Feeds:
Posts
Comments

Posts Tagged ‘JP Morgan Chase’

A few years ago, congress approved and President Obama signed legislation called Dodd-Frank, which was supposed to regulate the actions of Wall Street banks by curbing the financial crimes and other unethical shenanigans of the big banks. Dodd-Frank was weak legislation, badly watered down by Wall Street lobbyists, so the press told us. What the corporate press didn’t tell us is that it was created to be ineffective.

That’s because of Hedge Funds. Hedge funds are unregulated investment firms not impacted by Dodd-Frank, or any other federal regulations.

The big banks all own hedge funds, which are many times larger than the big banks. So, for example, if Goldman Sachs is worth $20 billion, then its two hedge funds are worth closer to $100 billion each. That means only the front company of these investment banks are being “weakly” regulated.

Under the above scenario, only 8 percent of Goldman Sachs is being weakly regulated by Dodd-Frank and whatever other rules are in the federal books. The same holds true for Citibank, JP Morgan/Chase and all the other big banks that have hired the Clinton’s to give speeches on topics they don’t know much about.

In ballyhooing Dodd-Frank, the Democrats achieved virtually no regulations on Wall Street, but they did create a smokescreen by which they could claim they did something significant. Blow away the smoke screen, and they achieved almost nothing in the way of regulating Wall Street.

Hedge Funds were created in 1940. They were small wealth managing companies that were limited to having 99 clients or less via a loophole in the New Deal Reforms.

“The Investment Company and Investment Advisers Acts of 1940 prohibited firms operating with pools of investor money from engaging in risky practices like short sales (bets that a stock will go down instead of up), leverage (investing with borrowed funds to amplify returns and heighten risk), and corporate takeovers. Meanwhile, investment companies had to register with the Securities and Exchange Commission (SEC), disclosing their portfolios and their corporate structures. The 1940 laws also restricted certain types of fund manager compensation. The purpose was to eliminate the kind of speculative risks with pools of capital that generated the Great Depression.”

Hedge Funds were never a big player in today’s financial markets until one day in 1996 “President Bill Clinton signed the National Securities Markets Improvement Act (NSMIA), which overhauled state and federal responsibility for securities market oversight. It was part of a series of financial market deregulations in the Clinton era, advanced with broad Wall Street support and almost no resistance in Congress: After bipartisan agreement, the House and Senate finalized NSMIA with a voice vote.”

BarclayHedge now estimates hedge fund assets under management in the third quarter of 2015 at $2.7 trillion, up from about $100 billion in 1995. And that doesn’t count the borrowed money also invested by the same firms, which likely total trillions more.

After Clinton left office, Wall Street investment banks rewarded Bill and Hillary Clinton for their loyalty by paying them millions of dollars in speaking fees. No doubt, President Obama will get the same deal if he can get the Trans Pacific Partnership passed through congress via partnership with the Republican Party.

The game is still rigged and Dodd-Frank is almost completely useless thanks to the big banks and their Hedge Funds.

As for Hedge Funds, they are now the preferred vehicle of ripping people off, manipulating markets via their trillions of dollars, helping the big banks keep millions of homes off the markets so as to create the current (as well as the last) housing bubble, and so much more.

The Clinton’s have exacerbated our current crisis of democracy. Vote Bernie Sanders!

As for the rest of the story, stay tuned.

Advertisements

Read Full Post »

Rate_hike_cartoon_11.30.2015_normal

Federal Reserve Chairman Janet Yellen announced Wednesday, December 16 that the Fed will raise short term interest rates by .25 percent. That means interest rates are going to rise for the 99 percent; from 15 to 17 percent on credit cards, for example. Home mortgage rates, car loans, home equity credit lines, and student loans, among other loans, are going to rise. Home mortgage loans will rise from about 3 percent to roughly 5 percent.

Yet there are no signs of an inflationary spiral, which would in theory spur the Fed into raising rates, which is one of its falsely stated goals. Then there’s high (but not too high) employment, another cherished and false goal of the Fed. For the last six years the US economy has been creating less jobs every year (and with declining wages) than occurred under that alleged dreadful president, Jimmy Carter, whose four years as president also included rising real wages. Carter did this with an economy and population about half of today’s economy.

Preliminary indications are that the US is headed toward a recession deeper and longer than the last one, and we should arrive there somewhere between seven and seventeen months from now. The Fed’s actions exacerbate these indications by redistributing income from the 99 to the 1 percent, curtailing demand, and hurting the economy, such as a US durable goods sector that is clearly in recession. So what gives? What is the Fed up to?

Despite false statements to the contrary, the Fed actually has pretty much followed only two goals throughout its history, and its latest move is a classic example of this. One goal is to protect the profits and share prices of the big banks, and number two is to protect wealthy investors from their own bad investment decisions. Everybody else is expendable when the Fed undertakes its responsibilities. In other words, the 99 percent is expendable, and often the victims, of the Fed’s actions on behalf of its unstated goals, which is to financially protect the rich.

And so in this most recent Fed action, the Fed is doing its first duty; increasing the earnings and share prices of the big banks at the expense of the 99 percent, which makes it seem, quite accurately, that the relationship between the Fed/Big Banks and the 99 percent is akin to parasites unto their hosts.

Your higher credit payments are going toward greater bank profits, which will provide rising dividends to rich shareholders. Share prices might and should rise, at least in the short term. This is pure income redistribution, and the corporate propaganda network wants you to believe the Fed’s increase in interest rates is to stabilize the economy, or limit non-existent inflationary pressures, or who knows what. But the last thing the corporate press wants you to know is that more of your income is being redistributed by the US Federal Reserve Bank to the rich via higher bank profits, rising shares, and soaring dividends. The rich are going to get richer, and you are going to be more poor.

The ten biggest US banks have many things in common, and one of them is declining share prices since last summer. Clearly, the Fed’s action is intended to reverse the decline.

The ten biggest US banks are:

1 JP Morgan Chase
2. Bank of America
3. Citigroup
4. Wells Fargo
5. US Bancorp
6. Bank of New York Mellon Corporation
7. PNC Bank
8. Capital One
9. HSBC North America Holdings
10. TD Bank US Holding Company

Read Full Post »

This story was written by Katie Rose Quandt and originally published on BillMoyers.com.

Front-line workers at our nation’s big banks — tellers, loan interviewers and customer service representatives — are required by their employers to exploit customers, according to a revealing report out today from the Center for Popular Democracy (CPD). Big banks have internal systems of penalties and rewards that entice employees to push subprime loans and credit cards on customers who would be better off without them.

CPD’s report outlines several illegal predatory practices big banks have been caught employing, usually via their front-line workers:

Blatantly discriminatory lending:
In 2011 and 2012, Bank of America and Wells Fargo paid out settlements for charging higher rates and fees to tens of thousands of African American and Hispanic borrowers than to similarly qualified white customers. Minority customers were also more likely to be steered into (more expensive, riskier) subprime mortgages.
Manipulating payment processing to maximize overdraft charges:
When a savings account balance drops too low, the bank charges a hefty overdraft fee on each subsequent purchase. Both Bank of America and US Bank paid settlements for intentionally processing customers’ largest debit card payments first, regardless of chronological order, in order to hit $0 faster and maximize overdraft fees. US Bank was also accused of allowing debit card purchases on zero-balance accounts to go through (and incur overdraft fees), instead of denying the charges upfront.
Forcing sale of unneeded products:
Wells Fargo, JP Morgan Chase and Citigroup were accused of forcing customers to purchase overpriced property insurance.
Manipulative sales quotas:
Lawsuits show Wells Fargo and Bank of America created incentive programs for employees with the interests of the company — not the customer — in mind. Wells Fargo’s sales quotas encouraged bank workers to steer prime-eligible customers to subprime loans, while falsifying other clients’ income information without their knowledge. Bank of America’s “Hustle” program rewarded quantity over quality, encouraging workers to skip processes and checks intended to protect the borrower.

Instead of cutting back on the risky, unethical practices that led to the Great Recession, the CPD report asserts that big banks have not learned from their mistakes. Bank workers report higher levels of sales pressure in 2013 than in 2008, and most do not have the job security or seniority to simply refuse to hawk credit cards or steer customers into risky financial situations. While the financial sector is turning near-record profits, the average bank teller made just $12.25 an hour in 2013 (a real-dollar decrease from 2007), causing 31 percent of tellers’ families to rely on public assistance. What’s more, 85 percent of these underpaid front-line bank employees are women, and one-third are people of color. Most are in no position to risk losing their job or having their pay docked for stepping out of line.

Several anonymous big bank employees went into detail about how their employers incentivize sales:

An HSBC employee reported that when workers fell short of sales goals, the difference was taken out of their paychecks.
A teller at a major bank said she is expected to sell three new checking, savings, or debit card accounts every day. If she falls short, she gets written up.
Customer service representatives at one major bank’s call-center said everyone is expected to make at least 40 percent of the sales of the top seller. Credit card sales count for extra, encouraging callers to push credit cards on customers who would be better served with checking or savings accounts.
A call-center worker said she offers a credit card to every customer, regardless of whether it would be beneficial. She explained: “If you aren’t offering, you can get marked down — the managers and Quality Analysts listen to your call, and can tell if you aren’t offering.”

“We’re not servicing their needs,” said one front-line worker. “What they want, what they need, isn’t important to us. Selling them a product is … Some of our customers just have their savings, many are just retirees.”

As the report concludes, “Our nation’s big banks are committed to a model that jeopardizes our communities and prevents bank employees from having a voice in their workplace.”

Read Full Post »

%d bloggers like this: