Showing posts with label banks. Show all posts
Showing posts with label banks. Show all posts
By Brian Kesten

The tumult in Greece continues, as Alexis Tsipras’s left-wing Syriza party won the plurality of votes Sunday night. Just last month, Tsipras resigned as Prime Minister and called new elections to determine Greece’s political direction in the wake of Tsipras’s 86 billion euro bailout. The election will allow Syriza to renew a coalition with another anti-austerity group, the right-wing Independent Greeks party.

Meanwhile, the agreed upon reforms were not greeted with smooth implementation. New banking rules risk wiping out corporate deposits if Greek banks are otherwise unable to meet EU bank capitalization rules. Although EU negotiators sought to preserve these deposits, the reality of implementing bank reforms clashes with EU bank capital rules and could result in further destabilization of the Greek financial system.
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October 01, 2015
By Catherine Kent

Reuters reported on April 6, 2015 that lawyer Gary Osen filed an amended complaint in federal district court in Brooklyn against six Western banks for conspiring with Iranian banks to circumvent U.S. sanctions on Iran. The plaintiffs, over 200 former U.S. soldiers and their families, claim to have been victims of Iran-sponsored attacks during the Iraq war. The six Western banks have allegedly masked wiring of $60 million worth in transactions with Iranian banks designated by the US to be terrorist organizations.
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April 22, 2015
By Evan Abrams 

Working in conjunction with the Financial Stability Board, Hong Kong has set out to update its financial industry laws and regulations. While the new law would give policy makers a variety of options to deal with failing institutions, it would allow the government to bailout a variety of banks, brokerages, and insurers if they believe a failure could trigger a systemic collapse. While the bailout provisions may prove unpopular, many observers feel the law is necessary for Hong Kong to remain a competitive and attractive financial hub. The bailout provision may be particularly hard for Hong Kong residents to swallow, because the majority of the island’s financial institutions are foreign companies. See more here from the South China Morning Post.
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March 06, 2015
By Rick Mendenhall

Picture a bank heist. $45 million stolen. No guns. No alarms. No masks. Just secret meetings between international criminal cells, suitcases stuffed with hundreds of thousands in cash, and an international investigation encompassing law enforcement authorities in the U.S., Japan, Canada, Germany and Romania.

Throw in Bruce Willis, set it on Christmas day, and this sounds like Die-Hard 7.

Alas, no yippe ki yay was uttered, and this heist was very real. Armed only with debit cards and an internet connection, three men plus an unknown number of international co-conspirators ripped off forty-five million from both domestic and foreign banks. The DOJ, however, with the assistance of sixteen countries, swiftly apprehended the cyber-criminals, and a federal judge just entered a sentence against them.

This type of international cyber-crime, while splashy now, may be the norm of tomorrow. Please join Georgetown University Law Center Thursday December 4th for a symposium entitled Cybercrime 2020: the Future of Online Crime and Investigations. Speakers will undoubtedly tackle both domestic and international legal issues.
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December 02, 2014
By Derek Hunter

Several large banks agreed to a $4.3 billion joint civil settlement with U.S., U.K. and Swiss regulators on Wednesday over currency exchange manipulation by its traders. Similar to the historic LIBOR settlements over the last few years, the six banks settled charges that they took steps designed to boost their profits by manipulating one of the world’s largest and most interconnected markets, sometimes at the expense of their clients. In secret chat rooms, traders from multiple banks would disclose confidential information to allow them to manipulate foreign currency prices and make a profit for themselves.

BloombergView discusses what these traders did wrong, how it compares to the LIBOR manipulation, and why this will not be the last we hear about these foreign currency manipulators. 
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December 02, 2014
By Evan Abrams

Last week a lawsuit was filed on behalf of 200 American soldiers and family members of soldiers killed in Iraq who accused five U.S. banks of helping to finance terror activities through interactions with Iran. This civil suit came on the heels of several cases brought by federal prosecutors that have been largely settled over the past few years. According to the New York Times, the suit did not assert that U.S. banks directly financed the attacks, but that they indirectly assisted in doing so by engaging in transactions with Iranian institutions who had links to Hezbollah. The article paints the current suit as emblematic of a growing legal trend and expects more such suits in the future since it is nearly impossible to recover damages from individual terrorists. 
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December 01, 2014
By Evan Abrams

In the wake of the Global Financial Crisis regulators set out to enhance safeguards to prevent another economic meltdown. However, as Reuters reports, banks are being told not to expect seamless rules across jurisdictions and are being advised the rules may soon change again. The rules are principally aimed at requiring banks to hold additional capital and placing restrictions on the trade of derivatives. Yet, banks are warning that divergent rules could segment capital markets and slow economic growth.
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October 21, 2014
By Catherine Kent

Chairman Baudouin Prot of Paris-based French bank, BNP Paribas, is now the second bank officer to step down after BNP Paribas spent 10 years (from 2002 to 2012) funneling money to nefarious regimes in Sudan, Iran, and Cuba, in violation of U.S. sanctions for which BNP Paribas paid the record-breaking fine of $8.9 billion this summer.. Mr. Prot, who had worked for BNP Paribas  for 30 years, had just been renewed as Chairman this year, and was not due to run again until 2017.

As the bank plead guilty to two criminal charges, it will also face a one year ban on its dollar-clearing business. Meanwhile, as top officers are stepping down and taking blame for this violation, industry sources are speculating that the bank might take this opportunity to find a new, fresh-minded leadership group for BNP Paribas – and hopefully one that will avoid violating U.S. sanctions in the future. 
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September 29, 2014
By Sam Obenhaus

European Union lawmakers struck an agreement with member states that will establish a single resolution mechanism for winding down banks in the event of their failure.  How to structure this authority has been debated for nearly two years.  European Union lawmakers generally support the creation of a centralized rescue fund while member states, most notably Germany, resist any efforts to pool resources into a pan-European Union bailout fund.  Germans fear they will be left on the hook for bailouts of non-German banks.

The agreement reached on Friday creates a bailout fund that will be capitalized by levies on banks.  While some of the money will be put in “national compartments” and not pooled, these divisions will be slowly phased out as the fund is capitalized over an eight-year period.  This is a major victory, at least in principle, for the European Parliament.

While the agreement is a breakthrough, the rescue fund’s €55 billion size strikes many as inadequate.  Another persistent concern is the mechanism’s complexity, which may make the proscribed wind-down process too slow and unwieldy to implement in the context of a financial crisis.

The Financial Times and Wall Street Journal have more on this story.
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March 26, 2014
By Sam Obenhaus

The fix was in and now the Financial Stability Board (FSB), an international financial regulator created by the G20, is investigating.

At issue is alleged collusion among traders to set benchmark foreign-exchange rates.  According to initial investigations carried out by dozens of financial regulators across the globe, traders used chat rooms to share market-moving information about their impending foreign-exchange trades.   They then allegedly used this information to organize their trades during “the fix,” which is a one minute span starting at 3:59:30 London time each afternoon.  The trades executed during “the fix” are used to set the foreign exchange benchmark rates.

After independent investigations by regulators including the U.S. Federal Reserve, the Bank of England and the Reserve Bank of Australia, the FSB is launching its own probe. 

The FSB was created to “to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies” across the G20.  Its membership is made up of financial regulators from G20 states.  The United States’ Treasury Department, Federal Reserve Board, and Securities and Exchange Commission are all members.

Bloomberg has more on this story.
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February 21, 2014
By Sam Obenhaus

Does Americans’ right to privacy extend far enough to protect their hidden foreign bank accounts?  Will a law requiring foreign financial entities to disclose information on all American account holders lead those institutions stop doing business with Americans?  The Republican National Committee (RNC) says yes and voted to repeal the Foreign Account Tax Compliance Act (FATCA) at its winter meeting.

The Act was passed in 2010 but goes into effect this July.  Its principle objective is to make it harder for U.S. citizens – primarily those living within the U.S. – to evade taxes by stashing money in offshore accounts.  However, banks, libertarians, and non-resident U.S. citizens, among others, are all opposed to a law that some call “overzealous.”

The heart of the conflict, the burden on U.S. citizens living abroad, comes about because of the U.S.’s unique extraterritorial taxation system.  Unlike all other developed nations, the U.S. taxes its citizens living in foreign countries.  One legitimate concern is that these Americans will find it harder to find a local bank willing to deal with them because of the increased regulatory burdens imposed by FATCA.

Undeterred, the U.S. government is forging ahead and recently signed an intergovernmental agreement with Canada to facilitate the sharing of bank account information.  This is the 22nd such agreement.

You can see the RNC resolution here and an article about their vote over at Reuters.  Bloomberg BNA has an article on the U.S.-Canadian agreement.
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February 20, 2014
By Sam Obenhaus

European finance ministers are meeting this week in an attempt to resolve long-running differences over the establishment of the European Union’s bank bailout mechanism.  The heart of the debate revolves around the design of the Single Resolution Mechanism (SRM) for handling failing European banks and ensuring that they are efficiently wound-down with minimal taxpayer assistance.

The finance ministers will be working towards their second agreement on the subject.  The E.U. Parliament criticized the finance ministers’ previous SRM agreement as being too unwieldy to implement.  Both the national governments and the E.U. Parliament must approve the SRM’s design before it can come into effect.

The familiar north-south dynamic present in most E.U. financial debates is an additional point of intrigue.  Greece currently holds the E.U. presidency while Germany remains extremely skeptical of any plan to pool bailout resources.

For more on this story visit Bloomberg BNA.
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February 18, 2014
By Joe Vladeck

The number of European bankers earning more than 1 million euros jumped 11 percent from 2011 to 2012, according to new data from the European Banking Authority (EBA). The report is timely in Europe, where regulators are struggling to set limits on the financial industry compensation, hoping to reduce incentives for bankers and traders to take undue risks. New caps on bonus payments are set to come into effect in 2014. 

Reuters has a detailed summary of the EBA report. British bankers account for the bulk of European high-earners, representing more than 2,700 of the 3,500 million-euro bankers. 

And, predictably, the countries hardest-hit by the ongoing financial crisis saw banker pay fall. Spain saw a 20 percent decrease in million-euro bankers, as did Ireland. Despite Greece's recent financial calamity, a single banker in the country is somehow still earning more than a million euros in compensation. 
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December 11, 2013
By Sam Obenhaus

On Wednesday, November 20, the European Central Bank took a major step towards integrating the euro zone’s financial markets when it nominated Danièle Nouy to serve as the first “Single Supervisor” for major banks across the continent. If confirmed by the European Parliament, she will lead one of the world’s most important start-ups.  The Single Supervisor’s office is still in the process of hiring staff and it does not gain the legal authority to start regulating banks until the end of next year.

The task facing Nouy is hugely important for the future of the euro zone.  One of the chief criticisms of the zone is that oversight of its banking system remains balkanized.  The hope is that installation of a Single Supervisor, along with the first set of stress tests that subject the zone’s banks to the same set of standards, will address this persistent criticism.

The New York Times has more on this story.
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November 26, 2013
By Joe Vladeck

The National Credit Union Administration (NCUA) is the latest regulatory body to pursue sanctions against some of the world's largest financial institutions for allegedly manipulating LIBOR, a.k.a. the London Interbank Offered Rate.  LIBOR is a commonly used benchmark interest rate used to price trillions of dollars of financial products, ranging from credit cards and mortgages sold to the public to complicated bespoke derivative securities sold from one financial institution to another.  

The NCUA is alleging that its member credit unions lost investment income as a result of the interest rate manipulations.  The lawsuit, National Credit Union Administration Board v. Credit Suisse Group AG, names some of the world's largest banks, including JPMorgan Chase & Co, Barclays Plc, Societe General SA, and the Royal Bank of Canada.  This suit is the latest action in a fusillade of litigation and regulatory actions taken against the banks, which has drawn mixed results thus far.  Over the summer, Barclays, UBS, and RBS settled with U.S. and European regulators, agreeing to pay fines exceeding $2.5 billion.  But a series of earlier lawsuits, many of which brought claims under U.S. racketeering statutes, were dismissed this past Spring.
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October 15, 2013
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