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It has taken six years for the public to absorb the enormity of the bank scandal, the lying, cheating and stealing. Now the spotlight is finally turned on the regulatory agencies whose employees shuttle back and forth between the agencies and the banks. They work for the banks, then they work for the agency that is supposedly regulating the bank. They work for the agency, then they work for one of the banks or bank associations regulated by that agency.
It isn’t the fault of the public, and it is only partly right to blame the press. The enormity was made possible by making the crimes so complex and hidden in the shadow banking system that the information and explanation took six years to come out. If the regulators were truly regulating instead of setting up their next job, the shadow banking system would not exist and there would be nonsuch thing as an off-balance sheet transaction.
If regulators were doing their job the shadow banking system could never have grown to ten times the real money banking system which is now scaring the crap out of everyone. The transparency required by existing law would have been enforced, which would have made it impossible to take the money of investors (depositors) and apply it on the Bank’s whim for the benefit of the bank instead of for the benefit of the investors. They couldn’t have sold the loan products multiple times without everyone knowing about it. They couldn’t have claimed the losses of the investors as their own for insurance bailouts, and then make the investor absorb the losses created by an intentionally corrupt system of loan underwriting.
Using industry standards as they existed for centuries, we would not be staring down the barrels of a shotgun, with one barrel containing the documentation of a transactions that never occurred and the other barrel carrying financial transactions that did occur but were never documented. The gap was a playground for bank criminals, as we are now seeing with increased clarity each week.
So who is to blame? There is plenty to go around. But those who make laws could fix the problem in a moment by prohibiting employment shuttling, in addition to the standard payoff or bribe. The promise of employment is a bribe. And that is why under current laws the banks and the individuals employed by the regulatory agencies who conspired with them can be sanctioned, indicted, tried, convicted and sentenced torsion and required to disgorge I’ll-gotten gains. This would release more than enough money to reduce all household debt including mortgages at the expense of the culprits who fixed the appraisal prices and suckered innocent people into really bad deals.
And just like Iceland, we could be enjoying renewed Economic growth, increased spending, decreased unemployment and restoration of a market that is free and fair. If you take the referees off the playing field and leave it to each player to make and change the rules as they go along, you can ALWAYS expect chaos and criminal conduct. The cry for less government interference or less government regulation can fairly be translated as PLEASE KEEP US OUT OF JAIL.
Bank Scandal Turns Spotlight to Regulators As big banks face the fallout from a global investigation into interest rate manipulation, American and British lawmakers are scrutinizing regulators who failed to take action that might have prevented years of illegal activity. Politicians in both London and Washington are questioning whether regulators allowed banks to report false rates in the run-up to the 2008 financial crisis and afterward. On Monday, Congress stepped into the fray, requesting information about the role of the Federal Reserve Bank of New York, according to people close to the matter. The focus on regulators and other financial institutions has intensified in the last two weeks after the British bank Barclays agreed to pay $450 million to resolve its case. British and American authorities accused the bank of improperly influencing key interest rates to deflect concerns about its health and bolster profits. The Barclays settlement is the first action stemming from a broad investigation into how banks set key benchmarks, including the London interbank offered rate, or Libor. The pricing of $350 trillion of financial products, including credit cards, mortgages and student loans, is pegged to Libor and other such rates.
Barclays Chairman Criticized in Parliament Over Rate Scandal During tense parliamentary testimony, Marcus Agius, Barclays’ chairman, was repeatedly questioned about the leadership and culture at the bank in the wake of the Libor scandal.
Diamond to Forgo Up to $31 Million in Bonuses From Barclays Robert E. Diamond Jr., the former chief executive of Barclays, will forgo deferred bonuses of up to $31 million, as the British lender looks to quell public anger over an interest rate-rigging scandal.