Investment News has discovered a documentary produced by Morgan Stanley chronicling the harsh competition between branches that is encouraged by their home office. Some news reports suggest this is a parody, but I don’t think so.
Click to see the ten minute video:
Some of my favorite scenes:
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Where is the fence?
When an auditor finds several problems in one small area of the accounting, a typical approach is to put a fence around it. That means, figure what the outer boundaries are. Is it just one month’s worth of transactions in one department of one branch? If a little testing at the boundaries indicates the problem is localized, you can start working on the problem.
On the other hand, if the problem carries across to the whole year, or it affects many other branches, there is bigger problem. If you realize several other departments have the same issue, then you have no idea how big the problem is.
The worst situation is when every time you think there is a fence around the problem, the problem jumps the fence. An auditor has a horrible feeling when there just doesn’t seem to be any boundary.
That is how the banking fiascos have felt over the last year or two. A minor inquiry from DoJ or some other regulator turns into full-blown investigation, then multiple regulators, and then six months or a year later most banks hand over a few billion collectively.
Then another investigation sprouts out of that one. And then there is half a dozen benchmark interest rates that have been manipulated.
Where is the fence showing the outer limits of fiascos created by the TBTF banks? I can’t see it.
Is there anything they aren’t playing games with?
There IS no fence showing the boundary or limit or end of fiascos
What’s next?
Possibly manipulating gold and silver prices?
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Where is the fence showing the outer limit of banking fiascos?Read More »
Maybe, just maybe, there may be some criminal charges individually and corporately.
2/9 – New York Times – Justice Department Is Seeking Felony Pleas by Big Banks in Foreign Currency Inquiry
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Maybe some criminal prosecutions this time around from HSBC and forex investigationsRead More »
Superb map of where the laundered money at HSBC is coming from. Used with permission.
Graph posted on February 11. Published by Martin GrandJean. You can find it at SwissLeaks: the map of the globalized tax evasion
From the linked article: Map of the HSBC accounts amounts per country. Full size here (CC) license – freely reusable with link to this post.
Fine print in the corner you may not be able to read: …
The coverage by The Guardian and ICIJ mentioned in yesterday’s post is kicking off a lot of coverage. Twitter is lighting up with a few hundred tweets in a few minutes, but I’m learning that interest typically fades in a few days. By Friday, the twitterverse will be on to its next outrage.
Here are two more articles I found interesting. First is on UBS maybe having more trouble on aiding tax evasion. Second, when stock analysts say one of the too big to fail banks is too big to manage, it is capitalists making the criticism, not people outside the business world.
2/4 – Wall Street Journal – UBS Faces a New Tax-Evasion Probe – Authorities Investigate Whether Swiss Bank’s Clients Used ‘Bearer Securities’ to Hide Cash
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Here are a few possibilities for the record level of settlements for bank in ’14: Wrapping up the legacy issues from the financial crisis. Regulators are getting serious about pushing big banks to improve their operations. Or maybe regulators just want more money. Or maybe banks are getting worse at obeying the law.
Some articles for you to ponder:
12/30 – Wall Street Journal – For Banks, 2014 Was a Year of Big Penalties – Here’s my interpolation of the fines and legal costs for the largest banks, as presented in the article’s graph:
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What is behind the record $56 billion in bank fines in 2014?Read More »
A few links and comments of interest to auditors: continued investigations of TBTF banks, get an engagement letter, and more on The Economist article:
12/9 – Guardian – Standard Chartered under pressure as US regulators relaunch investigation – …
The Wall Street Journal reports ”Flipped” Bankers Aid U.S. in Foreign-Exchange Probe – Criminal Charges Are Expected as Early as Next Month.
Looks like it is time to pay attention to a new fiasco. After manipulating LIBOR comes the foreign exchange rates, or forex.
Article appears to be based on lots of leaks. In a tossup between guessing whether the Justice Department or the banks are leaking most of the info, I’ll guess the slightly higher probability is the feds.
This new fiasco is apparently developed from information obtained during the LIBOR investigations.
Individual enforcement action this time
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Next banking fiasco? Manipulating foreign exchange rates?Read More »
JP Morgan settled charges it manipulated energy prices by paying $410 million. That is a civil penalty of $285M plus $125M of profits from the trades.
I calculate that is about a week’s work of earnings per share or roughly equal to 2 traffic tickets in California for a median income family.
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Fine for manipulating energy market equal to 7 days net income or two traffic ticketsRead More »
George F. Will suggests the answer to the question is “yes”: When banks get too big to fail, they are too dangerous to leave intact
One of the U.S. senators on the left end of the political spectrum thinks it is time to break up the too-big-to-fail banks.
Look at the concentration of assets in the TBTF range and the long history of TBTF: …
Does too big to fail, too big to punish, and too big to manage mean you are too big?Read More »
