Friendly Banks

I went to Chase Bank yesterday and deposited $10.00 in cash. The bank teller asked for my identification. Why? Because all cash despots at Chase banks now require an ID.

Bank RobberyThis should concern you because it’s evidence of the government’s anxiety. Chase Bank is not asking of their own accord, they are being told by the Feds to demand this information. The government is beginning to track how cash is circulating in the economy.

Recently, the former speaker of the House of Representatives, Dennis Hastert (R), was recently indicted for paying hush money to an “unnamed individual.” Hastert was caught because of the frequency and amounts of  cash withdrawals he was making. Let’s remove the politics from the story and focus on the salient point. His bank contacted the federal authorities over the cash withdrawals. There is no crime for taking your money out of your bank; yet his bank contacted the Federal authorities initiating an investigation.

I use to travel frequently overseas and I always had to notify my bank, in advance, so that my ATM card would work overseas. But these simple policies (ID cards, permission) implemented by the banks are also psychological triggers to control and monitor the populace. I had to ask the bank to give me permission to take out my cash.  The American public has been complacent in letting the banks dictate how and when we can use our cash to the extent that we have forgotten it’s our cash!

If you look at the glowing reports by the media and the government, you would think that the economy is doing great. Interest rates are low, unemployment is down, the stock markets are higher and housing is in the uptick. Yet, if everything was doing so great why would the government care what you were doing with your money?  Why would they track cash deposits and, for that matters, cash withdrawals?

When a government over regulates and over taxes, as ours does, citizens will inevitably resort to barter and cash to escape the heavy hand of government. When banks start tracking when you deposit or withdraw cash, you know something is amiss. The government knows that when things are over regulated, people will resort to cash to avoid paying taxes. In addition, when an economy is weak, the government knows it is imperative that people keep their money in the system, lest a bank run begin.

This is why they are monitoring all cash transactions.

In fact, the government is manipulating the economic numbers to present a picture of robustness. If  the economy was doing so well, Donald Trump would not be leading in the polls! His platform of getting America’s business back on track, and workers back to work, has catapulted him into the lead because the American public knows the economy is not doing well.

If you look at TV or magazine ads, the banks try to portray themselves as friendly and willing to help you. America’s biggest banks spend hundreds of millions of dollars to create a pristine image. They’re here to help out families and small businesses. They’re conservative stewards of your capital and they play by the rules. In reality, they are not your friends. In reality, they are in cahoots with the government to watch and track you.

These banks are not friendly institutions. Many have engaged in criminal activities. Yet they treat their retail clients as potential criminals and alert the Feds whenever they think you might be doing something suspicious.

Here is a small sample of some of the crimes that the banks have committed:

  • Wells Fargo, which owns Wachovia bank, paid a $160 million fine for conspiring with cocaine cartels to finance their operations.
  • Citibank was caught laundering money for a Mexican drug Kingpin in 2001.
  • American Express Bank admitted to laundering $55 million in drug money in 2007.

However,  these crimes are small change compared to the massive crimes they have committed in the financial markets. These crimes are so massive they affect us all by defrauding  customers and rigging financial markets.

For example:

  • In 2011, Bank of America paid a $335 million fine for discriminating against minority borrowers.
  • In 2013, J.P. Morgan paid $410 million for manipulating the electricity market. They also paid $13 billion to settle claims that it knowingly sold toxic loans.
  • In 2014, Bank of America paid a $6.3 billion fine for selling faulty mortgages.
  • And in 2015, five big banks paid $5.8 billion for rigging the currency markets.

These banks have no problem breaking the law when it benefits them. Yet, when their customers deposit or withdraw cash they are the first to alert the authorities over your “suspicious” behavior. We are living in a world where the fox is guarding the hen house. The banks have been caught time after time taking advantage of their customers… while helping criminals skirt the law. The result? Their only penalty has been to pay small fines. They see that merely as the cost of doing business.  After all, they make far more money from illegal activities than they pay in fines.

With the nation’s largest banks operating this way, how much faith do you have that our banks will be able to withstand the next financial crisis when it comes?

I’m just sayin’…

Steve

sleeclark@gmail.com

Thanks to Bill Bonner and his team which inspired this article

Where Is My Check?

A few weeks ago the federal government fined five banks more than 5 billion dollars related to currency manipulation and rigging.

Where is my check?The traders and sales people involved in the manipulation called themselves The Cartel” which turned out to be an appropriate name. Prosecutors said that traders and sales agents used electronic chat rooms to conspire to manipulate prices in the foreign currency markets. They secretly marked up transaction costs telling customers they hadn’t.

To get an edge, traders at the five banks colluded to pad their returns.  In order to carry out the the plan, one trader would typically build a huge position in a currency then unload it, hoping to move prices. Traders at the other banks would play along, coordinating their actions in online chat rooms. What is more worrisome is that in this process, the traders were sharing what trades their customers were making, completely violating their privacy.

The charges laid forth were that the banks colluded when quoting their customers so that they could exact as much profit as possible on the transactions. So, as a result of this theft, the banks will now pay the government $5Billion for market rigging. However,  the clients most harmed by this transaction will never see a penny in restitution.The banks will pay the government for wrong doing… and life will go on.Shamefully, the U.S  government will continue to transact with these same banks next week for their borrowing needs, issuance of new debt, debt repurchases, and repurchase agreements.

Th end result is that these banks will make back from the government that charged them with fraud, the fees they paid to the government for ripping off their customers in the first place!

This is the mad world we in which we are living. Yet, a closer look reveals that nothing has changed.

In 2008, the U.S government bailed out most of the major banks in the U.S, along with a lot of other companies related to the real estate sector, as experts sounded the alarm that the U.S economy would collapse without a bailout. Because the banks made a series of bad investments in the real estate sector (with the aid of the government), the U.S treasury gave cash, loan facilities and 0% interest rate loans to the banks to shore up their losses. In the end, it worked. The banks did not go bust, confidence was restored, and the market plowed higher.

But what about the homeowners?

Why weren’t they paid for the losses they suffered? Think about it. Both parties made a bet. The home buyer made a bet that he could purchase a home that would go increase in value and later sell it for a profit. The bank made a bet that the home buyer would be able to meet the loan (mortgage) obligation and the bank would make profit by way of interest fees on the loan. Both parties lost on their “bet.” But in that case, only the banks were made whole for their losses while the homeowner, in most cases, lost his property

Bailing out companies for making bad bets started a long time ago.

The Chrysler bailout in the 1970’s became a proxy for future bailouts where companies, mostly in the financial sector, started making bigger and bigger bets knowing the government would be there to bail them out. (For a great history of bailouts, take a look at Bailout Nation).

Imagine I’m inviting you to bet on the flip of a coin whereby “heads I win and tails you lose.” I am guaranteed a win! This is the bet structure that exists in the United States, with the government and financial sectors on one side and the consumer on the other. Its socialized losses and privatized gains.

In the real estate crisis of 2008, the bank employees still got paid their bonuses via taxpayer money. The rationale for this farce was that “the employees would have quit en mass had they not received their bonuses.” Better to have let them quit, Perhaps people who really wanted to put in an honest days work for a fair wage in return would have taken their place.

In both the currency fine and 2008 bailout, the government became the judge, jury and deliverer of justice and in both instances only the public took the hit.

Steve