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Thursday, October 31, 2013

'Why Bankers Still Aren't Chastened'

From Spiegel:

Why Bankers Still Aren't Chastened, by Martin Hesse and Anne Seith, Spiegel: ... At 1:45 on the morning of Oct. 19, Italian police arrested the 53-year-old [Raoul Weil, once one of the most influential executives at Swiss bank UBS] ... and brought him to ... Dozza prison. The reason: US authorities had indicted Weil, the former head of wealth management at UBS, for allegedly helping American clients hide their assets from US tax authorities on Swiss bank accounts.
Weil's arrest was only one of a series of reminders last week that bankers around the globe are no longer the admired elite of the business world. Public prosecutors, financial regulators and politicians everywhere now suddenly seem to be striving to condemn all of the industry's excesses in fast forward.
British authorities recently hit the financial sector with record penalties. Last week, on the other side of the Atlantic, a US court found Bank of America and a former manager guilty of fraud because of a scheme involving shoddy home loans. Shortly before that, Jamie Dimon, CEO of JPMorgan,reluctantly negotiated a record settlement of $13 billion (€9.45 billion) to at least put a stop to civil claims that his bank knowingly sold toxic US mortgage-backed securities. ...
The truth is, spectacular coups like Weil's arrest are little more than symbolic gestures. The fines and settlements paid by many financial institutions are akin to the indulgences sold by the medieval Catholic Church. The sins of the past may now be forgiven -- but there are no guarantees of improvement in the future.
Regulatory agencies and politicians have not set effective controls on banks and bankers, and although their reputation may be tarnished, their power remains unbroken. ...

    Posted by on Thursday, October 31, 2013 at 09:19 AM in Economics, Financial System, Regulation | Permalink  Comments (8)

          


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