Le Monde Diplomatique, July 2014
Fining the banks for all the wrong crimes
BNP Paribas’s sins
US financial regulation is back — but it’s aggressively pursuing crimes, and criminals, not relevant to the near-destruction of the world economic system in 2008.
by Ibrahim Warde
Pre-crash free market ideology was only briefly out of favour. Although it was proved false and unviable, it soon returned to fill the void. Nobody knows any better — or can think any differently.
THE US SENATE VOTED IN JULY TO APPROVE A DILUTED VERSION OF A MAJOR REFORM OF THE BANKING SECTOR, A POLITICAL SUCCESS FOR THE OBAMA ADMINISTRATION. HOWEVER, THE MORE SIGNIFICANT STORY MAY BE ABOUT THE LEGAL, YET SHARKISH, BUSINESS PRACTICES OF GOLDMAN SACHS
Former Goldman Sachs chief executive officer Robert Rubin led the National Economic Council created by President Bill Clinton (1993-95) before becoming his treasury secretary. He contributed to "reassuring" the financial community by becoming a cheerleader for deregulation. During George W Bush's administration, two other Goldman Sachs CEOs also played major political roles – in both parties. Hank Paulson was treasury secretary between 2006 and 2009, and in that capacity was the principal architect of the massive government rescue of the banking sector.
In one of the private emails that triggered the latest Wall Street scandal, Goldman Sachs trader Fabrice Tourre, one of those "quants" (quantitative analysts) who were the hottest property in finance during the recent boom, wrote about how he created "all these complex, highly leveraged, exotic trades without necessarily understanding all of the implications of those monstrosities!"
DUBAI DIDN'T FALTER IN ITS MISPLACED SELF-CONFIDENCE ALL THE WAY THROUGH THE GREAT GLOBAL FINANCIAL CRASH. AND THEN THE DAY OF RECKONING CAME FOR ITS YEARS OF FLASH AND EXCESS. NOBODY KNOWS WHAT IT REALLY OWES
Carlo Ponzi was born in Parma, Italy, in 1882. He arrived in the United States in 1903, the heyday of robber barons, convinced like many immigrants that the streets were paved with gold. This get-rich-quick artist, endowed with more imagination than talent, tried all sorts of fiddles, practised a thousand trades and frequently found himself on the wrong side of the law.
BERNARD MADOFF HAS TAKEN THE SECRETS OF HIS PONZI SCHEME TO HIS RELATIVELY COMFORTABLE NEW JAIL ACCOMMODATION WHERE HE WILL SPEND THE REST OF HIS LIFE. NO ONE KNOWS, AND HE ISN'T TELLING, HOW LONG HIS FRAUD LASTED, HOW MUCH IT NETTED AND WHO WAS IN IT WITH HIM
THE US RECESSION, RECORD OIL PRICES AND A COSTLY WAR ON TERROR HAVE ADDED TO THE SENSE OF UNEASE GENERATED BY THE PRESENT, UNPRECEDENTED CREDIT CRISIS. SOVEREIGN WEALTH FUNDS FROM EMERGING COUNTRIES ARE NOW APPEARING AS INDISPENSABLE INVESTORS OF LAST RESORT.
On 14 March Bear Stearns, fifth investment bank in the United States, facing a severe liquidity crisis, appealed to the Federal Reserve. In order to save the bank after its battering by the subprime crisis, the Federal Reserve lent $30bn to JPMorgan Chase, which announced two days later that it was buying Bear Stearns for $236m.
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