CHEATING BANKS DINGED $2.3 BIL

Reuters  |  Posted: 12/04/2013 7:01 am EST  |  Updated: 12/04/2013 9:11 am EST 

Via: HuffPost

BRUSSELS (Reuters) – EU antitrust regulators fined six financial institutions including Deutsche Bank, Royal Bank of Scotland and Citigroup a record total of 1.71 billion euros ($2.3 billion) on Wednesday for rigging financial benchmarks.

The move confirms what a source familiar with the matter had previously told Reuters.

The penalty is the biggest yet to be handed down to banks for rigging the benchmarks used to determine the cost of lending, one of the most brazen violations of conduct since the financial crisis. It is also the highest antitrust penalty ever imposed by the Commission, the EU’s competition regulator.

The other banks penalized are Societe Generale, JPMorgan and brokerage RP Martin.

Deutsche Bank received the biggest fine of 725.36 million euros.

The European Commission said it would continue to investigate Credit Agricole, HSBC, JPMorgan and brokerage ICAP for similar offences.

The benchmarks involved are the London interbank offered rate, or Libor, the Tokyo interbank offered rate and the euro area equivalents. They are used to price hundreds of trillions of dollars in assets ranging from mortgages to derivatives.

“What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other,” EU Competition Commissioner Joaquin Almunia said in a statement.

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Gas Prices Tightening Family Budgets Just In Time For Summer

Gas Prices Tightening Family Budgets Just In Time For Summer

JONATHAN FAHEY   05/27/11 05:17 PM ET   via HuffPost

NEW YORK — There’s less money this summer for hotel rooms, surfboards and bathing suits. It’s all going into the gas tank.

High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.

Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.

Jeffrey Wayman of Cape Charles, Va., spent Friday riding his motorcycle to North Carolina’s Outer Banks, a day trip with his wife. They decided to eat snacks in a gas station parking lot rather than buy lunch because rising fuel prices have eaten so much into their budget over the past year that they can’t ride as frequently as they would like.

“We used to do it a lot more, but not as much now,” he said. “You have to cut back when you have a $480 gas bill a month.”

Alex Martinez, a senior at Arcadia High School outside Los Angeles, said his family’s trips to San Francisco, which they usually take once or more a year, are on hold. As he stopped at a gas station to put $5 of fuel in his car – not much more than a gallon – he said the high prices are crimping social life for him and his friends.

“We’re always worrying, `How are we going to get home. We’ve got less than half a gallon left,'” Martinez said. “We definitely can’t go out as much, and we can’t go as far.”

As Memorial Day weekend opens, the nationwide average for a gallon of unleaded is $3.81. Though prices have drifted lower in recent days, analysts expect average price for 2011 to come in higher than the previous record, $3.25 in 2008. A year ago, gas cost $2.76.

The squeeze is happening at a time when most people aren’t getting raises, even as the economy recovers.

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Financial System Riskier, Next Bailout Will Be Costlier, S&P Says

Financial System Riskier, Next Bailout Will Be Costlier, S&P Says

Huff Post- Shahien Nasiripour

First Posted: 04/19/11 05:26 PM ET Updated: 04/19/11 06:00 PM ET

The financial system poses an even greater risk to taxpayers than before the crisis, according to analysts at Standard & Poor’s. The next rescue could be about a trillion dollars costlier, the credit rating agency warned.

S&P put policymakers on notice, saying there’s “at least a one-in-three” chance that the U.S. government may lose its coveted AAA credit rating. Various risks could lead the agency to downgrade the Treasury’s credit worthiness, including policymakers’ penchant for rescuing bankers and traders from their failures.

“The potential for further extraordinary official assistance to large players in the U.S. financial sector poses a negative risk to the government’s credit rating,” S&P said in its Monday report.

But, the agency’s analysts warned, “we believe the risks from the U.S. financial sector are higher than we considered them to be before 2008.”

Because of the increased risk, S&P forecasts the potential initial cost to taxpayers of the next crisis cleanup to approach 34 percent of the nation’s annual economic output, or gross domestic product. In 2007, the agency’s analysts estimated it could cost 26 percent of GDP.

Last year, U.S. output neared $14.7 trillion, according to the Commerce Department. By S&P’s estimate, that means taxpayers could be hit with $5 trillion in costs in the event of another financial collapse.

Experts said that while the cost estimate seems unusually high, there’s little dispute that when the next crisis hits, it will not be anticipated — and it will likely hurt the economy more than the last financial crisis.

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Bernanke Calls On Congress To Help The Economy — For At Least The Fourth Time In Five Months

Bernanke Calls On Congress To Help The Economy — For At Least The Fourth Time In Five Months

Huff Post

William Alden & Shahien Nasiripour

First Posted: 11-20-10 09:01 AM   |   Updated: 11-20-10 01:55 PM

NEW YORK — For at least the fourth time since June, Federal Reserve Chairman Ben Bernanke publicly urged Congress to combat the lackluster recovery by increasing government spending, a recommendation that has gone unheeded by lawmakers.

In a speech at a conference of central bankers in Frankfurt, Bernanke once again said the Fed cannot save the economy on its own. The Fed’s recent move to add to its ballooning balance sheet by committing to buy up to $600 billion of government debt faces “limits” to its effectiveness, Bernanke said. The rest of the government, the chairman added, could aid the Fed’s efforts by hammering out a plan for stimulative spending. The right kind of spending, he noted, could help reduce the budget deficit over the long-term by first boosting economic growth.

“[I]n general terms, a fiscal program that combines near-term measures to enhance growth with strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve,” Bernanke said Friday, according to his written remarks.

The fiscal policy recommendation came directly after Bernanke acknowledged it isn’t his job to make such policy proposals. “The Federal Reserve is nonpartisan and does not make recommendations regarding specific tax and spending programs,” the chairman noted.

The official parameters of his job, though, have not stopped Bernanke from engaging in backseat driving. At least four times since June — on June 9, July 21, July 22 and now Friday — he has urged lawmakers to increase spending to jumpstart the lagging economy.

But policy makers have proved to be unable to agree upon such a plan — or even propose one that’s viable. The rest of the nation has suffered as a result, as near-10 percent unemployment continues to hobble the economy. Democrats recently lost control of the House of Representatives, and a substantial part of their majority in the Senate. Voters said the dismal economy was their top concern.

To combat an ineffectual Washington establishment, the Fed has taken matters into its own hands. By buying up to $600 billion of government debt, the central bank hopes to increase the flow of money through the economy. Critics of the program, which is intended to lower interest rates and encourage corporate spending, have said the cheap money will not convince businesses to create jobs.

MORE HERE

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As stimulus funds near end, new pain will begin

by Ronald J. Hansen – Nov. 21, 2010 12:00 AM
The Arizona Republic

If people didn’t like the federal stimulus, they may hate when it’s gone.

As the year winds down, the $862 billion plan to rescue the economy from the depths of the recession enters a new phase in which tax cuts and credits expire and countless hard-to-replace construction projects will end. Thousands of workers in some states could lose their jobs.

The political power shift brought about by the midterm elections has likely settled any lingering doubts that the stimulus will largely run out, as scheduled, in the coming months. A smaller package of federal aid that passed in August, primarily for teachers, also will rapidly disappear. With the new Republican majority in the House next year, there will be little support for similar additional measures.

Worries about the national debt and a negative view of the stimulus augur a new period when more businesses must survive on their own and governments must tighten their belts. The austerity will be widely felt.

Nearly every worker in the nation will see slightly slimmer paychecks as $400 individual tax cuts are slated to end this year.

Tax credits, such as those offering incentives for energy-efficiency improvements for homeowners, also are set to lapse at year’s end. The earned-income tax credit, which rewards the working poor, will no longer include funding for those with a third child.

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Obama Small Business Task Force Will Likely Threaten Small Business Programs

The Huffington Post

Lloyd Chapman

On April 26th, President Barack Obama established a Small Business Task Force to supposedly remove barriers to small businesses landing contracts with the federal government. I had to laugh out loud. This was amusing to me for many reasons, but most notably, President Obama ignored the recommendations of his last small business task force. It was established during his presidential campaign, and I was on it.

We spent months coming up with solid and practical solutions to help small businesses. He never adopted a single one of our recommendations. It turned out to be the first of many Obama, “all talk and no action,” programs for small businesses.

In my humble opinion, the number one barrier to small businesses landing more federal contracts is President Obama himself. All you need to do is take a quick look at President Obama’s actual track record for small businesses to predict what the recommendations of his small business task force will be.

Since 2003, a series of federal investigations have found that most federal small business contracts actually go to Fortune 500 firms. Report 5-15 from the Small Business Administration (SBA) Inspector General referred to the rampant fraud and abuse as, “One of the most important challenges facing the Small Business Administration and the entire Federal government today…” (http://www.asbl.com/documents/05-15.pdf) The SBA IG has reported this as the number one management challenge facing the SBA for the last five consecutive years.

The latest data released by the Obama Administration clearly, and undeniably, shows the largest recipient of federal small business contracts last year was Textron, Inc., a Fortune 500 firm with over 43,000 employees and over $14 billion a year in annual revenue. Other firms that received U.S. government small business contracts included, Lockheed Martin, Dell Computer, Xerox, General Dynamics, ManTech, Raytheon, Boeing, Office Depot and General Electric.

President Obama was clearly aware of this issue in February of 2008, when he released the statement, “It is time to end the diversion of federal small business contracts to corporate giants.” (http://www.barackobama.com/2008/02/26/the_american_small_business_le.php) To date, he has consistently refused to adopt any polices to keep his campaign promise and end the daily flow of over $400 million a day in federal small business contracts to corporate giants.

It gets worse. On March 12th of this year the Obama Administration removed, and potentially permanently destroyed ten-years worth of data that had been used by federal investigators to uncover billions of dollars in fraud and abuse in federal small business contracting programs. Obama officials removed the “small business flag,” field, in which Fortune 500 firms have illegally misrepresented themselves as small businesses for years. Report 5-16 from the SBA IG referred to these misrepresentations as, “false certifications” and “improper certifications.” Other federal investigations described the blatant fraud as “vendor deception.” Now all evidence of the abuses has been removed.

~More~

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GM CEO, Rick Wagoner, Will Step Down

Rick Wagoner, GM CEO, Will Step Down At Obama’s Behest

Huffington Post/NYT/CNBC |   March 29, 2009 05:04 PM

UPDATE:

The Obama administration asked GM CEO Rick Wagoner to step down, according to numerous reports.

According to Politico:

The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.
The White House confirmed Wagoner was leaving at the government’s behest after The Associated Press reported his immediate departure, without giving a reason.

And the Wall Street Journal adds more details:

Mr. Wagoner was asked to step down on Friday by Steven Rattner, the investment banker picked last month by the administration to lead the Treasury Department’s auto-industry task force. Mr. Rattner broke the news to Mr. Wagoner in person at his office at Treasury, according to an administration official. Afterward, Mr. Rattner met one-on-one with Mr. Henderson, who will fill in as GM’s CEO.
“On Friday I was in Washington for a meeting with administration officials,” Mr. Wagoner said in a statement released by GM. “In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have.”

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General Motors CEO Rick Wagoner will step down from the company, according to several reports.

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NY AG Cuomo: 73 AIG Employees Got Multi-Million-Dollar Bonuses

Cuomo Reveals AIG Details: 73 Employees Got Multi-Million-Dollar Bonuses

Huffington Post- Marcus Baram

March 17, 2009 01:22

AIG’s assertion that it had no choice but to make multi-million dollar bonus payments was undercut this afternoon by New York Attorney General Andrew Cuomo, who revealed new details about the now-infamous pay packages.

Cuomo reveals that 73 individuals received bonuses of $1 million or more, with one recipient getting a bonus of more than $6.4 million.

In particular, Cuomo takes aim at AIG’s rationale for distributing more than $160 million in retention payments to members of its Financial Products subsidiary, “the unit of AIG that was principally responsible for the firm’s meltdown,” according to a letter sent by Cuomo to Barney Frank, chairman of the House Committee on Financial Services.

Though AIG has stressed that payments were essential to retain individuals at Financial Products vital to unwinding the subsidiary business, Cuomo notes that “numerous individuals who received large ‘retention’ bonuses are no longer at the firm.”

Cuomo’s office also learned more details about the bonuses:

• The top recipient received more than $6.4 million;
• The top seven bonus recipients received more than $4 million each;
• The top ten bonus recipients received a combined $42 million;
• 22 individuals received bonuses of $2 million or more, and combined they
received more than $72 million;
• 73 individuals received bonuses of $1 million or more; and
• Eleven of the individuals who received “retention” bonuses of $1 million
or more are no longer working at AIG, including one who received $4.6
million;

Again, these payments were all made to individuals in the subsidiary whose performance
led to crushing losses and the near failure of AIG. Thus, last week, AIG made more than 73
millionaires in the unit which lost so much money that it brought the firm to its knees, forcing taxpayer bailout. Something is deeply wrong with this outcome. I hope the Committee will
address it head on.

We have also now obtained the contracts under which AIG decided to make these
payments. The contracts shockingly contain a provision that required most individuals’ bonuses to be 100% of their 2007 bonuses. Thus, in the Spring of last year, AIG chose to lock in bonuses for 2008 at 2007 levels despite obvious signs that 2008 performance would be disastrous in comparison to the year before. My Office has thus begun to closely examine the circumstances under which the plan was created.

READ THE LETTER: HERE

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Bankers Testify: Live Video

Bailed Out Bankers Testify: Live Video

MSNBC |   February 11, 2009 08:58 AM

The eight chief executives from bailed out Wall Street banks are testifying today before Congress. The CEOS will be quizzed aggressively on how they have used more than $160 billion in taxpayers’ money.

Watch the hearing live here

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Banking leaders face the hot seat in Congress

Via: Raw Story/ Associated Press
Published: Wednesday February 11, 2009

Banking leaders who benefited from a federal bailout are bringing a message of accommodation and gratitude to Congress, hoping for a better reception than the one given Treasury Secretary Timothy Geithner.

The eight chief executives nevertheless will likely hear plenty of skepticism Wednesday morning when they take seats at a witness table in the Rayburn House Office Building. It will be the first such examination by lawmakers since they passed the bailout bill last year. The CEOS will be quizzed aggressively on how they have used more than $160 billion in taxpayers’ money.

In prepared testimony, the banking industry leaders applauded the program for making more loans available and promised to pay their share of the money back to the Treasury over time. Anticipating confrontations over their own compensation, several asserted that none of the government’s money went to bonuses or dividends.

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Obama: Executive Pay Limits For Bailed Out Companies

Obama to introduce executive pay limits for bailed out companies.»

Think Progress- By Faiz Shakir on Feb 3rd, 2009 at 10:25 pm

The Obama administration plans to mandate new executive pay limits for financial companies that are receiving any help from the $700 billion bailout fund. “If the taxpayers are helping you, then you’ve got certain responsibilities to not be living high on the hog,” President Obama said in an interview. Sen. Claire McCaskill (D-MO) has proposed that no employee of a bailed-out company can receive more than $400,000 in total compensation until it pays the money back.

Update– Obama will announce today that he’s imposing a cap of $500,000 on the compensation of top executives at companies that receive significant federal assistance in the future.

Update– Sen. Bernie Sanders (I-VT) was the first to propose the idea of capping salaries last October. Watch his appearance last night on The Rachel Maddow Show.

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Obama to detail compensation limits on executives

JIM KUHNHENN | February 4, 2009 10:05 AM EST |

WASHINGTON — Call it the maximum wage. President Barack Obama wants to impose a $500,000 pay cap on executives whose firms receive government financial rescue funds, a dramatic intervention into corporate governance in the midst of financial crisis.

The new restrictions, described by an administration official familiar with the new rules, are to be announced Wednesday morning at the White House. The steps set the stage for the administration’s unveiling next week of a new framework for spending the money that remains in the $700 billion financial rescue fund.

“If the taxpayers are helping you, then you’ve got certain responsibilities to not be living high on the hog,” President Barack Obama said Tuesday.

The official, speaking on the condition of anonymity because the plan had not yet been made public, said the most restrictive limits would apply only to struggling large firms that receive “exceptional assistance” in the future. Healthy banks that receive government infusions of capital would have more leeway.

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Economy Shrinks 3.8 Percent- Worst Since 1982

Job seekers queue up to attend a job fair Tuesday, Jan. 27, 2009, in Chicago. The number of people receiving unemployment benefits has reached an all-time record, the government said Thursday, and more layoffs are spreading throughout the economy. (AP Photo/M. Spencer Green)

Economy Shrinks In 4Q At 3.8 Percent Pace

JEANNINE AVERSA | January 30, 2009 10:33 AM EST |

WASHINGTON — The economy shrank at a 3.8 percent pace at the end of 2008, the worst showing in a quarter-century, as the deepening recession forced consumers and businesses to throttle back spending.

Although the initial result was better than economists expected, the figure is likely to be revised even lower in the months ahead and some believe the economy is contracting in the current quarter at a pace of around 5 percent. The current January-March period, they said, will probably turn out to be the worst quarter for the recession.

American consumers and businesses cut back everywhere in the final three months of 2008. Shoppers chopped spending on cars, furniture, appliances, clothes and other items. Businesses dropped the ax on equipment and software, home building and commercial construction. And overseas sales of U.S.-made goods and services tanked as foreign buyers grappled with their own economic woes.

“The downturn is intensifying. The fourth quarter is worse than it looks,” said Mark Zandi, chief economist at Moody’s Economy.com.

The new figure, released Friday by the Commerce Department, showed the economy sinking at a much faster clip in the October-December period than the 0.5 percent decline logged in prior quarter.

The report tallies gross domestic product, the value of all goods and services produced within the United States. It is considered the broadest barometer of the country’s economic health.

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