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“If you ain’t cheating, you ain’t trying.”
That’s a direct quote from a Barclays PLC vice president, as cited in a Financial Times article about the global foreign exchange rigging settlement announced this week.
The Justice Department obtained guilty pleas on several federal crimes, forcing Barclays, Citigroup, JPMorgan Chase and Royal Bank of Scotland to cough up $5.6 billion in fines.
Several banks already paid $4.25 billion to regulators late last year. And of course, as I’ve chronicled in Money and Markets, major global banks have faced several more billions of dollars in penalties for fixing the key LIBOR interest rate and the commodities markets.
Bloomberg also chronicled today how banks rigged the interest-rate swaps market, too. That’s a huge $381 trillion market for financial derivatives – one in which everyone from banks to hedge funds to corporations to pension managers speculate and invest in, or sue to hedge their interest rate exposure on outstanding debts.
|Banks have agreed to pay billions in fines.|
From an investment standpoint, these ongoing mega-fines and charges are a key reason why some of the largest global banks look unattractive for more than a quick trade here and there. I’d rather focus on smaller, regional and super-regional banks domestically — or select foreign institutions not swept up in the investigations.
But there’s a much bigger issue here. An unbelievable amount of B.S. has been going on at the world’s biggest banks! These are the very same institutions that brought the financial world to its knees during the credit crisis. They’re the very same institutions that taxpayers like you and I … and the Federal Reserve … then spent years bailing out, to the tune of hundreds of billions of dollars. If that doesn’t make you fighting mad, I don’t know what will!
You know what’s better than getting mad, though? Getting even!
You see, the latest settlements come on the heels of others showing how hopelessly conflicted the stock ratings and research that major banks and brokers publish are. It’s clear they’re spending most of their time figuring out how to rip you and other investors off, rather than helping you build wealth in today’s market.
|“You know what’s better than getting mad, though? Getting even!”|
So now more than ever, you need independent guidance … conflict-of-interest-free ratings … and the expertise that comes from decades spent analyzing the financial markets — with a contrarian, skeptical, B.S.-detecting approach.
With that said, what do you think about the latest mega-settlements? Why do banks keep ripping investors off, and keep racking up billion-dollar-plus bills for doing so? Is there something more that regulators or the Justice Department can or should do to put a stop to this B.S.? What would you do if you were “king for a day?” Let me know over at the Money and Markets website.
|Our Readers Speak|
Boy, did the latest article about double-secret-adjusting economic statistics to make them look better get your blood boiling over at the website.
Reader Tradewinds said: “It’s just another bout of a type of ‘social engineering’ where the ‘powers that be’ are simply misrepresenting things to manipulate public opinion to accomplish the things they want to accomplish. With the way many people are right now, it works (because no one has been really hurt yet on account of it). But let the country end up falling into the greatest depression ever, and then watch everybody change their tune.”
Reader Mike C. added: “I’ve never put my trust in the federal numbers (of any sort), and this is now part of my seemingly permanent view given the data manipulation/stunts of the last six years.
“When traditionally predictable information becomes strangely unpredictable, trust goes out the window. And right now I’m hanging outside the window from the window sill by my finger tips, as are many other investors and U.S. corporations. The current leadership in America is the root cause for this diminished trust level, and I fear that the diminished trust will shortly turn to wholesale distrust, and what then?”
Reader Steven tried to have a bit of fun at the government’s expense, saying: “They say figures can’t lie, but liars figure. Yes, we have seen liar’s figures in the past (global warming) but this takes the cake!
“And you wonder why they call those studies ‘sadistical regression.’ Just torture the numbers long enough and they will give you the answer you want while begging for mercy!”
Finally, Reader Gilbert W. said: “How about two jokes? One old and one new. Old joke: ‘Do you know how to tell when a politician is lying? When his or her mouth is moving.’ New joke: ‘Do you know how to tell when the government is lying? When it publishes statistics.’ They would be funny if they weren’t so absolutely pathetic.”
Thanks very much for weighing in on this topic. I’ve seen a lot of ridiculousness in my almost two decades in the business. But this news really takes the cake. We’ve always needed to take statistics out of places like China with a huge helping of salt. But if the U.S. government goes further down this path, what does it say about the numbers here?
Want to add more to the discussion? Then make sure you head over to the website here.
|Other Developments of the Day|
The health-care mega-deals keep on coming. CVS Health just agreed to buy Omnicare for $12.7 billion, or $98 a share plus assumed debt. The move will expand CVS’ pharmacy benefits management business by adding Omnicare’s drug-delivery and senior-living facility services operations.
The only thing being liquidated over at Lumber Liquidators is the company’s stock! The shares plunged another 16 percent today after CEO Robert Lynch unexpectedly hit the bricks. The firm’s flooring has come under fire for containing too much formaldehyde, a charge LL denies but that the Consumer Product Safety Commission has been investigating.
We hear a lot about how parents are increasingly keeping their kids off the football field because of fears over injury. But it’s baseball that is really seeing youth participation fall, according to a new Wall Street Journal story.
Only 5.3 million kids ages 7 to 17 played baseball as of 2013, down from 8.8 million at the turn of the century. The story cites increased specialization in only one sport by kids who take competition much more seriously than they used to, as well as the increased travel requirements and costs associated with some leagues.
And finally, David Letterman signed off from late night television for the last time yesterday. The Late Show host was on the air for 33 years, and more than 6,000 shows.
Any thoughts on these stories, or others I didn’t cover? Then don’t let them fester – put ’em online for me and your fellow investors to see here.
Until next time,