Spanish bankers defraud customers

This video says about itself:

July 23, 2012

Spain is launching a fraud investigation into the collapse of one of its largest banks. A Spanish court will begin an investigation into the role of senior executives in the spectacular collapse of the Spanish bank Bankia In May, as the euro crisis was escalating, Spain nationalised Bankia. In many ways, the bank’s story mirrors the disastrous plight of the country’s whole financial sector. Al Jazeera’s Simon McGregor Wood reports.

By Alejandro López:

Hundreds of thousands of defrauded small savers face loss of life savings in Spain

12 April 2013

Approximately 710,000 Spanish bank customers and their families have been inappropriately sold preference shares in their banks, according to financial consumer association ADICAE (Association of Bank and Savings Bank Users). Most are ordinary savers who were persuaded to convert their life savings into this much riskier form of investment, which they were told was just as safe. This was a lie.

Preference shares are high-risk financial products, potentially generating high returns if the bank in question makes a healthy profit. These are usually sold to professional speculators who know the risk involved. Unlike normal depositors, the government does not insure holders of preference shares against losses.

The advantage to the banks is that it makes their capital balance look stronger, because customers have their savings locked up and at the same time they have no voting rights to which shareholders are usually entitled.

Between 1999 and 2004, some €18.3 billion (US$24 billion) worth of preferential shares were sold in Spain, to around 50,000 people, mainly pensioners. But with the onset of the global financial meltdown in 2008, banks embroiled in the toxic property loans market began selling a lot more of these shares as the property boom collapsed.

Around €31 billion worth of preferential shares were sold by Spain’s major banks and savings banks (cajas de ahorro). Banking staff were instructed to pressure customers, who for the most part had no idea what these financial products were, to buy these shares. In many cases, clients were deliberately conned.

According to a report by the Consumers and Users Organization (OCU), 80 percent of those affected are older than 65. The banks deliberately targeted this age group because they were considered to “trust” banks more. They were then “recommended” the product as a good new investment due to its “high profitability” without being told that returns were not guaranteed, or that the state Deposit Guarantee Fund would not cover losses.

There are thousands of stories of the callousness with which banks imposed themselves on these small investors, including one pensioner suffering Alzheimer’s disease and at least one illiterate person who signed by dipping a finger in ink.

Maria Carmen, who attended a meeting of victims of the preferential shares fraud, explained, “I speak on behalf of my mother who has 11,965 shares placed with her by force or at least through ignorance… She spoke to someone who she trusted and this person played on that, tricked her and sold her these preferred shares when my mother thought she was taking out a deposit.”

Another saver told Tengrinews, “My bank told me it was a safe investment with a very good return of 7 percent and that I could get my money back in 2014… I didn’t even know I had preferential shares. They called them financial assets”.

His daughter, who is unemployed, added: “My parents are not from an educated background… My mother wanted a low-risk investment. They told them, ‘You will get your money back in 2014’. But it was a verbal agreement.” When problems with their bank came to light they were never told. The family only found out when the bank would not let them access their savings.

Nemecio Martin, a 70-year-old pensioner, told AFP that he invested €42,000 in preference shares, which he had planned to use to pay for his stay in a retirement home. “If I can’t pay, where will I go?” he asked. “Will I wait under a bridge to die?”

Last year, the European Union propped up Spanish banks with €42 billion in rescue loans. One of the conditions imposed was that bank customers who bought preferred shares would have to take losses.

As a result, on March 22 the Popular Party government of Prime Minister Mariano Rajoy passed a decree imposing “haircuts” of up to 61 percent on preference shares and other debt in four nationalised banks: Bankia (36 percent) Banco Gallego (50 percent) and Catalunya Banc (61 percent). The haircut on NCG Banco is not yet unknown, but estimates are around 43 percent.

Other banks also have large quantities of preference shares. Banca Civica, bought by La Caixa last year, has €9 billion worth (compared to Bankia’s €3.9 billion). The situation is particularly bad for customers of Banco CAM, an Alicante-based savings bank, which was bailed out in 2011 and re-privatised for one euro to Spain’s Banco Sabadell. It was then suddenly discovered that 70,000 customers had been sold a package that included CAM preference shares. Banco Sabadell has now offered to exchange the CAM savings for ordinary shares in the bank, but at a conversion rate that means savers are looking at an immediate loss of almost 40 percent.

The decree also poured salt into the wounds of the defrauded small savers, by making the banks contribute just €2 billion of the €30 billion total to the Deposit Guarantee Fund. Banks must make 40 percent of their contribution to the fund no later than 20 days from the end of this year.

The second largest bank in Spain, BBVA, has already said it will not comply.

Pensioners and other victims of the preference shares fraud, angry at losing their life savings, have been protesting almost daily. In Galicia hundreds of protesters have been invading town hall meetings across the region in Vigo, Mos, Redondela, Nigrán, Oia, As Neves and O Porriño, blaming both the ruling Popular Party government and the opposition Socialist Workers Party’s inaction. Three weeks ago police in the Galician town of Ponteareas had to help the Popular Party mayor and councillors escape from the town hall via a back window after demonstrators blocked access to the building.

The brutal way in which the Spanish government is treating small savers again demonstrates that the ruling elite is determined to make working people and the middle classes pay for a crisis that is not of their making.

In Spain and other countries, including most recently Cyprus, the bank bailouts have been tied to structural reforms that include a hike in the retirement age, the slashing of public sector jobs and services and extensive privatisations.

In Cyprus, due to angry protests in the streets, parliament voted down a proposal to levy a charge against those bank depositors with less than €100,000. Instead the required money to bail out the banks and finance institutions is to be seized through a gamut of mass austerity measures, imposed by the troika with no democratic mandate.

Related articles

• Spanish Bank Deposits Seized, Cyprus-Style! (socioecohistory.wordpress.com)
• Now Spain Plans To Wipe Out Bank Shareholders (sweetness-light.com)
• Spain’s Bankia-Led Bailout Won’t Spell End of Troubles for Banks – Bloomberg (bloomberg.com)
• Bankia posts biggest loss in Spanish history (miamiherald.com)
• Spain’s Bankia posts £16bn loss (independent.ie)
• Banco do Brasil among bidders for Bankia Florida unit: report (elpais.com)
• Minister rejects accusation he forced Bankia head to resign (elpais.com)

British big business fraud

From daily News Line in Britain:

Friday, 5 April 2013

BIG BUSINESS FRAUD BOOMING! – as workers fight for their rights

WHERE crime ends and business starts and vice versa has always been seen as a blurred grey area which always remains, whatever the scandals that rock the ruling class.

The Fraud Investigation and Dispute Services team at Ernst & Young has released new research revealing that the total fines issued to UK firms and executives for fraudulent activity has exceeded £1 billion in the past five years, with 68% of the fines being applied to the financial services industry (which equates to 55% of the total value).

The study collected data from over 700 cases of fraud reported since 2007 using information provided by three major UK governing bodies.

The data compared the penalties imposed on firms and individuals alongside the reasons behind the fine.

The investigation found that since 2007, UK companies have been fined a total of £976,119,238 whilst individuals have been fined a total of £45,967,462.

The study found that 68% all cases of fraud over the past five years were within the financial services industry, with cases of financial fraud highest in the mortgage industry and specialised finance sector.

Overall, the total fines for the financial services industry exceeded regulatory censure.

John Smart, Partner at Ernst & Young, said: ‘It is worrying to see that the regulators have needed to step in so frequently and issue punishments of this severity to businesses and executives.

‘Just under half of the penalties handed out in the past five years have been monetary fines and the market, for the most part, is not in a condition for businesses to be losing money due to negligence.

‘These results should serve as a stark warning to all businesses in the UK to get their houses in order.

‘Whilst the results vary across different industries, firms should be mindful that these are not isolated situations, and fraudulent actions can occur across all industries and all sizes of business.’

The study’s findings also revealed that individual prison sentences across all regulatory prosecutions ranged from eight months to ten years, with partners and directors receiving the heaviest punishments.

The research reveals that since 1997, the average prison stay of a convicted fraudster – either acting individually or on behalf of a company – is 2,000 days.

John Smart concludes: ‘The extent and variation in the level of fines and prison sentences sends a clear message to UK businesses and their employees that misconduct will not be ignored.

‘Board members will need to take a good look at what they are doing and undertake a full risk and systems review in order to identify any blind spots and identify who the fraudsters are.’

Additional findings from the research include:

• 45% of all fines in the past five years were between £10,000 and £100,000.

• The consumer staples industry, incorporating food, beverages, tobacco and household goods, had the second largest total of fines and the largest average fine at £56,342,307.75, despite making up just 2% of all cases.

Meanwhile the ruling class carries on with its war with the working class all over the planet.

Related articles

• Erie businessman pleads guilty to fraud charges (goerie.com)
• The Best Way Yet to Proclaim Love for a Tax Cheat – Bloomberg (bloomberg.com)
• Jim Chanos Talks Fraud Detection On Wall Street (valuewalk.com)
• Fraud Case Against Ernst & Young (cjess1.wordpress.com)
• Retailers to consult former cyber criminal on e-retail fraud (computerweekly.com)

More homeless Irish people, IMF demands

This music video from Ireland is called Lough Sheelin Eviction, by the Wolfe Tones.

The song tells about one of many similar tragedies in nineteenth-century Ireland.

The Wikipedia article about the lake Lough Sheelin writes about it:

Lough Sheelin (from Irish: Loch Síodh Linn meaning “lake of the fairy pool”) is a limestone freshwater lough (lake) in Ireland located in County Westmeath, County Meath and County Cavan near the villages of Finnea (also spelled Finea) and Mountnugent and the town of Granard, (County Longford).

The lake is naturally populated by brown trouts whose native stocks had depleted in recent years, hence the Central Fisheries Board stocking with farm reared the lake for the pleasure of anglers.^[1] Trout stocks are estimated to be over 100,000.

It is also the setting of the song “Lough Sheelin Eviction”, made popular by The Wolfe Tones. The lyrics tell the sad, but unfortunately, too typical story of a family being evicted from their home by an unforgiving & merciless landlord. Absentee landlords were common in Ireland and for many landlords the main interest was income rather than the conditions of their tenants. Many landlords realized that they could get a higher income by turning their properties to pasture than to continue with the old practice of collecting rents from tenant farmers. Evictions were the most common way of getting rid of unwanted tenants. In the song the woman, Eileen, dies in the cold and the man is forced to flee his native land in order to find a new home.

It seems that the International Monetary Fund of Ms Christine Lagarde now wants to bring back the horrors of nineteenth century Ireland to the twenty-first century.

From daily News Line in Britain:

Friday, 5 April 2013

IMF ORDERS MORE IRISH ‘REPOSSESSIONS’

THE International Monetary Fund has delivered a brutal assessment of Ireland’s economic situation, complaining of a lack of progress by banks, and dangers of the country’s debt becoming unsustainable if growth forecasts are missed.

The IMF has criticised Irish banks for ‘inadequate progress’ in dealing with non-performing loans, stating that they are ‘only beginning to tackle non-performing loans’.

It complains repossessions are low at 0.3 per cent of total mortgage arrears in 2012, compared to the 3.25 per cent in the UK and the US.

Calling for a more efficient repossession regime, the IMF proposes the designation of specialist judges to concentrate expertise in handling a ‘potentially larger volume of repossession cases in an expedited manner’, while maintaining protections for homeowners.

While acknowledging progress to date, the IMF expects Ireland’s economy to grow by 1.1 per cent this year, by 2.2 per cent next year and by 2.7 per cent in 2015.

However, it warns that if growth was to fall short of these targets and to remain a sluggish 0.5 per cent per year, public debt would escalate to one-and-a-half times the size of the economy by 2021 and put the economy on an ‘unsustainable path’.

The IMF says allowing the European Stability Mechanism bailout fund to directly invest in Irish banks could play ‘an invaluable role’ in improving the country’s prospects for recovery and making the public debt burden more sustainable.

On the high unemployment, the IMF warns: ‘If involuntary part-time workers and workers only marginally attached to the labour force – two groups that registered significant increases – are also accounted for, the unemployment and underemployment rate stands at a staggering 23 per cent.’

Related articles

• Bankers make Irish people homeless (dearkitty1.wordpress.com)
• British bedroom tax makes people homeless (dearkitty1.wordpress.com)
• European funding for banks could be ‘invaluable’ to recovery, says IMF (irishtimes.com)
• IMF’s grim warning on recovery is aimed at EU hawks (independent.ie)

Detroit, Stockton, United States cities in trouble

This video from the USA is called Moratorium NOW! – Detroiters Demand 1 of 2.

And here is video #2 of that series.

From daily News Line in Britain:

Wednesday, 3 April 2013

American dream turns to nightmare!

HUNDREDS of US cities are going bust, either destroyed by the banking and property collapse or by the crisis of the major US industries.

The city bosses are choosing between two roads to resolve the crisis. One, as in the Californian city of Stockton, is to declare bankruptcy, and impose huge cuts while trying to avoid having to repay, in full, the huge financial loans that were negotiated on the basis of the boom.

The other road is being taken in Detroit, where the motor car industry has collapsed, and where an unelected official has been appointed with dictatorial powers to put the city finances right by destroying the trade unions and closing the city’s schools, and ending city democracy.

A Federal judge on Monday granted the city of Stockton its request to go bankrupt.

US Bankruptcy Judge Christopher Klein’s declaration means the city of 292,000 can now draft a plan to pay off its creditors for less than it owes.

A feature of the hearing was the judge’s point-by-point recounting of the rise and fall of the city, that explosively expanded as part of the inflationary property boom, then imploded with its collapse.

Encouraged by the tax income from the housing boom of the early 2000s, Stockton approved ‘overly generous’ employment packages for its officials as they pushed through gigantic projects, including a waterfront baseball stadium, a new marina and a presidential palace-style City Hall.

Then, said Judge Klein, came the ‘hit’ – what we now call the ‘Great Recession’ and foreclosures hit the city like a nuclear explosion.

By 2011, unemployment reached 22 per cent, property values collapsed by more than half, homeless people lived on the streets, and the crime rate rocketed.

Klein lambasted the bond creditors who are still owed $167 million for the new City Hall and other municipal buildings and projects, for saying that the city was trying to ruin them by filing for bankruptcy instead of hacking more from its budget to pay them back.

Stockton filed for bankruptcy in June. The city contended it had trimmed every dollar it could from its budget for several years but was unable to erase a $26 million deficit or make any headway on renegotiating its $1 billion in long-term debt.

Officials have been forced to make dramatic spending cuts – roughly $26m (£17m) this year. The city cut a quarter of its police officers, one third of the fire department staff and 40 per cent of all other employees. It also cut wages and medical benefits. Stockton’s unemployment and violent crime rates now rank among the worst in the nation. Its police force is so decimated, he said, that officers ‘during peak activity respond only to crimes in progress’.

The city’s case is being watched closely by hundreds of other US cities and towns that are weighing their options between official bankruptcy or dictatorship – as in Detroit. There, the embattled Detroit Police Department says the city ‘is on the brink’.

Major developments took place during the first official week of emergency management in Detroit. A series of demonstrations against state-appointed bank functionary, Kevyn Orr, highlighted the widespread opposition to the usurpation of local power and the imposition of dictatorship.

On March 25, Detroiters rallied outside the City Hall denouncing the appointment of Orr and his overseer, conservative Republican Governor Rick Snyder. People chanted slogans against the denial of voting rights in the city.

Jerome Goldberg of the Moratorium NOW! Coalition to Stop Foreclosures, Evictions and Utility Shut-offs was invited to address the crowd. Goldberg slammed the banks as the main source of the crisis in Detroit, calling for an immediate halt to the payment of debt-service on the fraudulent $16.9 billion that the financial institutions claim is owed by the working people of the city.

In fact, Public Act 436 creates another form of governance that allows municipalities to be controlled by an unelected official ‘who is vested with broad legislative power and whose orders, appointments, expenditures and other decisions are not reviewable by local voters.’

The Public Act is a bankers’ bill whose purpose is to retrieve the billions of dollars that the banks claim to have loaned to the city.

This story of two cities shows that the American Dream is over and that, whatever road the bourgeoisie takes, it has turned into a nightmare of huge cuts and mass poverty for the workers, with an open dictatorship of the bankers already a reality in Detroit.

Related articles

• Judge Lets Stockton Stay in Bankruptcy, and Creditors Tremble (businessweek.com)

Fresh food wasted amidst hunger

This is a German video with English subtitles on the global waste of food.

In this Easter season, poor people in Afghanistan, in Pakistan and in Greece cannot afford food. Some people there who can afford food throw some of it away.

So, the poor people go to garbage bins and rubbish dumps to eat. The food there may very well be contaminated with sick making, maybe even lethal germs or chemicals of the rest of the garbage.

Some corporate bosses in London, England want to make sure that discarded food is not eaten hygienically, but from hazardous garbage cans. They seem to say: “Let them eat cake, fished out of stinking rubbish”. A variant on what Queen Marie Antoinette said about poor people just before the French revolution … well, she seems to have never really said it … like many quotes ascribed to famous people are not really by those people.

By Eric London in the USA:

Augusta, Georgia: Police hold back crowd in near-food riot

1 April 2013

Police in Augusta, Georgia held back a crowd of hundreds of people who had gathered near an out-of-business grocery store last Tuesday in the hopes of collecting the store’s remaining food surplus. The crowd of three hundred watched in anger as the large pile of fresh groceries was thrown into dumpsters and carted away to rot in a nearby landfill.

“These are brand new [food] items,” Richmond County Sheriff Richard Roundtree told WISTV.com. “We saw the potential for a riot was extremely high.”

The near outbreak of a food riot in the United States illustrates the historic magnitude of the social counter-revolution being waged by the ruling class against the vast majority of the population.

The assault on the living conditions of the working class has produced a level of social desperation not seen since the Great Depression. Though the scene of hungry crowds confronting armed police may seem more reminiscent of 1931, in fact it depicts the harsh reality of 2013.

The near-riot in Augusta went entirely unreported outside of Georgia, with the national media refusing to mention it. The events in Augusta are unmentionable because they expose all too clearly the fruits of the joint policies of the Republicans and Democrats, including the Obama administration, which are to ruthlessly protect the interests of the financial aristocracy at the expense of the wages and living conditions of the remainder of the population.

The existence of crowds of hungry citizens within the United States explodes the various proclamations from the Obama administration that an economic “recovery” is underway, and demonstrates instead that the capitalist system is proving itself utterly incapable of meeting the most basic needs of society. There is a palpable fear in the political establishment that widespread opposition within the population to their policies will emerge.

Last Tuesday’s confrontation arose after word spread through the heavily impoverished neighborhoods surrounding the Laney Supermarket that the store owners were being evicted and were donating the surplus food to local residents. But Sun Trust Bank, the owner of the property, ordered that the food be destroyed.

Police were deployed to the parking lot and pushed shouting crowds away from the food as it was thrown into dumpsters and trucked away to be destroyed. Armed officers turned away families that had gathered with empty plastic bags, forcing them out of the parking lot.

“People have children out here that are hungry, thirsty, could be anything. Why throw it away when you could be issuing it out?” Robertstine Lambert told local news outlet Fox 54.

“For them to do this is a low blow,” Jennifer Santiago said. “A lot of people are sad, a lot of people aren’t going to have food to put on the table. This is ridiculous.”

Augusta, Georgia is home to profound social polarization. The same city that hosts the Masters golf tournament, a pageantry of Southern wealth and exclusivity, suffers from an official poverty rate of 31.6 percent, which is higher than the national average. In total, 11.8 percent of the population lives below 50 percent of the official poverty line. This means that nearly 12 percent of families of four live on less than $12,000 a year.

For young people in Augusta, official poverty rates are even higher. Nearly 45 percent of children under 5 years of age live in poverty and the rate is similarly high for other under-18 age groups.

According to the White House, the bipartisan “sequester” plan will result in $28.6 million in cuts to primary and secondary school education in the state of Georgia. Nearly 400 teachers will be fired and approximately 80 schools will receive no funding in the next fiscal year.

Additionally, $17.5 million will be cut from programs to help children with disabilities, and 2,500 low-income students will see their financial aid to attend college slashed. Nearly 40,000 civilian Defense Department employees will face mandatory furloughs, resulting in a total pay loss of $190 million.

It is under these conditions of social devastation that the 300 people who gathered at Laney Supermarket watched—through police lines—as hundreds of pounds of groceries were tossed into dumpsters and trucked off to rot.

Throwing away food in front of starving families recalls the words of John Steinbeck, who described a similar scene in The Grapes of Wrath (1939): “There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success. The fertile earth, the straight tree rows, the sturdy trunks, and the ripe fruit. And children dying of pellagra must die because a profit cannot be taken from an orange. And coroners must fill in the certificates—died of malnutrition—because the food must rot, must be forced to rot … and in the eyes of the people there is a failure; and in the eyes of the hungry there is a growing wrath. In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage.”

Related articles

• Hunger in the USA, new documentary film (dearkitty1.wordpress.com)
• Georgia Supermarket Throws Fresh Food in the Dumpster While Hungry People are Restrained by Police (libertyblitzkrieg.com)
• An American Recovery: Police Restrain Hundreds of People Begging For Food As Officials Opt To Throw It In the Trash Rather Than Help (philosophers-stone.co.uk)
• Food poverty in London report (London Assembly) (slideshare.net)
• What’s it like to go to school hungry? (blogs.greatschools.org)
• Soaring use of food banks ‘will only go up’ (standard.co.uk)
• ‘Food swamps’ in Augusta lack healthy food (chronicle.augusta.com)

Bankers make Irish people homeless

This music video from Ireland is called Lough Sheelin Eviction, by the Wolfe Tones.

The song tells about one of many similar tragedies in nineteenth-century Ireland.

The Wikipedia article about the lake Lough Sheelin writes about it:

Lough Sheelin (from Irish: Loch Síodh Linn meaning “lake of the fairy pool”) is a limestone freshwater lough (lake) in Ireland located in County Westmeath, County Meath and County Cavan near the villages of Finnea (also spelled Finea) and Mountnugent and the town of Granard, (County Longford).

The lake is naturally populated by brown trouts whose native stocks had depleted in recent years, hence the Central Fisheries Board stocking with farm reared the lake for the pleasure of anglers.^[1] Trout stocks are estimated to be over 100,000.

It is also the setting of the song “Lough Sheelin Eviction”, made popular by The Wolfe Tones. The lyrics tell the sad, but unfortunately, too typical story of a family being evicted from their home by an unforgiving & merciless landlord. Absentee landlords were common in Ireland and for many landlords the main interest was income rather than the conditions of their tenants. Many landlords realized that they could get a higher income by turning their properties to pasture than to continue with the old practice of collecting rents from tenant farmers. Evictions were the most common way of getting rid of unwanted tenants. In the song the woman, Eileen, dies in the cold and the man is forced to flee his native land in order to find a new home.

It seems that banks in Ireland now want to bring back the horrors of the nineteenth century to the twenty-first century.

By Jordan Shilton:

Banks threaten to increase repossessions as Irish mortgage crisis deepens

1 April 2013

Details have emerged in recent weeks of the full scale of the debt crisis confronting households in Ireland. The large quantity of mortgage debt, which totals €17 billion for owner-occupied properties alone in a country of just 4.5 million people, equating to €3,777 per person, is creating concerns about the potential for a renewed financial collapse.

A report from the Central Bank of Ireland stated that over 140,000 households were in some form of mortgage arrears. Including the buy-to-let market, the total outstanding debt stood at €25 billion. The report showed that more than 23,000 households had been in debt for at least two years and that the total overdue payments were at least €3 billion. Some 11.5 percent of households were in arrears by more than 90 days.

Almost one quarter of mortgages are either in arrears or have been restructured due to the inability of borrowers to pay. Many homes are “under water”, meaning that they are worth less than the mortgage taken out on them, since property prices have halved since the economic crisis began.

A massive property bubble prior to 2008, brought on by the speculative activities of the banks and encouraged by low tax rates, contributed significantly to the financial collapse five years ago. Since then, the austerity policies implemented by the political elite have shifted the burden of the crisis onto the backs of working people.

The last five years have seen spending cuts and tax hikes totalling €28.5 billion, and much more is to come. The latest deal agreed between Ireland’s international lenders and the government in February will see working people pay for the bailout of the former Anglo Irish Bank over the next 40 years.

Concerns remain that the large levels of mortgage debt could provoke another financial collapse, particularly as the economy across Europe goes deeper into recession. Projections for the domestic economy this year suggest that it will see zero growth.

Bank of Ireland, the only major financial institution not to have fallen under majority state control, reported pre-tax losses of €2.16 billion earlier this month. It has cut 5,000 jobs since 2008. Over €3 billion of its mortgage lending, which totals €28 billion, is more than 90 days in arrears.

Some commentators have warned that the deepening crisis may compel the state to intervene and assume responsibility for the debt, not only at Bank of Ireland, but also at Allied Irish Bank and Permanent TSB. Losses for 2012 at Allied Irish were even worse at €2.8 billion. At Permanent TSB, one in five mortgages are in arrears.

In spite of the Bank of Ireland’s poor figures, executive pay rose sharply in 2012. Bank CEO Richie Boucher saw his pay and bonus package rise by over €12,000 to more than €840,000. Joe Walsh, a former Fianna Fáil government minister ostensibly appointed to the bank “on behalf of taxpayers,” enjoyed a pay increase of 14 percent.

In contrast, yet more sacrifices are being demanded from the working class. Leading banking officials responded to the latest mortgage figures with complaints over the low repossession rate of homes, and warned that they would be taking a more direct approach in future. A Bloomberg report described what was being prepared as “the biggest wave of foreclosures in the nation’s history.”

John Moran, the Secretary General of the Department of Finance, summed up the views in government when he declared that the rates of house repossessions in Ireland were “uncharacteristically low.” He continued that banks would soon be able to “move forward” in dealing with problem mortgages.

Matthew Elderfield, Deputy head of the Irish Central Bank stated, “Various factors have temporarily restrained lenders but it is an unpalatable fact in light of the severity of the crisis that repossessions must be expected to rise significantly.”

The Central Bank, which will oversee new government regulations to tackle the crisis, has said that banks must propose “sustainable” solutions to 50 percent of those with mortgage arrears by the end of 2013. In addition, the bank wants 75 percent of all customers with outstanding debts to have complied with new agreements by the end of 2014.

The government legislation will help facilitate the banks’ attempts to claw back mortgage arrears from workers struggling to make ends meet, with provision for repossession for those unable to make repayments. There are also plans to remove a legal loophole that has prevented a number of repossessions from going ahead.

The government proposals also include powers for representatives of the banks to impose income restrictions and limits on living standards on those in arrears. This could include compelling individuals to give up health insurance or even childcare. State-appointed “mediators”, who will be tasked with debt negotiations between mortgage holders and the banks, will be granted the power to determine “reasonable living expenses,” and rule out any spending deemed to be a “luxury.”

The government is calling for more “engagement” by the banks, in order to separate the “strategic defaulters” from those borrowers who genuinely cannot afford to pay. This distinction is completely fraudulent and is an attempt to conceal the brutality of the approach being proposed. The reality is that thousands of people across the country no longer have the means to meet basic living costs, let alone keep up with mortgage payments.

According to a survey by the Irish League of Credit Unions, 1.8 million people—a third of the population—have less than €100 left each month after “essential bills” are paid. Slashing of wages across all economic sectors, the implementation of a series of new taxes and levies to pay for the banking bailout, and thousands of job losses, with unemployment rising to over 14 percent, have all contributed to the growth of mass poverty.

On top of this, the government will introduce a new property tax at the beginning of July on 1.8 million households across the country.

Ireland’s international lenders in the European Union (EU), European Central Bank, (ECB) and International Monetary Fund (IMF) all support these measures against homeowners. In its latest review of Dublin’s bailout programme, the IMF hailed the government’s encouragement of the banks to increase home repossessions. “Building on the strong budget out-turn for 2012, sound budget execution remains critical in 2013, including continued vigilance on health spending and a successful introduction of the property tax,” the IMF wrote.

The callous indifference to the impact such measures are having on working people is in line with the policies being dictated by the troika across Europe. Similar austerity programmes are being followed in Greece, Spain, Portugal, Italy, and Cyprus.

The banks have seized the opportunity to massively expand repossessions. On March 16, the Irish Independent reported that instead of the 200 homes it had repossessed last year, Ulster Bank may aim at assuming control of 1,000 in 2013.

Related articles

• British bedroom tax makes people homeless (dearkitty1.wordpress.com)
• Irish Foreclosure Wave Risks Housing Recovery: Mortgages – Bloomberg (bloomberg.com)
• Chief executives could escape wage cuts at bailed-out banks (independent.ie)
• Wave of foreclosures risks killing Ireland’s housing recovery (business.financialpost.com)
• Permanent TSB chief says bank unlikely to repay all bailout funds (irishtimes.com)

G4S mercenaries enforcing Cyprus austerity

This is a music video by British punk band Crass, of their song Securicor (another name for G4S corporation). Lyrics are here.

From daily The Morning Star in Britain, Wednesday 27 March 2013:

Cypriot banks set to reopen tomorrow

CYPRUS: Officials have placed limits on money transfers before banks reopen tomorrow to avoid a run.

Banks have been closed for two weeks during wrangling over a bid by international financiers to steal Cypriots’ savings.

Security privateer G4S will despatch around 180 staff to branches across the country to quell any potential unrest.

Related articles

• G4S security guards sent in as Cyprus banks open (metro.co.uk)
• Bringing in the Wolves to herd the sheep? G4S Readies Guards as Cypriot Banks Prepare to Open (sott.net)
• Cyprus Readies for Reopening of Banks (ipsnews.net)
• Cyprus crisis: Oligarchs escape as crisis hits middle class (rbth.ru)
• Cyprus caves to eurozone pressure (morningstaronline.co.uk)

European Union robs Cyprus bank depositors

This video says about itself:

Cyprus bailout- Man threatens bank with bulldozer

16 March 2013

People in Cyprus have reacted with shock to news of a one-off levy of up to 10% on savings as part of a 10bn-euro (£8.7bn; $13bn) bailout agreed in Brussels.

Savers queued at cash machines amid resentment at the charge, while co-operative credit societies shut to prevent a run on deposits.

From daily News Line in Britain:

Monday, 18 March 2013

‘Clear-cut robbery in Cyprus’ – the penalty for the crime is revolution!

THE Cypriot parliament yesterday postponed an emergency session on the 7-10% banking tax imposed by the EU on every depositor in the country’s banking system.

This has already been termed by locals as a ‘clear-cut case of robbery’. Already, ATM machines have been shut down, and farmers have appeared on the scene with bulldozers ready to do what is necessary to get their cash back.

However, the reality of the situation, that the Cypriot banks do not have the cash in their vaults to restore depositors’ money, demands a revolutionary solution to this crisis.

The parliamentary debate and a presidential address is now to take place today. By the time it ends, most Cypriot banks could well be occupied by their depositors, who will be considering what further steps they must take to end this ‘clear-cut case of robbery’, to get their cash back.

The Cypriot president has said that refusing the bailout terms will lead to the collapse of the country’s banks. However, they have already collapsed.

The implications of the EU’s bankers imposing a 7-10 per cent banking tax on an entire state are completely revolutionary. This time the EU is not just deciding who the government will be, it has decided to act as a bank robber.

The prospects are that the Cypriot parliament will refuse to do this, leaving the EU leadership with no option, but to order the government to carry out the robbery using the police and the state forces to do so.

This will leave the Cypriot working class with only one option – that of taking possession of the banks, bringing down the government and bringing in a revolutionary government.

It will not be lost on workers and young people throughout the EU that they could be the next target of the EU’s robber financiers.

Their initial reaction may well be to withdraw their cash, and begin a run on the EU’s banks that will reveal that they too are already bankrupt, and see the banks closed.

As the Cypriot crisis explodes, depositors throughout the EU will be forced to ignore governmental and other assurances that ‘it can never happen here’. They will test out themselves whether the banks have enough cash to return their deposits.

In Cyprus, the opposition leader George Lillikas has already said the president – who was elected last month – had ‘betrayed the people’s vote’.

Sharon Bowles, MEP, chair of the European Parliament’s Economic and Monetary Affairs Committee, has said she is appalled by the plans to impose the tax.

‘This grabbing of ordinary depositors’ money is billed as a tax, so as to try and circumvent the EU’s deposit guarantee laws. It robs smaller investors of the protection they were promised,’ she said.

However the EU parliament is purely cosmetic. The real power is the European Central Bank and the eurozone’s financiers.

‘The challenges we are facing in Cyprus are of an exceptional nature,’ claims Jeroen Dijsselbloem, the Dutch finance minister who helped engineer the plan, ‘Therefore, unique measures are determined to be necessary.’

However, Jeroen Dijsselbloem, the president of the group of euro area finance ministers, made it clear early on Saturday that he could not rule out taxes on depositors in countries beyond Cyprus, although he said such a measure was not currently being considered.

‘What the deal reflects is that being an unsecured or even secured depositor in euro-area banks is not as safe as it used to be,’ said Jacob Kirkegaard, an economist and European specialist at the Peterson Institute for International Economics in Washington. ‘We are in a new world.’

In this ‘new world’, capitalism is crashing, its currencies are pieces of paper and gold is money.

This is not a new world but the essence of the capitalist madhouse revealing itself.

The terms attached to the European Union (EU) finance ministers’ bailout for Cypriot banks triggered heavy losses on financial markets that were lessened only on the basis of an expected climb-down: here.

Update: here.

Related articles

• ATMs drained as bailout tax triggers run… (theage.com.au)
• A look at Cyprus’ decision to tax depositors (miamiherald.com)
• Insane EU: Bank depositors in panic as they pay for Cyprus €10bn bailout (keeptalkinggreece.com)
• Bailout Cuts Cyprus Bank Accounts, Withdrawals Barred (greece.greekreporter.com)
• Madness in the Mediterranean (smallthoughtsfromasmallmind.wordpress.com)
• Is The Cyprus Money Grab Coming To A Bank Near You? (etfdailynews.com)
• Deposit haircut back on the table (cyprus-mail.com)
• How Europe stumbled into scheme to punish Cyprus savers (ekathimerini.com)

JPMorgan Chase bank fraud documented

This video is called US senators grill JPMorgan over hidden losses.

By Barry Grey in the USA:

Senate report documents fraud and lawbreaking by JPMorgan Chase

16 March 2013

The Senate Permanent Subcommittee on Investigations released a 300-page report Thursday documenting systematic fraud and deception by JPMorgan Chase, the biggest US bank, in connection with over $6.2 billion in losses from high-risk speculative trades in financial derivatives in 2012.

The losses, incurred by the bank’s London-based Chief Investment Office (CIO) and a trader dubbed the “London whale” because of the size of his bets, were concealed from investors, analysts, regulators and the public by the bank’s top management, including its chairman and CEO, Jamie Dimon.

The report details from emails, phone conversations and interviews with bank officials the use of accounting gimmicks to vastly understate the scale of the losses in the first quarter of 2012, the withholding and falsification of information on the trading activities in reports made to the chief federal regulator of JPMorgan, the Office of the Comptroller of the Currency (OCC), and misrepresentations and lies from top bank officials in public statements issued beginning last April, when press reports of the massive bets being made by the CIO’s Synthetic Credit Portfolio began to emerge.

The report also documents the complicity of federal regulators, led by the OCC, in the bank’s fraudulent activities. The OCC gave its stamp of approval when JPMorgan informed it in January 2012, as the losses at its Chief Investment Office were piling up, that it was altering its calculation of risk so as to free up more funds for speculative investments. The regulator did nothing when the bank stopped providing it with profit and loss reports from its CIO division concerning its Synthetic Credit Portfolio.

At a press conference Thursday, Senator Carl Levin (Democrat of Michigan), the chairman of the Permanent Subcommittee on Investigations, said investigators “found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public.”

The report demonstrates that nothing has changed on Wall Street since the financial meltdown four-and-a-half years ago that was triggered by rampant speculation and illegality on the part of the banks. The same types of exotic bets and parasitic wheeling and dealing—in the case of JPMorgan, with depositors’ money—that brought the global financial system to the point of collapse and ushered in a world slump, continue unabated. The bets that backfired for JPMorgan in early 2012 were a form of gambling on credit default swaps.

Likewise, the role of the government and regulatory agencies as protectors of the financial criminals remains unchanged.

Two years ago, the same Senate committee released a 630-page report on the practices that led to the banking crash of September 2008, documenting the role of major banks, regulatory agencies and credit rating firms. At the time, Senator Levin said his investigation had found “a financial snake pit rife with greed, conflicts of interest and wrongdoing.” Yet not a single bank or high-ranking bank executive has been criminally charged, let alone convicted and sent to prison.

The report issued Thursday lays out a prima facie case for the criminal prosecution of the top executives of JPMorgan, including CEO Dimon. The cover-up of losses, use of accounting tricks to deceive investors, and issuing of false statements to regulators and the public are violations of federal securities statutes punishable by fines and jail terms.

But the report carefully avoids accusing the bank or any of its executives of breaking the law. The New York Times on Friday reported that the Federal Bureau of Investigation (FBI) was looking into the JPMorgan “London whale” losses and planned to interview top executives in the coming weeks, including Dimon. It added, however, that “authorities do not suspect the chief executive of wrongdoing.”

Britain: The Banking Standards Commission selects three scapegoats for the capitalist crisis: here.

Related articles

• Braunstein Repeats ‘I Don’t Recall’ at Senate Grilling on Dimon – Bloomberg (bloomberg.com)
• Senate JPMorgan Report Gives SEC Road Map for Potential Lawsuit (bloomberg.com)
• JPMorgan Faulted on Controls and Disclosure in Trading Loss (dealbook.nytimes.com)
• JPMorgan Chase Slammed for Lying, Hiding Losses (hispanicbusiness.com)
• Jamie Dimon Lied To Regulators. Will He Be Indicted? Ha, Ha! (crooksandliars.com)
• Senate Report Blames JPMorgan Senior Managers For Bad Bets That Led To ‘Whale’ Loss (huffingtonpost.com)
• Probe: JPMorgan misled, dodged regulators (newsday.com)
• John Cassidy – Will The London Whale Swallow Jamie Dimon? – 17 March 2013 (lucas2012infos.wordpress.com)

Criminal bankers ‘too big to jail’

This video from the USA says about itself:

On March 8 2013, Elizabeth Warren grilled the Treasury Department about “Too Big For Jail.”

By Joseph Kishore in the USA:

Too big to jail

12 March 2013

In testimony before the Senate Judiciary Committee last week, US Attorney General Eric Holder made an extraordinary admission.

Responding to questioning from Republican Senator Chuck Grassley, who noted that there had been no major prosecutions of financial institutions or executives by the Obama administration, Holder said: “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…”

In other words, major banks are so economically important that, according to Holder, it is impossible to prosecute them for criminal activity. They are above the law.

This exchange occurred during a discussion of the Justice Department’s settlement last month with British-based HSBC, the world’s third-largest bank. HSBC had been charged with laundering billions of dollars for Mexican and Colombian drug cartels. In exchange for avoiding charges, HSBC agreed to pay $1.9 billion, or roughly two months’ profits. Top US officials explicitly vetoed any criminal charges, even on lesser counts than money laundering.

HSBC is only the latest bank to have received a free pass. Earlier this year, ten financial firms agreed to pay $3.3 billion in cash to settle charges of mortgage fraud: amid the housing market collapse, they had employees fraudulently sign off on thousands of mortgage foreclosures a month.

Last year, the government ended an investigation into Goldman Sachs without charges over its promotion of mortgage-backed securities at the height of the speculative bubble—even as Goldman Sachs bet against the assets itself.

In 2010, the Obama administration reached a settlement with Wachovia Bank on similar charges as those brought against HSBC: laundering billions of dollars of drug money, in this case for the Sinaloa Cartel. The fine was $160 million, less than 2 percent of the previous year’s profits.

Many similar arrangements could be cited. In each case, a check is signed—if there is any punishment at all—and business goes on as usual. Whatever money the financial institutions lose is more than balanced by their take of the $85 billion funneled into the markets every month by the US Federal Reserve.

Bernard Madoff, who admitted in 2009 to running a multibillion-dollar Ponzi scheme, told media outlets this week that the government-appointed trustee for his firm’s investors is refusing to act on evidence showing the complicity of major banks in his activities: here.

Related articles

• Holder admits some banks ‘too big to jail’ (wnd.com)
• Wall Street Banks: Too Big to Fail, Too Big To Jail (rinf.com)
• Elizabeth Warren Wants HSBC Bankers Jailed, Regulators Have Ties to Bank (news.firedoglake.com)
• VIDEO – Eric Holder Questioned On Too Big To Jail (dailybail.com)
• Too Big to Jail? (pubcit.typepad.com)
• Stefanie Ostfeld: Congress Must End ‘Too Big to Jail’ (huffingtonpost.com)
• Warren Hits Back Against ‘Too Big to Jail’ Banks (wealthwire.com)