Tuesday, July 26, 2011

Banking Corruption Update

Just in case you're not sufficiently demoralized by the failure of authorities to punish almost anyone in the financial industry for their actions leading up to the crisis, read Joe Nocera on the recent fine handed down by the Federal Reserve to Wells Fargo Bank. The Fed fined the bank $85 million (much less than 1% of its revenues for the last quarter alone). No one will be prosecuted, this despite apparent evidence that multiple bank employees "falsified income information on mortgage applications."

Nocera's comments hit the nail on the head:
What’s more, this practice appears to have been quite widespread — “fostered,” as the Fed puts it, “by Wells Fargo Financial’s incentive compensation and sales quota programs.” Matthew R. Lee, the executive director of Inner City Press/Community on the Move and Fair Finance Watch, spent years bringing Wells’ subprime abuses to the attention of the Federal Reserve. “The way the compensation was designed ensured that abuses would take place,” he says. “It was a predatory system."

These are exactly the kind of loans — built on illegal practices — that gave us the financial crisis. Brokers working for subprime mortgage companies routinely doctored incomes to hand out subprime loans they knew the borrowers could never repay — and then, after taking their fat fees, shoveled the loans to Wall Street, which bundled them into subprime securities. This was the kindling that lit the inferno of September 2008. So again, I ask: Why is there no criminal investigation into what went on at Wells Fargo Financial?

I'm not sure whether Justice Department officials have capitulated entirely to economists' arguments about financial incentives and the inefficiencies of good old fashioned legal punishments (i.e. jail time), but I can't see the culture on Wall St. changing one tiny bit until the law shows some real teeth. The dearth of prosecutions suggests that few people in power really want it to change. 

Various organizations such as the World Audit Organization and the Internet Center for Corruption Research try to estimate the level of corruption in different nations, and have been doing it since 1995. It's hardly an exact science and depends a lot on perceptions. But I'm not surprised that the United States in these estimates has fallen from 14th globally in the year 2000 to 22nd in 2010. Hardly surprising.


  1. There is a tool called Money multiplier which government uses to control mandatory reserves of commercial banks. Money multiplier is calculated as money supply value divided to the monetary base value. This way central bank controls commercial banks’ activity, and the number of Canadian payday loans is controlled first of all.


  2. شركة نقل عفش
    اهم شركات مكافحة حشرات بالخبر كذلك معرض اهم شركة مكافحة حشرات بالدمام والخبر والجبيل والخبر والاحساء والقطيف كذلك شركة رش حشرات بالدمام ومكافحة الحشرات بالخبر
    شركة مكافحة حشرات بالدمام
    شركة تنظيف خزانات بجدة الجوهرة من افضل شركات تنظيف الخزانات بجدة حيث ان تنظيف خزانات بجدة يحتاج الى مهارة فى كيفية غسيل وتنظيف الخزانات الكبيرة والصغيرة بجدة على ايدى متخصصين فى تنظيف الخزانات بجدة
    شركة تنظيف خزانات بجدة
    شركة كشف تسربات المياه بالدمام
    شركة نقل عفش واثاث

  3. شركة نقل عفش بالرياض وجدة والدمام والخبر والجبيل اولقطيف والاحساء والرياض وجدة ومكة المدينة المنورة والخرج والطائف وخميس مشيط وبجدة افضل شركة نقل عفش بجدة نعرضها مجموعة الفا لنقل العفش بمكة والخرج والقصيم والطائف وتبوك وخميس مشيط ونجران وجيزان وبريدة والمدينة المنورة وينبع افضل شركات نقل الاثاث بالجبيل والطائف وخميس مشيط وبريدة وعنيزو وابها ونجران المدينة وينبع تبوك والقصيم الخرج حفر الباطن والظهران
    شركة نقل عفش بجدة
    شركة نقل عفش بالمدينة المنورة
    شركة نقل اثاث بالرياض
    شركة نقل عفش بالدمام