GLOBAL BANK SETTLEMENT – FEDERAL RESERVE BANKS PLEAD GUILTY TO CRIMINAL CHARGES

“Silence in the face of evil is itself evil. God will not hold us
guiltless. Not to speak is to speak. Not to act is to act”.
Dietrich Bonhoeffer

“Patriotism means standing by your country. It does not mean
standing by your President or any other public official.” Teddy Roosevelt

“When the people fear their government, there is tyranny. When the government fears the people, there is liberty.” Thomas Jefferson

GLOBAL BANK SETTLEMENT – FEDERAL RESERVE BANKS PLEAD GUILTY TO CRIMINAL CHARGES

On May 20, 2015, there was a global bank settlement where Federal Reserve banks plead guilty to Criminal Charges of “conspiracy to manipulate prices”. In layman’s English, they admitted to theft from you and me. You see, they got and still do get a certain percentage from each mortgage transaction – LIBOR rates and money exchange rates – FOREX trading. In LIBOR, the rates are set each day in London. The traders use that rate in mortgages, derivatives and virtually all financial transactions. The FOREX rates are virtually non-regulated but are set by the banks daily. This sets the relative price of the dollar to other currencies. Thus, a very small increase affects millions of transactions and trillions of dollars.
This settlement was for both LIBOR and FOREX. European as well as Federal Reserve banks were involved in the settlement. The wording of the settlement on May 20, 2015 is as follows:
“. . . Pleaded guilty to conspiracy to manipulate prices in the $500 billion a day market for US dollars and euros.” And
“Pleaded guilty to manipulation of the London interbank offered rate, or LIbor.”
This is clearly admission to theft in the LIBOR and FOREX markets. The banks involved in this theft are:
• Barclays
• Citigroup (Federal Reserve Bank)
• JP Morgan (Federal Reserve Bank)
• Royal Bank of Scotland group PLC
• Bank of America (Federal Reserve Bank)

Exhibit 1 Global Bank Fines and Thefts in LIBOR, FOREX and Mortgages

The article was confusing as to the amount of the theft as well as the source of the fines. However, after a close reading, I reconstructed an Excel spreadsheet. In Exhibit 1, Fines and the Amount of Theft, I tried to document what was in the

article as to the fines. The amount of theft comes from the new book that I have written and that is at the publishers and is about to be released. Exhibit shows some facts that are surprising.
• The amount of Fines imposed last year and this year are $11.03 billion.
• The fines are paid to the U.S. Treasury and the Federal Reserve Bank.
o The Federal Reserve Banks is a PRIVATE company not the U.S. government
o The Federal Reserve Banks has jurisdictional control over all U.S. regulatory agencies since the Dodd Frank Act of 2010.
o This theft has gone on while the Federal Reserve Bank had jurisdictional control of the “cops”, yet the Federal Reserve Bank was  awarded $550 million in fines. This makes no sense. Since when do private companies get judicial fines for criminal actions by their peers?
• The $7.2 trillion theft is calculated in my book.
• The $11.03 billion in fines for stealing $7.2 trillion means, “Crime does pay.”

In summary, they stole $7.2 trillion and paid a total of $11.03 billion in fines. This is “chump change” and we are the “chumps”. On top of this, the banks announced
• “They expected little disruption in their business.”
• The Justice Department is going along with the thefts and the fines even though
o They call these criminal actions, “breathtaking”
• The Justice Department  “ripped up” their previous agreement with UBS to cease and stop their illegal actions.  They issued a new authorization to proceed with “normal” oversight.

HOW IT WORKED

This is how it worked. The banks on both sides of the Atlantic had what they called “chat rooms” The traders participated in these chat rooms call themselves the “cartel”. They communicated using a coded language – not specified in the article. Rates were set at 1:15 PM and 4 PM daily. Traders withheld bids that could move the price if other traders in the “cartel” had positions that could be hurt by losing money. The inside group of traders in the cartel had to agree whether other members or traders could join the cartel. This is clearly collusive theft between banks. Also, the size of these trades were enormous. As a result, management above these men knew what was happening and how. They let it go on. This is implicit approval up to the CEO. This is clearly a white collar crime.

Who Got Punished

No one got punished. The banks received fines which they paid of roughly $11 billion but according to my calculations, they stole approximately $7 trillion per year.   The fines are not even in the noise level. It is almost undetectable on these banks’ bottom lines. In addition:
• Not a single name is released as to who the traders are – thus anonymity pervades this theft.
• There were no indictments.
• There were no jailings.
• A very few people (8) – unnamed – in England got fired.

Ms. Lynch, our new Department of Justice appointee, plays the role nicely by stating about the fines that
“These are unprecedented figures that appropriately reflect the companies’ breathtaking flagrancy and its systemic reach and its significant impact”
The result was summarized in the news release that says:
“All five banks received waivers from the Justice Department to continue operating without deep regulatory reviews.”

CONCLUSIONS

The facts are that a global set of banks with the largest Federal Reserve Banks in the U.S. being a critical component, admitted to a criminal conspiracy of setting prices in LIBOR and FOREX markets. For their admission, they got virtually no fines in relation to the size of the thefts. The Justice department issued statement saying that these thefts were “breathtaking”, fines them lightly and issues a “get out of jail card” by issuing waivers to each bank that allows them to proceed without overview in the manner that they have been accustomed – – – apparently proving – – crime does pay if it is big enough.