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Index » Radio Paradise/General » General Discussion » Banksters Page: 1, 2, 3  Next
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miamizsun

miamizsun Avatar

Location: (3261.3 Miles SE of RP)
Gender: Male


Posted: Mar 14, 2018 - 2:43pm

 islander wrote:
I mostly agree. But some people, especially very poor people, have very limited choices. These often amount to a Hobson's choice of take it or leave it. Sure they can leave it, but there are no, or very limited alternatives.   Maybe Amazon's offer will be a viable option, but I don't think for a second it has anything to do with helping anyone who is not Amazon.  
 

i don't know enough about amazon's intentions for the poor, banking or otherwise to make a call

i read a blurb about partnering with, not preying on the current heavyweights

banking/transferring money is going to get somewhat disrupted by some really efficient players coming out of asia

most of africa and asia are "poor" by our standards but they're going to use mostly mobile tech to trade and transact

what is that going to look like?

not sure, but it will happen (maybe grameen and others will streamline and simplify the process)

there's a big effort to bring a few billion people online sooner rather than later

exciting stuff

sending money here now?

a couple of taps and it's done


Red_Dragon

Red_Dragon Avatar



Posted: Mar 14, 2018 - 9:32am

Corporate America's undertakers prepare for feast after lean years
islander
Thalassophile
islander Avatar

Location: Seattle
Gender: Male
Zodiac: Scorpio
Chinese Yr: Cock


Posted: Mar 14, 2018 - 7:45am

 miamizsun wrote:

there's been a lot written on money, banking and finance (these are really important tools)

and arguably one of the first and most important political captures ever (epic corruption)

but when we get down the retail/individual stuff, it's just simple electronic transactions

if we know how banking/checking works and we do and how banks need those deposits

they should be rolling out the red carpet and giving you a toaster for opening an account

the more important point here is this: power

so why would something work better if it was in the private sector?

for conversational purposes there are two types of power

political power and economic power

political power is all about coercion, force, the threat of force and having a monopoly on the initiation of violence on peaceful people

you're not allowed to say no to political power (because violent consequences)

economic power is all about voluntary transactions

you vote with your choices/money

someone in the private sector offering a you shitty deal? don't take it

you can say no and walk and find a better or more acceptable deal

regards


 
I mostly agree. But some people, especially very poor people, have very limited choices. These often amount to a Hobson's choice of take it or leave it. Sure they can leave it, but there are no, or very limited alternatives.   Maybe Amazon's offer will be a viable option, but I don't think for a second it has anything to do with helping anyone who is not Amazon.  
islander
Thalassophile
islander Avatar

Location: Seattle
Gender: Male
Zodiac: Scorpio
Chinese Yr: Cock


Posted: Mar 14, 2018 - 7:41am

 kurtster wrote:

We agree !

 
On occasion. 
miamizsun

miamizsun Avatar

Location: (3261.3 Miles SE of RP)
Gender: Male


Posted: Mar 14, 2018 - 6:09am

islander wrote: 

  I have a friend who is a banker. We have discussed this several times. I think the general gist is correct that regulations make it incredibly difficult to manage low balance/low transaction customers. But their model of accounting for these costs is flawed (usually done as total cost/total customers), they don't have a good feel for what it costs to do compliance for an individual customer, and I argue that the small balance / typical small customer is a low risk for the money laundering problems and can be managed more cost effectively (even automated).   Even my banker buddy will admit that they have missed the mark on the business model and are relying too much on generic fees because it became the easiest thing to do following the 2007 problems and subsequent regulation. We both agree that there is a better model, especially with interest rates at record lows to empower poorer people with loans and to make money servicing those loans, and getting growth from those customers as they grown and interest rates return to traditional norms.  There would be some losses, but again with proper management those could be handled and in aggregate would work out. But this would also take a shift in consumer behavior, and getting the low end customers to borrow money for investment rather than unproductive spending.  Our system is set up to keep people away from knowledge and power, and this is just another component of it. It's very expensive to be poor. This leads to my last point:

This is a bad idea. Free services aren't free. If you aren't paying for what your using, you are the product, not the customer. If you are the product, you have no leverage, and the people making decisions are looking for ways to maximize profit off of you, not looking for ways to improve your customer experience or help you out. You are just part of the value being created for the real (paying) customers, and you aren't getting a fair slice of that value.  More free stuff doesn't help people get off of government services and become self dependent, so why would it work better just because it comes from the private sector?
==============================================================================
i was a banker, but i wouldn't admit it unless someone was holding a gun on me

there's been a lot written on money, banking and finance (these are really important tools)

and arguably one of the first and most important political captures ever (epic corruption)

but when we get down the retail/individual stuff, it's just simple electronic transactions

if we know how banking/checking works and we do and how banks need those deposits

they should be rolling out the red carpet and giving you a toaster for opening an account

the more important point here is this: power

so why would something work better if it was in the private sector?

for conversational purposes there are two types of power

political power and economic power

political power is all about coercion, force, the threat of force and having a monopoly on the initiation of violence on peaceful people

you're not allowed to say no to political power (because violent consequences)

economic power is all about voluntary transactions

you vote with your choices/money

someone in the private sector offering a you shitty deal? don't take it

you can say no and walk and find a better or more acceptable deal

regards



kurtster

kurtster Avatar

Location: drifting
Gender: Male
Zodiac: Libra
Chinese Yr: Dragon


Posted: Mar 13, 2018 - 8:22am

 islander wrote:

I did business with Amazon for years (until fairly recently). They have only one motive - their profit. They won't even participate with others if it means they have to share profit. They are ruthless in how they handle every transaction, and they have no regard for any other party - they set the price and you have to figure out how to deal with it.  They do *Nothing* just for good intentions.

I respect their model and did very well under it. But I don't like it, and I would much rather have better customers (hence my current world). I don't believe them when they say they are trying to help anyone other than themselves. 

 
We agree !
islander
Thalassophile
islander Avatar

Location: Seattle
Gender: Male
Zodiac: Scorpio
Chinese Yr: Cock


Posted: Mar 13, 2018 - 8:18am

 kurtster wrote:
 islander wrote:

...

Our system is set up to keep people away from knowledge and power, and this is just another component of it.

It's very expensive to be poor.
 

This leads to my last point:


This is a bad idea. Free services aren't free. If you aren't paying for what your using, you are the product, not the customer. If you are the product, you have no leverage, and the people making decisions are looking for ways to maximize profit off of you, not looking for ways to improve your customer experience or help you out. You are just part of the value being created for the real (paying) customers, and you aren't getting a fair slice of that value.  More free stuff doesn't help people get off of government services and become self dependent, so why would it work better just because it comes from the private sector?
 
Being poor is extremely expensive.  Nearly everything costs more just due to proximity and mobility.  Toss in the cost of security and it gets worse.

Its not a bad idea if (remember I already made a comparison to company stores) ...

Amazon's intentions really are good and stay that way. 

Amazon is making a dramatic shift towards the poor.  It now has a discount Prime membership rate for those on Medicaid.  This empowers the poor to have access to items that they would not normally find at the corner mom & pop convenience store and at far better prices if they were.  No longer where you live or what kind of transportation you have keeps you from the good stuff and the good prices.  This will allow the poor to be less stressed about just simply getting their basic needs and getting them home, let alone paying for them.  This brings stability to a stressed out environment.  It does require paying attention and educating yourself so you don't fall into expensive predictable patterns.

Then what about Food Stamps ?  I don't know how they fall into this, but that could be a win - win for the users and the taxpayers.  They would be used for only authorized items and less subject to illegal conversion.

This falls into the realm of benevolent dictator / monopoly.  Dangerous and overall a bad idea, because the downside abuses are more likely in the long term as everyone gets lulled into complacency.

You are absolutely right.  Nothing is free or without cost.  It's a risk / reward proposition dependent upon good intentions, and we all know how that plays out over time.

 
I did business with Amazon for years (until fairly recently). They have only one motive - their profit. They won't even participate with others if it means they have to share profit. They are ruthless in how they handle every transaction, and they have no regard for any other party - they set the price and you have to figure out how to deal with it.  They do *Nothing* just for good intentions.

I respect their model and did very well under it. But I don't like it, and I would much rather have better customers (hence my current world). I don't believe them when they say they are trying to help anyone other than themselves. 
kurtster

kurtster Avatar

Location: drifting
Gender: Male
Zodiac: Libra
Chinese Yr: Dragon


Posted: Mar 13, 2018 - 7:47am

 islander wrote:

...

Our system is set up to keep people away from knowledge and power, and this is just another component of it.

It's very expensive to be poor.
 

This leads to my last point:


This is a bad idea. Free services aren't free. If you aren't paying for what your using, you are the product, not the customer. If you are the product, you have no leverage, and the people making decisions are looking for ways to maximize profit off of you, not looking for ways to improve your customer experience or help you out. You are just part of the value being created for the real (paying) customers, and you aren't getting a fair slice of that value.  More free stuff doesn't help people get off of government services and become self dependent, so why would it work better just because it comes from the private sector?
 
Being poor is extremely expensive.  Nearly everything costs more just due to proximity and mobility.  Toss in the cost of security and it gets worse.

Its not a bad idea if (remember I already made a comparison to company stores) ...

Amazon's intentions really are good and stay that way. 

Amazon is making a dramatic shift towards the poor.  It now has a discount Prime membership rate for those on Medicaid.  This empowers the poor to have access to items that they would not normally find at the corner mom & pop convenience store and at far better prices if they were.  No longer where you live or what kind of transportation you have keeps you from the good stuff and the good prices.  This will allow the poor to be less stressed about just simply getting their basic needs and getting them home, let alone paying for them.  This brings stability to a stressed out environment.  It does require paying attention and educating yourself so you don't fall into expensive predictable patterns.

Then what about Food Stamps ?  I don't know how they fall into this, but that could be a win - win for the users and the taxpayers.  They would be used for only authorized items and less subject to illegal conversion.

This falls into the realm of benevolent dictator / monopoly.  Dangerous and overall a bad idea, because the downside abuses are more likely in the long term as everyone gets lulled into complacency.

You are absolutely right.  Nothing is free or without cost.  It's a risk / reward proposition dependent upon good intentions, and we all know how that plays out over time.
islander
Thalassophile
islander Avatar

Location: Seattle
Gender: Male
Zodiac: Scorpio
Chinese Yr: Cock


Posted: Mar 13, 2018 - 7:12am

 miamizsun wrote:

The Government Killed Free Checking—Can Amazon Save It?

Government regulations have driven many people out of their checking accounts, but maybe innovative solutions can help.

Banking has become prohibitively expensive over recent years, especially for the poor. The number of people with free checking accounts has hit a new low, while overdraft fees continue to rise. Whereas it used to be part of the American Dream to maintain a healthy bank account, around 35 million households no longer have regular access to traditional financial services.

It wasn’t long ago that banks would provide valuable financial products to an ever-widening margin of low-income consumers—and make a profit doing so. In 2009, 76 percent of banks offered free checking accounts. Today, that number is only 38 percent. Likewise, overdraft fees in the year 2000 were around $18. Today they are over $30.

So what changed? Critics like to blame big banks for putting “profit over people.” But as easy as it is to point the finger at Wall Street, the real problem isn’t the banks. It’s the government.

Regulations Are Increasing Costs

It turns out that it’s incredibly expensive to extend financial products to the poor. According to the economic research firm Moebs Services, each checking account costs banks $349 on average, while the average revenue is only $268. A substantial portion of these costs come from the thousands of pages of regulations that banks must abide by just to be able to open an account.

Take anti-money laundering (AML) and “know your customer” laws. The AML regime costs have risen by some 50 percent over recent years. This costs banks around $8 billion annually in compliance but leads to remarkably few convictions. A conservative analysis of the law estimates that each AML conviction costs over $7 million.

Meanwhile, as the cost of maintaining a checking account for banks has risen, the main revenue source of these accounts dried up. An amendment to the 2010 Dodd-Frank Act from Sen. Richard Durbin (D-IL) imposed price controls on debit card “swipe fees.” The Durbin Amendment capped the price that banks could charge merchants when a customer used a bank’s debit card to purchase something from the merchant. These fees largely covered the bank’s cost of maintaining a checking account and provided the incentive for banks to issue more debit cards. But seeing that a significant and dependable source of revenue was to dry up, banks looked to cut costs and raise fees elsewhere in order to make up for it.

The cumulative effect of regulation raising costs and reducing revenue was to push low-income consumers out of the formal financial system. At the time of the Durbin Amendment’s implementation, JP Morgan estimated that the new regulations would make 70 percent of customers with less than $100,000 unprofitable. Recent history can attest to that. Around one million people have exited the banking system because of the Durbin Amendment alone. For banks like Bank of America who recently canceled their free checking program, it simply doesn’t make sense to offer these checking accounts to low-income consumers when the account barely breaks even.

A Possible Solution

For the last eight years, the trend has been toward the death of free checking. But that tide might be turning, as innovative companies like Amazon look to enter the market, in partnership with banks like JPMorgan and Capital One.

Amazon’s proposal focuses on creating a product for the unbanked—those very people who have been pushed out of the banking system by regulation. The key is that Amazon is uniquely positioned to turn the usual business model of checking accounts on its head. Whereas banks tend to rely upon overdrafts or interchange fees for revenue, Amazon may be able to leverage something even more valuable—consumer data.

Amazon has an enormous data platform which it relies on to tailor products to its consumers. Integrating a customer’s checking account into their broader commercial infrastructure would allow the firm to analyze a customer’s shopping patterns and financial data to better tailor their products. In combination with its payment system, it would also make purchases at Amazon’s marketplace much cheaper and easier for both the customer and the firm.

In this way, the checking account wouldn’t necessarily need to be profitable, as long as it drives more retail sales for the company, with reports suggesting that Amazon could include a checking account as part of its Prime subscription service. For a further discussion of the advantages Amazon has over its competitors, see this Bain & Co. report.

The move into co-branded checking accounts may, therefore, be less about disrupting the financial services marketplace as it is about increasing consumer engagement with Amazon’s own platform. As for the product’s outlook, Bain and Co. predict that the service could grow to more than 70 million customers over the next five years. This is the same as the third-largest bank, Wells Fargo.

All of this spells good news for currently under-served consumers, who often rely on relatively expensive financial services such as payday lending or check cashing. While government regulation may have just about killed free checking, a new wave of innovative tech firms like Amazon may be able to save it.  



 
I have a friend who is a banker. We have discussed this several times. I think the general gist is correct that regulations make it incredibly difficult to manage low balance/low transaction customers. But their model of accounting for these costs is flawed (usually done as total cost/total customers), they don't have a good feel for what it costs to do compliance for an individual customer, and I argue that the small balance / typical small customer is a low risk for the money laundering problems and can be managed more cost effectively (even automated).   

Even my banker buddy will admit that they have missed the mark on the business model and are relying too much on generic fees because it became the easiest thing to do following the 2007 problems and subsequent regulation. We both agree that there is a better model, especially with interest rates at record lows to empower poorer people with loans and to make money servicing those loans, and getting growth from those customers as they grown and interest rates return to traditional norms.  There would be some losses, but again with proper management those could be handled and in aggregate would work out. But this would also take a shift in consumer behavior, and getting the low end customers to borrow money for investment rather than unproductive spending.  Our system is set up to keep people away from knowledge and power, and this is just another component of it. It's very expensive to be poor.  This leads to my last point:

This is a bad idea. Free services aren't free. If you aren't paying for what your using, you are the product, not the customer. If you are the product, you have no leverage, and the people making decisions are looking for ways to maximize profit off of you, not looking for ways to improve your customer experience or help you out. You are just part of the value being created for the real (paying) customers, and you aren't getting a fair slice of that value.  More free stuff doesn't help people get off of government services and become self dependent, so why would it work better just because it comes from the private sector?


kurtster

kurtster Avatar

Location: drifting
Gender: Male
Zodiac: Libra
Chinese Yr: Dragon


Posted: Mar 13, 2018 - 6:34am

 miamizsun wrote: 
Outside the box.  Walmart tried to do something like this awhile ago but it didn't takeoff.  Prolly just because it was Walmart.  I think they tried to buy their own bank or did, but their brand just wasn't warm and fuzzy enough to get people to give them their money without buying something.

I've been very fortunate to be with the bank that I use.  Been with them since the 80's.  Somehow they have avoided being bought up and just recently started buying other banks.  And they still have free checking.  Even better, they give you free 24 hour overdraft protection on your checking account.  Who does that ?  They give you 24 hours to move money into your account to cover it and let it slide.

This Amazon thing is spooky though.  It kinda sounds reminiscent of the old company store in rural mining towns and the like.  Your money and the store have the first relationship.  Kinda makes it easier to keep it all in house and inhibit spending elsewhere.  Sneaky yet very smart for Amazon. 

Imagine going to your checking account and finding a message that you are low on something that you purchase at a regular interval and here's a handy one click link to order more !  More often than not, it'll get the click without any concern over price cuz its apparently already been mentally accepted as the price you like.  Conditioning ... convenience ... mindlessness ... brilliant ...

Meanwhile, Amazon has got various cities bending over backwards to give them tax incentives to bring in a company that is so flush with cash that it would be the least in need or deserving of any tax breaks.  Amazing.


miamizsun

miamizsun Avatar

Location: (3261.3 Miles SE of RP)
Gender: Male


Posted: Mar 13, 2018 - 5:32am

The Government Killed Free Checking—Can Amazon Save It?

Government regulations have driven many people out of their checking accounts, but maybe innovative solutions can help.

Banking has become prohibitively expensive over recent years, especially for the poor. The number of people with free checking accounts has hit a new low, while overdraft fees continue to rise. Whereas it used to be part of the American Dream to maintain a healthy bank account, around 35 million households no longer have regular access to traditional financial services.

It wasn’t long ago that banks would provide valuable financial products to an ever-widening margin of low-income consumers—and make a profit doing so. In 2009, 76 percent of banks offered free checking accounts. Today, that number is only 38 percent. Likewise, overdraft fees in the year 2000 were around $18. Today they are over $30.

So what changed? Critics like to blame big banks for putting “profit over people.” But as easy as it is to point the finger at Wall Street, the real problem isn’t the banks. It’s the government.

Regulations Are Increasing Costs

It turns out that it’s incredibly expensive to extend financial products to the poor. According to the economic research firm Moebs Services, each checking account costs banks $349 on average, while the average revenue is only $268. A substantial portion of these costs come from the thousands of pages of regulations that banks must abide by just to be able to open an account.

Take anti-money laundering (AML) and “know your customer” laws. The AML regime costs have risen by some 50 percent over recent years. This costs banks around $8 billion annually in compliance but leads to remarkably few convictions. A conservative analysis of the law estimates that each AML conviction costs over $7 million.

Meanwhile, as the cost of maintaining a checking account for banks has risen, the main revenue source of these accounts dried up. An amendment to the 2010 Dodd-Frank Act from Sen. Richard Durbin (D-IL) imposed price controls on debit card “swipe fees.” The Durbin Amendment capped the price that banks could charge merchants when a customer used a bank’s debit card to purchase something from the merchant. These fees largely covered the bank’s cost of maintaining a checking account and provided the incentive for banks to issue more debit cards. But seeing that a significant and dependable source of revenue was to dry up, banks looked to cut costs and raise fees elsewhere in order to make up for it.

The cumulative effect of regulation raising costs and reducing revenue was to push low-income consumers out of the formal financial system. At the time of the Durbin Amendment’s implementation, JP Morgan estimated that the new regulations would make 70 percent of customers with less than $100,000 unprofitable. Recent history can attest to that. Around one million people have exited the banking system because of the Durbin Amendment alone. For banks like Bank of America who recently canceled their free checking program, it simply doesn’t make sense to offer these checking accounts to low-income consumers when the account barely breaks even.

A Possible Solution

For the last eight years, the trend has been toward the death of free checking. But that tide might be turning, as innovative companies like Amazon look to enter the market, in partnership with banks like JPMorgan and Capital One.

Amazon’s proposal focuses on creating a product for the unbanked—those very people who have been pushed out of the banking system by regulation. The key is that Amazon is uniquely positioned to turn the usual business model of checking accounts on its head. Whereas banks tend to rely upon overdrafts or interchange fees for revenue, Amazon may be able to leverage something even more valuable—consumer data.

Amazon has an enormous data platform which it relies on to tailor products to its consumers. Integrating a customer’s checking account into their broader commercial infrastructure would allow the firm to analyze a customer’s shopping patterns and financial data to better tailor their products. In combination with its payment system, it would also make purchases at Amazon’s marketplace much cheaper and easier for both the customer and the firm.

In this way, the checking account wouldn’t necessarily need to be profitable, as long as it drives more retail sales for the company, with reports suggesting that Amazon could include a checking account as part of its Prime subscription service. For a further discussion of the advantages Amazon has over its competitors, see this Bain & Co. report.

The move into co-branded checking accounts may, therefore, be less about disrupting the financial services marketplace as it is about increasing consumer engagement with Amazon’s own platform. As for the product’s outlook, Bain and Co. predict that the service could grow to more than 70 million customers over the next five years. This is the same as the third-largest bank, Wells Fargo.

All of this spells good news for currently under-served consumers, who often rely on relatively expensive financial services such as payday lending or check cashing. While government regulation may have just about killed free checking, a new wave of innovative tech firms like Amazon may be able to save it.  


R_P
Oînk, oînk, OÎNK!
R_P Avatar



Posted: Mar 7, 2018 - 11:17am

Gary Cohn: Mission Accomplished
miamizsun

miamizsun Avatar

Location: (3261.3 Miles SE of RP)
Gender: Male


Posted: Sep 26, 2017 - 5:56am

 R_P wrote:
Trump Swamp Redux...
Goldman Sachs alum Gary Cohn, head of President Donald Trump’s National Economic Council, is planning a weakening of financial regulations via executive order.

Executive orders set to be issued on Friday would direct regulatory agencies to review new rules adopted under the Dodd-Frank Act, a sweeping reform of the financial sector that was passed after the Great Recession. The orders would also repeal a Department of Labor rule that requires retirement advisers to operate solely in the best interests of their clients.

“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” Cohn, the former chief operating officer of Goldman Sachs, told the Wall Street Journal on Friday. “The banks are going to be able to price product more efficiently and more effectively to consumers.”

Cohn left Goldman for the White House last month, cashing in on bonuses and stock options worth hundred of millions of dollars. He’s among three alumni from the iconic Wall Street firm (the others are Treasury nominee Steve Mnuchin and Steve Bannon as chief White House strategist) to be serving in this administration, a sharp departure from a campaign in which the president criticized financial elites.


 
a lot of this is lather, rinse, repeat

that dol rule is a politically friendly rule to the mega-companies (and attorneys)

in essence it will squeeze out the small guy due to compliance/legal expenses and the giants will mop up

the fees/costs to the clients and taxpaying livestock?  well....

at least the govt regulatory framework will grow/benefit

what is it they say about the road to hell?  {#Money-mouth}

 
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Posted: Sep 25, 2017 - 8:42pm

Government by Goldman
Gary Cohn Is Giving Goldman Sachs Everything It Ever Wanted From the Trump Administration
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Posted: Feb 4, 2017 - 1:03am

Trump Swamp Redux...
Goldman Sachs alum Gary Cohn, head of President Donald Trump’s National Economic Council, is planning a weakening of financial regulations via executive order.

Executive orders set to be issued on Friday would direct regulatory agencies to review new rules adopted under the Dodd-Frank Act, a sweeping reform of the financial sector that was passed after the Great Recession. The orders would also repeal a Department of Labor rule that requires retirement advisers to operate solely in the best interests of their clients.

“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” Cohn, the former chief operating officer of Goldman Sachs, told the Wall Street Journal on Friday. “The banks are going to be able to price product more efficiently and more effectively to consumers.”

Cohn left Goldman for the White House last month, cashing in on bonuses and stock options worth hundred of millions of dollars. He’s among three alumni from the iconic Wall Street firm (the others are Treasury nominee Steve Mnuchin and Steve Bannon as chief White House strategist) to be serving in this administration, a sharp departure from a campaign in which the president criticized financial elites.

ScottFromWyoming
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Posted: Sep 9, 2016 - 3:16pm

Interesting background on that Wells Fargo debacle 
 
There's a standard story in most bank scandals, in which small groups of highly paid traders gleefully and ungrammatically conspire to rip-off customers and make a lot of money for themselves and their bank. This isn't that. This looks more like a vast uprising of low-paid and ill-treated Wells Fargo employees against their bosses.  

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Posted: Jun 28, 2016 - 1:48pm

Assistant Attorney General Lanny Breuer on Whistleblowers and Not Prosecuting Bankers for Fraud (Satire)


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Posted: Apr 3, 2016 - 1:59pm

Panama Papers: Mossack Fonseca Leak Reveals Elite's Tax Havens
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Posted: Jan 22, 2016 - 3:13pm

 RichardPrins wrote: 
They were floating a pretty sweet 2 point+ CD right before the market took a dump.Today was pretty sweet though.


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Posted: Jan 22, 2016 - 3:00pm

Elizabeth Warren Denounces Travesty of Government "Settlement" With Goldman Sachs

Criticism of US government leniency on Wall Street legal transgressions is now being covered widely - even by trade publications such as the National Mortgage Professional Magazine. On January 18, the trade publication ran an article about Sen. Elizabeth Warren (D-Massachusetts) condemning the most recent US government settlement with a "too-big-to-fail" financial firm, in this case Goldman Sachs, for illegal abuse of the mortgage market:

Sen. Warren used her Facebook page to denounce the agreement, noting that the settlement sum was “barely a fraction of the billions investors lost” while arguing that Goldman Sachs was not properly penalized for its actions.

“That’s not justice – it’s a white flag of surrender,” she wrote. “It’s time to end this farce. These companies think they’re above the law – and too many government officials go along with them. A first step would be to pass the bipartisan Truth in Settlements Act to shine more light on these backroom deals. A second step would be to get government officials who have the backbone to fight back.”

Warren’s comments were echoed by the nonprofit U.S. Public Interest Research Group (U.S. PIRG).

The publication, which is geared toward professionals in the mortgage industry, also tellingly noted, "In announcing thesettlement, Goldman Sachs made no admission of guilt or error, and no executive from the New York-based financial giant will face criminal or civil charges." 

As we have noted in this space many times, the seemingly large financial penalties levied on Wall Street firms for illegal activity are not so large, in the context of those firms' budgets: The fines are generally less than the revenue that the firms generated by engaging in the often fraudulent practices in the first place. As The Huffington Post noted in a report on the recent settlement, 

About $2.4 billion of the settlement is in the form of a government penalty. The bank has said that it securitized about $125 billion of home loans between 2005 and 2008, of which about $23 billion eventually soured. The penalty represents about 10 percent of investors’ losses.

Goldman can deduct the rest of the settlement, about $2.7 billion, from its future tax bills, according to a person familiar with the accord. The bank said the settlement will reduce its fourth-quarter profit by about $1.5 billion. It reports earnings next week.

Goldman Sachs is being let off the hook for 90 percent of the investor losses for which it was primarily responsible. Furthermore, as is consistent with past settlements with Wall Street firms by the Department of Justice and other executive agencies, much of the fine is tax-deductible. As BuzzFlash has noted before, this rewards Wall Street financial companies by allowing them to factor in settlements with the government for illegal behavior as nothing more than the cost of doing business.

Former Attorney General Eric Holder, who left office last year to resume a six-figure-salary partnership at the DC corporate law firm of Covington & Burling (which defends many of the firms that Holder was responsible for prosecuting as attorney general), infamously stated to a US Senate committee in March of 2013:

I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute - if we do bring a criminal charge - it will have a negative impact on the national economy, perhaps even the world economy. 

Apparently, under current Attorney General Loretta Lynch, that legal exemption for too-big-to-fail financial firms and their executives has not changed.

Laughing all the way to...
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