JPMorgan, UBS and Deutsche Bank Charged with Derivatives Fraud:

JPMorgan, UBS and Deutsche Bank Charged with Derivatives Fraud:

Posted by Jesse at 9:20 AM
17 March 2010

More like international crime families sending out enticing emails trying to lure and trick the unsuspecting than serious financial institutions. This is banking?

Notice that these were operating out of their London units, similar to the AIG derivative scandal that helped to worsen the US financial crisis. The FSA is apparently working hard now to enforce its rules and bring these banks to heel. Contrast that with the SEC in the States which seems reluctant to do anything regarding enforcement, and even when a judge puts them to the task, are able to administer only the mildest of financial chastisement to be passed on to the shareholders.

There is speculation that the US government cannot reform these banks because it is deeply involved in financial transactions of a questionable nature with them itself, ranging from enormous individual campaign contributions to market manipulation in various financial instruments in support of government policy which is otherwise failing badly. The opacity of markets and government bodies like the ESF makes this difficult to assess, but the outrageous size of positions amongst some of the banks, together with the occasional slip in the redacted transcripts is the smoke that indicates more heat beneath the surface than we might imagine.

The US Treasury Secretary himself is recenly implicated in an outrageous accounting fraud perpetrated by Lehman Brothers with the apparent complicit silence of the NY Fed which he was leading at the time.

And yet the Congress seems to be able to do little or nothing, it is so controlled by the monied interests. The Senate has the temerity to propose giving Consumer Protection to this very Fed as it is revealed to be complicit in bank fraud of epic proportions, and a track record of fighting and delaying consumer reforms and sensible regulation of OTC derivatives for years. The Republicans are unashamed of their venality, and the Democrats are seemingly leaderless.

The banks must be restrained, the financial system reformed, and balance restored to the economy before there can be any sustained recovery.

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Deutsche Bank, JPMorgan, UBS Are Charged With Derivatives Fraud

By Elisa Martinuzzi and Sonia Sirletti

March 17 (Bloomberg) -- Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.

Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city on swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of borrowings.

Prosecutors across Italy are probing banks as local and national government agencies face potential losses of 2.5 billion euros on derivatives, lawyers say. The Milan probe may also affect cases as far away as the U.S., where securities firms have faced charges for price-fixing and bid-rigging in the sale of derivatives to municipalities, though not for fraud, according to former regulator Christopher “Kit” Taylor.

“This case could have repercussions over here if the trial showed deliberate intent,” said Taylor, a former executive director of the Municipal Securities Rulemaking Board, the national regulator of the municipal-bond market. “What happened in Europe was the continuation of a pattern in the U.S.”

UBS, JPMorgan and Deutsche Bank officials didn’t have an immediate comment. Officials at Depfa couldn’t immediately be reached.

Robledo alleges the London units of the four banks misled Milan on the economic advantage of a financing package that included the swaps and earned 101 million euros in hidden fees.

He also claims the banks violated U.K. securities rules by failing to inform Milan in writing that for the swap deal the city was a counterparty to the lenders rather than a customer. Banks abiding by the rules of the Financial Services Authority are required to shield customers from conflicts of interest and provide them with clear and fair information that isn’t misleading.

The prosecutor, who seized assets from the banks equal to their share of the alleged profit, is claiming JPMorgan charged about 45 million euros in commissions that were hidden from the municipality, while Deutsche Bank made about 25 million euros, Depfa Bank earned 21 million euros and UBS made 10 million euros, court documents show.... http://tiny.cc/oe7oo


Posted by Jesse at 9:20 AM

http://jessescrossroadscafe.blogspot.com/2010/03/jpmorgan-ubs-and-deutsche-bank-charged.html

Huge (53%) Tax Increase On SAVERS!:

Huge (53%) Tax Increase On SAVERS by Karl Denninger

Posted at 11:52
Wednesday, March 17. 2010

If you were wondering where the hidden taxes are in "Health Reform", guess what - President Obama has just given you something to sit on.

"The forced march to pass ObamaCare continues, and all that matters now is raw politics. But opponents should go down swinging, and that means exposing such policy debacles as President Obama's 11th-hour decision to apply the 2.9% Medicare payroll tax to "unearned income."

That's what savings and investment income are called in Washington, and this destructive tax wasn't in either the House or Senate bills, though it may now become law with almost no scrutiny." ( ObamaCare's Worst Tax Hike http://tiny.cc/mD5V0 )

This is unbelievably destructive to capital formation.

For the person who is "short-term trading" (e.g. daytrading, etc) this is a relatively small tax, an increase of about 7% in the tax (2.9% applied to the 39.6% maximum rate on "ordinary income", which short-term capital gains are.)

But for the person who is INVESTING for the long haul, that is, who is holding stocks for more than one year, this takes the marginal rate from 15% to 17.9%, an increase of almost 20% in the tax owed.

This, of course, comes on the back of President Obama's fraudulently engineered "rally", which was created through Congressional intervention to permit - surprise surprise - legalized accounting fraud through "mark to model."

So you got your stock market rally, and now President Obama and The Democrats are going to cram a 20% tax increase down your throat if you profited from it - and at this point, being 2010, there's not a thing you can do about it.

It gets better. Since ordinary investors can only write off $3,000 in capital losses, when you lose you don't get a tax credit. Oh yeah, you get to carry forward the loss to future years, but you paid the tax on the gains already - this is a putative future credit back.

Oh, and let's not forget that there was already a huge tax increase coming this year - the long term capital gains rate goes to 20% at the end of this year anyway as the Bush tax cuts expire.

So in fact the rate goes from 15% to 22.9%, a fifty-three percent increase in the tax rate.

And oh, if your AGI goes over $200,000 by even a dollar you are subject to this tax from the first dollar of your investment income.

A fifty-three percent increase in taxes on long-term (that is, capital-forming, long-term investment) capital gains - exactly the sort of investment activity you want to form businesses and invest for the long haul in America's future, not to mention generating jobs by forming those enterprises.

That's slammed the door on any interest I might have in forming a new business as I did in the 1990s - ever - and I suspect I'm not alone.

When this goes into effect my capital, other than that which I can shelter from taxation, is no longer going to be put at risk in the markets. I'd rather live in a nice little cottage on the beach and simply expend what I have rather than contributing to capital formation in any way, shape or form under a punitive system like this.

Why?

Because if Congress demonstrates that it will put 53% on the capital gains rate once I've already committed my capital (thereby destroying my return) I will not take the risk of them doing it again and making the rate even more punitive.

http://market-ticker.org/archives/2090-Huge-53%25-Tax-Increase-On-SAVERS.html