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With Credit Suisse expected to get swallowed up into UBS today and thus disappear as an independent entity, I thought it would be a fine time to reprint this article which describes the bank’s legacy.

Pay particular attention to comments at then of the post – – Credit Suisse has a subsidiary whose sole purpose in life is to launder money for clients. They have been laundering money since 1910. Yes, 1910.

Previously posted on 2/24/17:

Looks like Credit Suisse is in trouble again. The feds and NYDFS have opened another money laundering investigation.

Check out the report on 2/23/17 at Wall Street Journal – Credit Suisse Probe Opens Old Wounds for the following info.

A retired professor invested $500K in a startup back in 2000. When the company went public in 2008, his shares were worth $80M.

Cool!  Good for him!

He didn’t want to share a lot of that with Uncle Sam, so he got some help from the Israel branch of Credit Suisse to cut his tax bill.

By 2013 he had $200M parked in his accounts in Switzerland.

Well, somehow the revenuers caught up with him.

He cooperated extensively, including wearing a wire to some meetings.

Current status for him is he was sentenced to seven months in a federal penitentiary.  The Bureau of Prisons is expecting him (inmate 90504-083), but he is not in custody. (Check for yourself here.) That means he will be moving into federal  housing soon. Unstated implication is that means he is now a felon.

Current status for Credit Suisse is another probe with possible additional prosecution and additional fines. Several bankers have been fired.

The rules have changed

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Headline from 2017 which is relevant again today: Credit Suisse under investigation. Again. For money laundering. Again.Read More »

To keep track of the spreading banking crisis, I’m going to staring making notes here on the blog.  This will not be full coverage. Instead, this will highlight some parts of the story as it emerges.  This will help me track of developments.

Previous discussions:

• 3/13/23 – Full bailout for huge bank, rich bankers, and filthy rich depositors.
• 3/1/23 – Rap video explaining artificially low interest rates lead to turmoil and recession.

Update to late Sunday afternoon, 3/19/23 (yeah, it is necessary to time stamp blog posts that closely):

3/16/23 – Wall Street Journal –Eleven Banks Deposit $30 Billion in First Republic Bank – $30 billion of uninsured deposits went into First Republic Bank. Five billion each from J.P. Morgan, Citigroup, Bank of America, and Wells Fargo. 2.5 billion from Morgan Stanley and Goldman Sachs. Five others deposited 1 billion each. Purpose is to shore up liquidity.

Article indicates a large portion, if not most, of the funds are from money that regional banks have moved into the super big banks. They are recycling some of it back to the regional banks. These are uninsured deposits…well…conceptually they are uninsured, but after the bailout that wasn’t a bailout of Silicon Valley Bank, those are essentially insured.

The shoring-up started about four days earlier with money from Morgan.

3/16/23 – Wall Street Journal –Credit Suisse Will Borrow Up to $53.7 Billion – For several days there have been rumors Credit Suisse has been teetering on the edge of collapse. They announced borrowing $50 billion Swiss francs, which is US$53.7 billion, from Swiss National Bank, the nation’s central bank.

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A few notes on the banking crisis. Trying to keep track of the evolving story.Read More »

Rap video from a few years ago showing the failed arguments for Keynesian economics and the consequences of messing around with the money supply and artificially forcing interest rates low.

Pushing down interest rates leads to mal-investment in projects that are not really good plans. When interest rates eventually rise, lots of plans need to be abandoned.

The results? “Bailouts, payouts, and machinations.”

The ‘cheap credit dog’ will come back to bite hard.

When the economy is flooded with trillions of dollars during COVID, the fully expected inflation forces the Fed to raise interest rates, in turn dropping vaue of bonds and then in turn tanking the value of the securities portfolio of every bank in the country. No wonder the FDIC and FRB think Silicon Valley is just the first bank to go.

We saw it in 2008. We are seeing it again today.

Despite everyone on the planet knowing FDIC insurance covers up to $250,000 per depositor per bank, the Federal Reserve, FDIC, and Treasury Department decided over the weekend to increase the coverage at Silicon Valley Bank (SVB) to $1,000,000,000 per depositor. Yeah, up from quarter of a million to a billion.

Don’t know how this will develop over the next few days or weeks, but at the moment it looks like yet another bailout for the ultra-rich and ultra-connected. Oh, and a second massive bailout over the weekend.

It also looks like these bailouts will likely increase panic. It absolutely will increase of moral hazard, in other words, running a bank poorly knowing the feds will bail you out and investing in banks without due diligence because you will get bailed out.

SVB was taken over on Friday after a bank run drained massive amounts of cash. On an depressing tangent, the run is reported to have been fueled by venture capital investors calling their investees and clients, telling them to pull money as fast as they could. Essentially, we saw word-of-mouth spreading via social media at the speed of electricity. Thus a run appeared out of nowhere that collapsed a huge bank in a couple days.

Treasury Department says these are nationalizations, not bailouts

Regulators also took over Signature Bank on Sunday: WSJ, 3/12/23, SVB, Signature Bank Depositors to Get All Their Money as Fed Moves to Stem Crisis.

That is the third largest bank failure in the history of the US. The feds guaranteed all uninsured deposits, bailing out another set of ultra-rich depositors. SVB was the second largest.

Oh, excuse me. This is not a bailout.

I will quote the WSJ article so you don’t think I’m making this up:

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Full bailout for huge bank, rich bankers, and filthy rich depositors.Read More »

Today, January 28, 2022, marks the twentieth anniversary of the Ulvog CPA firm.

It has been a joy to serve the nonprofit community for these two decades as an independent CPA firm. Focusing on the religious nonprofit community has been a professional honor and a personal delight.

Thanks to all the organizations who have made this journey possible.

Looking forward to many more years of serving churches and ministries.

God’s blessings to you all.

After the Great Recession back in 2008, there was great hue and cry demanding that hundreds of bankers be thrown in prison, every one of them to spend the remainder of their life in a dank, dark dungeon.

Nice concept.

Has a good, solid, rewarding emotional feel. Just the thought all those horrible bankers in jail gives you a warm fuzzy feeling all over.

The only problem is for that to happen, federal prosecutors have to actually, you know, prove their case.

Little teeny, tiny problem standing in the way – – proving manipulation is difficult.

So difficult that all convictions for alleged LIBOR manipulation in the United States have now been overturned.

So much for throwing all the bankers in jail.

The core challenge is proving one specific individual committed a specific crime. A particular bank as a whole may have committed crimes, which can be proved. A department overall can be shown to have committed a crime. The challenge is to prove one specific guy over there, yeah that one, had intent to and did violate a specific criminal code.

Wall Street Journal – 1/27/22 – All US Trial Convictions and Crisis-Era LIBOR Rigging Have Now Been Overturned – Three traders from Deutsche Bank were convicted at trial in 2018 for manipulating LIBOR. The charges were wire fraud, which is exquisitely broad.

The Second Circuit Court of Appeals reversed the convictions.

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All the convictions in the U.S. for Libor manipulation have now been overturned.Read More »

The California Board of Accountancy Update newsletter, issue #94 dated Fall 2021, has details of disciplinary actions with effective dates in summer and fall of 2021.

A simple lesson for all CPAs from these situations is just do your job with at least a bare minimum of competence. The firms below didn’t get in trouble because they missed some SASs or were oblivious to some new or big or recent ASU. They didn’t get in trouble because a client lost out on a contested tax position. They didn’t get in trouble because they fell a few hours short on CPE or miscounted A&A hours.

No, they had splendiferous belly-flops from the 50 meter high dive. Examples?

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Disciplinary actions from California Board of Accountancy – Fall 2021Read More »

Distressing inflation news keeps rolling in…

Multiple comments from senior federal officials indicate we are going to have inflation for a while.

Treasury Secretary Janet Yellen indicated inflation will continue into 2022.

She indicates the source of inflation is bottlenecks that have themselves generated inflation. Unstated in the article, and apparently unacknowledged by Secretary Yellen, this these bottlenecks are caused by the government shutting down the economy and in their staggering hubris thinking they can flip a switch and seamlessly open up the economy.

CNBC – 10/5/21 – Yellen sees inflation staying higher for the next several months.

Article also points out Fed chairman Powell called inflation news last week “frustrating.” I suppose so. When you think you can control the economy of the world with a few keystrokes from your laptop, such news would be quite frustrating.

Most unsettling tidbits in the article are the estimates from the Federal Open Market Committee that inflation measured by the PCE will be 3.7% in 2021. THey think it will be lower next year. I hope so.

St. Louis Fed President predicts 2.8% for the full year of 2022.

Few days ago we discussed the Personal Consumption Expenditure for August 2021 shows ongoing inflation.

The August number of 0.4% increase results in a year-over-year increase of 4.3%. Bad news is this is the highest increase in PCE since 1991, all the way back when Pres. Bush was in office.  That is a 30-year high in the inflation rate as measured by PCE.

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A bit more on that high inflation rate seen in August PCE.Read More »

Looks like there is another flood of reporting ready to appear in print on bank secrecy and hiding wealth.

This project will be called the Pandora Papers.

If you recall, a major series of reports back in the 2016 timeframe described money laundering efforts flowing through one particular law firm in Panama. You can read my comments on the coverage.

The International Consortium of Investigative Journalists (ICIJ) brought together around 600 journalists from about 150 media outlets to analyze a data leak with 2.94 TB of info. That’s terabytes, as in thousands of gigabytes.

The ICIJ kickoff summary was published on 11/3/21: Pandora Papers: An offshore data tsunami.

If you are at all interested in offshore banking, or money laundering, or the world-far-away of hiding or relocating wealth even without nefarious intent, you will want to pay attention.

Looks like there will be a lot of coverage, what with 330 politicians and 130 people on the Forbes billionaire list showing up in the data.

From a first glance, it looks like this project have as one focus the structure of banks and professionals that service this market.

The Personal Consumption Expenditure (PCE) inflation index again shows an increase of 0.4% in August 2021 after increasing the same in July. Since December 2020 this index has shown inflation of between 0.3% and 0.6% each month.

This indicates that inflation is continuing. Good news is that inflation is slowing, declining from 0.6% in March and April, to 0.5% in May and June, to 0.4% in July and August.

Bad news is annualizing the running three month inflation rate shows between 4% and 7% since February.

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Personal Consumption Expenditure for August 2021 shows ongoing inflation.Read More »