It's Enough to Make Your Blood Boil
Here are two items that will upset you…
First, back in February, Attorney General Eric Holder christened the unofficial official doctrine of "Too Big to Jail."
He told Congress, "The size of some of these institutions [TBTF banks] becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if we do prosecute – if we do bring a criminal charge – it will have a negative impact on the national economy, perhaps even the world economy."
Of course, it was only the christening of another neat little name.
Check Out Who's Hiding $32 Trillion in Offshore Accounts
More than two million emails that shed light on the biggest tax dodge in history – trillions of dollars hidden in offshore accounts – have been uncovered by the British newspaper The Guardian and the Washington, D.C.-based International Consortium of Investigative Journalists (ICIJ).
Some $32 trillion has been hidden in small island banking hubs which host a bevy of trust funds, shell corporations and other tax havens, the Tax Justice Network estimates.
This money is to the financial world what the Higgs boson and dark matter are to particle physics: It's tough to prove it's there, but the universe doesn't make much sense without it. It's just a matter of connecting the money to the people hiding it.
That's been a tall order… until now.
A Simple, Scary Way to Neuter Goldman Sachs and Friends
TBTF is the acronym for "too big to fail."
It's the crazy notion that certain banks are so large and systematically important (which really means so threatening to financial systems) that they must be kept alive by the government, because their failure would wreak havoc on the economy.
How will they be saved from their own greed? And how will we be saved from their greed so we can kneel at their altars another day?
Central banks and governments, who are not as powerful as central banks, will backstop them with printed paper and taxpayer blood. That's how they'll be saved, grow bigger, and one day rule the world.
Oh, that already happened… never mind
There is No Such Thing as a "Safe" Big Bank
Thank goodness we have the FDIC and the Federal Reserve and Congressmen and women.
Thank goodness they're willing to tap the captive citizenry for as much cash as they need to back the Fed and the FDIC to safeguard our big, beautiful banks from… themselves.
Only, there's a problem.
Big bank "safety" is only a myth.
Why It's Time to Sell Too-Big-to-Fail Banks
I'm not buying any bank stocks here. I don't own any at present. And if I did, I'd either sell them or at least hedge them.
It's not that they're doing poorly. They're not. Bank stocks have been strong because they've been making record profits. It's been a good ride if you're a Too Big To Fail bank or a shareholder.
But, being the cautious trader I am, I'm inclined to take profits when I have them in hand. That's why I'm out of the banks. I've banked my gains and turned cautious.
Citigroup beat analysts' expectations and finished up yesterday-even though the Dow took a big tumble.
Wells Fargo and JPMorgan Chase didn't do badly last week, in terms of their earnings and profit numbers either, but investors were disappointed.
But here's why I'm cautious…
Bank Stress Tests Could Lead to Higher Dividends for These Investors
The U.S. Federal Reserve will announce results of its annual bank stress tests Thursday – which means higher dividend payouts could be on the way from a handful of U.S. banks.
The bank stress tests are designed to assess if big U.S. financial institutions can weather a major economic storm.
Then, on March 14, the Fed will announce whether or not it approves of the banks' plans to distribute profits to shareholders.
The two-stage announcement process was put into place to give banks a chance to amend their payout plans, depending upon the results of the stress tests, before announcing them publicly. The Fed must approve any plans for the nation's biggest banks to distribute profits to shareholders after assessing the impact of those distributions on the banks' capital.
"You've gone from a few years ago, when the industry as a whole didn't have enough capital, to the point where in the not- too-distant future, it's going to have too much," Jason Goldberg, a New York-based banking analyst at Barclays Plc, told Bloomberg News. "The Fed's endorsement is "a Good Housekeeping seal of approval.'"
Why Warren Buffett is Wrong About U.S. Banks
Warren Buffett has made billions since the financial crisis by investing in U.S. banks, including Bank of America (NYSE: BAC),
The Oracle of Omaha has even guaranteed the safety of U.S. banks.
"The banks will not get this country in trouble, I guarantee it," Buffett told Bloomberg News. "Our banking system is in the best shape in recent memory."
Buffett, CEO of Berkshire Hathaway (NYSE: BRK.A, BRK.B), says U.S. banks are safe because they have increased capital ratios, sold risky assets, cut unnecessary jobs and bolstered their balance sheets.
But while the U.S. banking system might be in better shape than it was five years ago, it is nowhere near fixed. And banks could cause another crash.
Too Big To Jail: It's a Dark Day For the Rule of Law
The opening line of a December 11, 2012 New York Times editorial on federal and state authorities choosing not to indict HSBC for money laundering reads: "It is a dark day for the rule of law."
It may be a dark day for the rule of law, but it's business as usual for the banks.
America's heralded and frighteningly powerful Department of Justice, along with all of the not so heralded or frightening banking regulators, simply refused to prosecute Britain's biggest bank out of fear of "collateral consequences."
In other words, they're "too big to prosecute."
That's what Andrew Bailey, the chief executive-designate of the Prudential Regulation Authority, said about the usual deferred prosecution agreement that accompanied HSBC's $1.9 billion fine. The Prudential Regulation Authority is set to replace the U.K.'s Financial Services Authority – the country's current toothless watch dog,
It's just another example of too big to fail and too big to jail.
Deferred prosecution agreements and hefty fines levied against the world's TBTF banks have become commonplace. Still, there are relatively few criminal charges, just wrist-slapping, don't-do-it-again fines and public spankings.
It is a dark day for the rule of law because the money cloak has effectively been cast over all things having to do with justice.
Let's call it what it is: buying immunity.
This "Massive" Cybersecurity Attack Targets Your Money
If you haven't yet been the victim of a cybersecurity attack, you might be soon depending on what bank you use.
Computer security firm McAfee issued a report yesterday (Thursday) alleging a "massive cyberattack" was being planned for next spring.
According to CNNMoney, a gang of criminals headed by a Russian cyber mafia chief known as NSD had developed a powerful "Trojan Horse" program designed to take money out of victims' bank accounts and channel it into their own.
The plan, called "Project Blitzkrieg," was aimed at 30 U.S. financial institutions, including online payment company PayPal, and was based on a malware program that would clone an account holder's computer to make it look like the accounts were being accessed from the owner's home computer, avoiding security questions that would deny the criminals access to the accounts. The idea was to then access thousands of accounts simultaneously to take out small amounts of cash from each one that would total millions of dollars.
Project Blitzkrieg first came to light when notices were posted on hacker Websites looking for hackers to join the group planning the attack. They offered a share of the loot for service.
Once the plan was discovered, it seems to have "gone dark."
It is impossible to know if Project Blitzkrieg has been cancelled or whether it is proceeding under much tighter security but security companies, including McAfee, have been working with banks to bolster their security.
HSBC Fine for Money Laundering is Largest Bank Penalty in U.S. History
The HSBC fine for money laundering charges reached a record $1.92 billion as Europe's biggest bank settled charges in an agreement with the U.S. Justice Department.
The fine is the largest penalty ever imposed on a bank from the Justice Department.
The Justice Department had accused HSBC Holdings PLC of illegally laundering money for Mexican drug cartels and with violating sanctions by doing business with countries including Iran, Cuba, Libya, Sudan and Myanmar, according to Reuters.
In a statement, HSBC Chief Executive Stuart Gulliver said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes."
Under new senior leadership over the past two years, Gulliver said, "we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters."