP Morgan Whistleblower

She was a witness to one of the biggest white collar crimes in American history – but when Alayne Flesichmann spoke up to her Wall Street bosses, she was ignored. And that, turned the Canadian-born lawyer into a whistleblower.  Here is a direct video link.

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Danielle on Money Talks radio today

Danielle was a guest on Money Talks radio with Michael Campbell today at 9 am PT (noon ET).  You can listen to an audio clip of the segment here. The play bar below starts with 14 seconds of silence.

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Danielle’s weekly market update

Danielle was a guest today on Talk Digital Network with Jim Goddard, talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

**Postscript correction: I incorrectly stated in this discussion that the UK Telegraph was purchased by Barclays Bank. In fact it is owned by the Barclay brothers. See: Who are the Barclay brothers, for more. Much thanks to Anthony in London, for correcting my error.  The assertion that the paper’s business dealings with HSBC and other banks curtail their investigative reporting on illegal practices, still stands.  See also:  Telegraph owners’ 250m HSBC loan raises fresh questions over coverage.

Oil is certainly not the only asset looking perilous at present prices…

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Breaking news: consensus now forecasting lower oil

You have to chuckle at the consensus of financial commentators. The same crowd who confidently and incorrectly predicted rising inflation, rising commodities, falling US Treasury bonds and a falling US dollar are now busily morphing their forecasts on all these things in real time with the price of oil. Very helpful (not).

The latest round has several previous bulls now talking about the prospects of oil at $10-$20 a barrel. As shown in my partner Cory’s chart below, $10-$20 is a possibility driven by the mean reversion of crazy leverage that has been directed into the energy (and other commodities) sector over the past decade.  But we have been making that, previously, wildly contrarian, observation since global demand peaked and turned down in 2011.

WTIC Feb 18 2015Moreover, there is a similarly strong probability of knock down effects to other highly levered asset classes such as equities and corporate debt, as commodities deflate. Of course, almost none of the now capitulating inflation bulls are forecasting downturns in these other assets.  Yet.  Investment sales needs to keep selling its bread and butter products after all…

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