Whistleblower Richard Bowen: Barclays Bank Gets Its Hands Slapped… and What Does That Change!!!??

By Richard Bowen
http://www.richardmbowen.com/barclays-bank-gets-its-hands-slapped-and-what-does-that-change/

Is getting its hands slapped a strong enough message? The latest in the bad bank sagas has the British bank, Barclays, red-faced. As it should.

CEO Jes Staley has been reprimanded for attempting to discover the identity of an internal company whistleblower. Mr. Staley stated that he was trying to protect a colleague from what he considered an unfair attack.

Mr. Staley took his inquiry so far he had Barclay employees reach out to postal inspectors in his attempt to discover who had anonymously mailed two letters to the Barclays board, which complained about the bank hiring a mid-level executive. 

The resulting fallout will see Mr. Staley facing a significant pay cut plus regulatory probes. The U.K. Financial Conduct Authority (FCA) has him under investigation which could result in a fine and a possible ban from the financial services industry if the FCA does not find him “fit and proper to lead the firm.”

The Department of Justice (DOJ) is also investigating whether any officials at Barclays or even the USPS may have violated civil Dodd-Frank Whistleblower protections; as well as criminal law in its attempts to uncover the whistleblower’s identity.

Mr. Staley has apologized to Barclays’ board and he states, “accepted its conclusion that my personal actions in this matter were errors on my part.”  However, he’d previously told the Barclays board “that he thought it was legal to unmask a whistleblower.” 

In the NY Post article, Jordan Thomas, Chair of the Whistleblower committee at Labaton Sucharow, the New York law firm responsible for the survey of 1200 plus U.S. and U.K. based financial services professionals on workplace ethics, principles, profits, leadership and confidence (re bank and bankers) asks, of the Barclays fiasco, “Under what circumstances do government agencies work for corporations?“

“Unfortunately” he points out, “you regularly see leaders within corporate America wanting to hunt down whistleblowers within their organization.” The survey’s findings pointed out a continued disregard for ethical engagement as well as alarming new tactics being attempted to silence potential whistleblowers.

In an earlier article, I’d posted New York Federal Reserve President William Dudley’s comment about ”an apparent lack of respect for law, regulation, and public trust that persists within some large financial institutions.”

Yes, absolutely there is cause for concern; the issues are ongoing. I continued that the article goes on to say that the Labaton Sucharow survey said “that one in four bankers said they knew co-workers who had run afoul of the law.” And nearly a third of those surveyed said bonus and compensation incentives encouraged malfeasance.

Profits continue to hold sway over principles no matter how many regulations or checks and balances large banks and their officials, employees and boards are accountable for. Accountable! Did I actually use that word as it regards the big banks?

As Marianne Jennings, professor emeritus of legal and ethical studies from the W.P. Carey School of Business at Arizona State says in her recent article about the Barclays situation, Barclays has been sending mixed messages for a long time.

She says, “Antony Jenkins was named Barclays’ CEO in December 2012 following the LIBOR rate-fixing problems at the bank, a serious misstep that cost the bank almost one-half billion in fines. Mr. Jenkins, by all accounts, worked diligently to change the Barclay’s culture.”

She points out, Mr. Jenkins did indeed try to change the culture, yet he was fired in July 2015 for not “doing enough shareholder-wise”. The message? Forget culture change, stick to earnings and profits! … “In the world of ethics and compliance, one of the keys to anonymous reporting is anonymity. However, Mr. Staley insists that he did not know such a request was wrong.” Yet he was told at the time he made the request that in fact “he could not unmask the identity of whistleblowers.”

He tried anyway, admitted such and now will reap the consequences.  Ironic, as she points out, that the media is lauding the board’s actions yet they fired the last CEO for trying to build a much-needed culture of accountability. Ms. Jennings says, and I agree, “This guy needs to go if the board expects to ever hear about any issue.”

We may not expect bankers to be girl and boy scouts any longer. But what’s it going to take to assure accountability? What is it about the makeup of big banks that has built a culture of profits at any cost even though this has resulted in such egregious malfeasance?

Is there any solution? If so, let me know.

David Dayen: A Bank Even a Socialist Could Love

A Bank Even a Socialist Could Love

The fight for public banking is gaining ground in cities and states across the country.

BY David Dayen

“We have Tea Partiers and Occupiers in the same room liking public banking. What does that tell you?”

“Money is a utility that belongs to all of us,” says Walt McRee. McRee is a velvety-voiced former broadcaster now plotting an audacious challenge to the financial system. He’s leading a monthly conference call as chair of the Public Banking Institute (PBI), an educational and advocacy force formed seven years ago to break Wall Street’s stranglehold on state and municipal finance.

“This is one of the biggest eye-openers of my life,” says Rebecca Burke, a New Jersey activist on the call. “Once you see it, you can’t look back.”

This ragtag group—former teachers, small business owners, social workers— wants to charter state and local banks across the country. These banks would leverage tax revenue to make low-interest loans for local public works projects, small businesses, affordable housing and student loans, spurring economic growth while saving people—and the government—money.

At the heart of the public banking concept is a theory about the best way to put America’s abundance of wealth to use. Cities and states typically keep their cash reserves either in Wall Street banks or in low-risk investments. This money tends not to go very far. In California, for example, the Pooled Money Investment Account, an agglomeration of $69.5 billion in state and local revenues, has a modest monthly yield of around three-quarters of a percent.

When state or local governments fund large-scale projects not covered by taxes, they generally either borrow from the bond market at high interest rates or enter into a public-private partnership with investors, who often don’t have community needs at heart.

Wall Street banks have used shady financial instruments to extract billions from unsuspecting localities, helping devastate places like Jefferson County, Ala. Making the wrong bet with debt, like the Kentucky county that built a jail but couldn’t fill it with prisoners, can cripple communities.

Even under the best conditions, municipal bonds—an enormous, $3.8 trillion market—can cost taxpayers. According to Ellen Brown, the intellectual godmother of the public banking movement, debt-based financing often accounts for around half the total cost of an infrastructure project. For example, the eastern span of the San Francisco-Oakland Bay Bridge cost $6.3 billion to build, but paying off the bonds will bring the price tag closer to $13 billion, according to a 2014 report from the California legislature.

Public banks reduce costs in two ways. First, they can offer lower interest rates and fees because they’re not for-profit businesses trying to maximize returns. Second, because the banks are publicly owned, any profit flows back to the city or state, virtually eliminating financing costs and providing governments with extra revenue at no cost to taxpayers.

“It enables local resources to be applied locally, instead of exporting them to Wall Street,” says Mike Krauss, a PBI member in Philadelphia. “It democratizes our money.”

Legislators, Brown says, commonly object that governments “don’t have the money to lend.” But this misunderstands how banks operate. “We’re not lending the revenues, just putting them in a bank.” That is, the deposits themselves—in this case tax revenues—are not what banks loan out. Instead, banks create new money by extending credit. Deposits simply balance a bank’s books. Public banks, then, expand the local money supply available for economic development. And while PBI has yet to successfully charter a bank, there’s an existing model in the unlikeliest of places: North Dakota.

During the Progressive Era, a political organization of prairie populists known as the Nonpartisan League took control of the state government. In 1919, they established the Bank of North Dakota. It has no branches, no ATMs, and one main depositor: the state, its sole owner. From that deposit base, BND makes loans for economic development, including a student loan program.

BND also partners with local private banks across the state on loans that would normally be too big for them to handle. These loans support infrastructure, agriculture and small businesses. Community banks have thrived in North Dakota as a result; there are more per capita than in any other state, and with higher lending totals. During the financial crisis, not a single North Dakota bank failed.

BND loans are far more affordable than those from private investors. BND’s Infrastructure Loan Fund, for example, finances projects at just two percent interest; municipal bonds can have rates roughly four times as high. And according to its 2015 annual report, the most recent available, BND had earned record profits for 12 straight years (reaching $130 million in 2015), during both the Great Recession and the state’s more recent downturn from the collapse in oil prices. A 2014 Wall Street Journal story described BND as more profitable than Goldman Sachs. Over the last decade, hundreds of millions of dollars in BND earnings have been transferred to the state (although the overall social impact is somewhat complicated by the bank’s role in sustaining the Bakken oil boom).

The long march through the legislatures

Brown founded the Public Banking Institute in 2010, after years of evangelizing in articles and books such as The Web of Debt: The Shocking Truth About Our Monetary System and How We Can Break Free. Since then, by Walt McRee’s estimate, around 50 affiliated groups have sprouted up in states, counties and cities from Arizona to New Jersey.

“I’ve been working against the system all my life,” says Susan Harman of Friends of the Public Bank of Oakland. “I think public banking is the most radical thing I’ve ever heard.” Harman, a former teacher and a onetime aide to New York City Mayor John Lindsay, helped get the Oakland City Council to pass a resolution last November directing the city to determine the scope and cost of a feasibility study for a public bank—a tiny yet promising first step.

A feasibility study completed by Santa Fe, N.M., in January 2016 found that a public bank could have a $24 million economic impact on the city in its first seven years. A resolution introduced last October would create a task force to help the city prepare to petition the state for a charter. “It’s the smallest municipality investigating public banking,” says Elaine Sullivan of Banking on New Mexico, who hopes the task force could complete its business plan by the end of the year. “We’re interrupting the status quo.”

In February 2016, the Philadelphia City Council unanimously voted to hold hearings discussing a public bank. Advocates are now working with the city treasurer to find funds to capitalize the bank.

PBI has faced a rougher path in state legislatures. In Washington, state Sen. Bob Hasegawa (D) has introduced a public banking bill for eight straight years. Despite numerous co-sponsors, the bill can’t get out of committee. Efforts in Arizona and Illinois have also gone nowhere. California Gov. Jerry Brown (D) vetoed a feasibility study bill in 2011, arguing the state banking committees could conduct the study; they never did.

One overwhelming force opposes public banking: Wall Street, which warns that public banks put taxpayer dollars at risk. “The bankers have the public so frightened that [public banking] will destroy the economy,” says David Spring of the Washington Public Bank Coalition. “When I talk to legislators, some are opposed to it because ‘it’s for communists and socialists.’ Like there are a lot of socialists in North Dakota!”

In Vermont the financial industry fought a proposed study of public banking, says Gwen Hallsmith, an activist and former city employee of Montpelier. “We don’t have branches of Bank of America or Wells Fargo in Vermont, but they have lobbyists here.” So Hallsmith got the study done herself, through the Gund Institute at the University of Vermont. It found that a state bank would boost gross domestic product 0.64 percent and create 2,500 jobs.

The state eventually passed a “10 percent” program, using 10 percent of its cash reserves to fund local loans, mostly for energy investments like weatherizing homes. Meanwhile, Hallsmith helped push individual towns to pass resolutions in favor of a state bank— around 20 have now done so. Hallsmith says her advocacy came at the expense of her job; the mayor of Montpelier, in whose office she worked, is a bank lobbyist. Hallsmith now coordinates a citizen’s commission for a Bank of Vermont.

Because of state resistance, PBI has encouraged its supporters to go local. And several issues have emerged to assist. For instance, environmental and indigenous activists have demanded that cities move money from the 17 banks that finance the Dakota Access Pipeline. But therein lies another dilemma: Who else can take the money? Community banks and credit unions lack the capacity to manage a city’s entire funds, and larger banks are better equipped to deal with the legal hurdles involved in handling public money. So divesting from one Wall Street bank could just lead to investing in another.

A public bank could solve this problem, either by accepting cities’ deposits or by extending letters of credit to community banks to bolster their ability to take funds. Lawmakers in Seattle have floated a city- or state-owned bank as the best alternative for reinvestment, and Oakland council member Rebecca Kaplan has connected divestment and public banking as well.

Another opportunity arises with marijuana legalization initiatives. Because cannabis remains illegal at the federal level, most private banks are wary of working with licensed pot shops, fearing legal repercussions. This means many of these shops subsist as all-cash businesses. “It’s seriously dangerous; people arrive in armored cars to City Hall to pay taxes with huge bags of money,” says Susan Harman. In Oakland and Santa Rosa, Calif., public banking advocates are partnering with cannabis sellers to offer public banks as an alternative, which would make the businesses safer while giving the banks another source of capital.

While Donald Trump hasn’t formally introduced a long-discussed infrastructure bill, his emphasis on fixing the nation’s crippling public works has also bolstered the case for public banking. Ellen Brown maintains the country could save a trillion dollars on infrastructure costs through public-bank financing. That’s preferable to Trump’s idea of giving tax breaks to public-private partnerships that want big returns.

From the Great Plains to Trenton

“All it’ll take is the first domino to fall,” says Shelley Browning, an activist from Santa Rosa. “Towns and cities will turn in this direction because there’s no other way to turn.” And PBI members think they’ve found an avatar in Phil Murphy, a Democrat and former Goldman Sachs executive leading the polls in New Jersey’s gubernatorial primary this year.

Murphy has made public banking a key part of his platform. “This money belongs to the people of New Jersey,” he said in an economic address last September. “It’s time to bring that money home, so it can build our future, not somebody else’s.”

Derek Roseman, a spokesman for Murphy, tells In These Times that Bank of America holds more than $1 billion in New Jersey deposits, but only made three small business loans in the entire state in 2015. Troubled state pensions could help capitalize a state-owned bank, and would earn more while paying lower fees.

Murphy’s primary opponent, John Wisniewski, chaired the Bernie Sanders campaign in the state, while Murphy raised money for Hillary Clinton. Some believe Murphy is simply using public banking to cover his Wall Street background—and on many issues, Wisniewski’s policy slate is more progressive. But Brown thinks Murphy’s past primed him to recognize public banking’s power: “It’s always the bankers who get it.”

The first new state-owned bank in a century, chartered in the shadow of Wall Street, could shift the landscape. What’s more, blue-state New Jersey and red-state North Dakota agreeing on the same solution would highlight public banking’s biggest asset: transpartisan populist support. “We have Tea Partiers and Occupiers in the same room liking public banking. What does that tell you?” asks PBI’s Mike Krauss.

“Regardless of declared conservative or progressive affiliations,” says state Sen. Hasegawa, “regular folk … almost unanimously grasp the concept.” He is working with Washington’s Tea Partybacked treasurer, Duane Davidson, to advance public banking. “I go to eastern Washington, … they get the whole issue about independence from Wall Street and corporate control.”

In fact, Krauss is himself a Republican. “The biggest thing going on in America, people decided we don’t have any control anymore,” he says. “Whether it’s Bernie’s people or Trump’s people, they’re articulating the same thing but differently. … They want control of their money—and it is their money.”

Award-winning Journalist David Dayen.

Author of “Chain of Title”.

Santa Cruz County Boycotts Big Banks that do Bad Things

 

SantaCruzCountyBy William Hudson

The progressives in Santa Cruz, California- a sleepy surfer community off of California’s stunning Route 1 highway have decided to take action against the big banks and their Wall Street Tactics- and hope their tactics will spread nationwide. Santa Cruz- located about 45 minutes south of San Jose and about 50 minutes north of the luxury enclave of Carmel, is unlike either capitalist-centric communities to their north and south.

 

Santa Cruzians aren’t obsessed with the tech wealth of Silicon Valley north of them, and nor are they impressed with the fortunes of the Carmel/Monterey/Big Sur crowd who have profited from their big bank holdings. Santa Cruz is where people reside who value lifestyle, the natural beauty of its coastline, redwood forests, and hold liberal leanings against corrupt banks. Santa Cruz is demonstrating that social responsibility matters and this concept may take hold in other similarly-minded communities nationwide.

 

The visionaries elected as Santa Cruz County Supervisors decided they would not invest the County’s holdings with the five banks who have participated in criminal felony activity. “Doing business with institutions that are committing federal crimes is not consistent with the obligation that we have to protect public dollars,” said Supervisor Ryan Coonerty, who originated the original proposal to the board. Coonerty recognized, “There’s been so much bad behavior and so few consequences.”

 

Citicorp, JPMorganChase, Barclays, The Royal Bank of Scotland and UBS AG were boycotted by Santa Cruz County after they were fined a scant $5.6 billion dollar penalty for manipulating the foreign-currency market. A measly fine of 5.6 billion dollars when hundreds of billions of dollars were made will never stop the banks from their criminal enterprises. However, if enough communities nationwide begin investing their funds in companies that offer altruistic social policies and sound economic principles- perhaps the impact on the banks will be enough to alter their illegal conduct.   Wall Street won’t mourn the loss of Santa Cruz County’s portfolio, valued at about $650 million- but collectively, if other communities join in- the resulting impact could be enormous.

 

In the case of Citicorp, JPMorganChase, Barclays, The Royal Bank of Scotland and UBS AG- the banks and traders designed the fraudulent scheme in online chat rooms referred to as “the mafia” and “the cartel.” United States Attorney General Loretta Lynch predictably failed to prosecute this criminal enterprise but did admit that the heist was a “brazen display of collusion” that affected “countless consumers, investors and institutions around the globe — from pension funds to major corporations and including the banks’ own customers.”

 

This concept may prove revolutionary. What would happen if, at the local and county level, citizens and their representatives took regional action against the felonious conduct of the big banks? Instead of looking at a Macro solution that has failed to materialize, perhaps people should use Santa Cruz as an example and boycott by micro-means. Civil protest has always started at the grassroot level until it becomes such a force that the states and federal government have no choice but to accept the inevitable.

 
To date, Santa Cruz Supervisors have contacted about 50 “progressive” cities nationwide to join them in their boycott, including about a dozen cities and counties in California’s uber-liberal and wealthy Bay Area- but have not disclosed the counties that have been contacted. These supervisors should be commended for being the first county supervisors nationwide to take action against banks that engage in policies detrimental to public policy and that are in fact illegal and criminal enterprises.

 

“It’s a bold step by the supervisors to do this. They’re taking a creative and direct response to the criminal practices of the big banks,” commented Walt McRee, an outspoken chairman of the Public Banking Institute, a nonprofit working to create publicly owned banks. “Whether or not other counties or cities will have the ability or the courage to do it remains to be seen.”

 

Apparently Santa Cruz County is now on Wall Street’s radar. In addition to inquiries from counties worldwide (countries like Australia and Ireland among others) – the supervisors have received emails from Wall Street finance workers who are fed up with the systemic culture of deception and fraud. Wall Street workers are looking for a venue to express their disapproval and the need for financial reform that will finally address the past decade’s Wall Street economic free-for-all at the expense of the middle and lower classes. The county claims that they will invest with other financial institutions including the Bank of the West and other sound financial institutions. However, the county may wish to “peak inside the hood” and conduct their due diligence before taking on smaller banks who may engage in similar practices.

 
The supervisors of Santa Cruz County should also be advised that their county records are in complete disarray, contain thousands of fabricated documents and go after the banks that circumvented the county’s recording laws. If the supervisors really want to take a stand- look at their country recording system and stop the banks from recording fabricated documents. Back in 2011 and 2012, Santa Cruz county cut ties with Barclays, JPMorganChase and Bank of America for deliberately rigging interest rates and other sketchy practices. If anyone can take a stand against banking practices that undermine the financial stability of a county’s financial holdings- it is Santa Cruz’s progressive thinking officials.

 
A revolution may be brewing by simply refusing to engage with banks that destroy the lives of ordinary Americans. Break the Banks!

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