HEADLINES 29 Sept: Financial Tsunami Update

Headlines from the world of the Banking Organised Crime Syndicate and its associated parasitic industries, plus a bonus; the Kaiser Report’s ‘fleeing the flood’ – a necessary and logical consequence of a financial tsunami!

 

Eurozone

Clegg warns of EU rupture over Euro as Merkel prepares to tackle rebellion: The European Union will “rupture” if the debt crisis allows Eurozone countries to make decisions without consulting governments outside the single currency, Nick Clegg will warn. Britain’s most pro-European Cabinet member will fly to Warsaw with a warning for European colleagues wrangling over paying off the debt of Greece.

Stockmarkets fall on Eurozone bail-out fears: The rally in stockmarkets came to an abrupt halt amid fresh warnings that European leaders were again stalling ahead of two vital debt crisis deadlines. Markets across Europe fell on reports that Angela Merkel is struggling to secure the Bundestag majority needed on Thursday to approve the expansion of the European €440 billion (£383 billion) bail-out fund.

Germany poised to vote in favour of European financial stability facility: The German parliament is expected to approve enhanced powers for the Eurozone’s bailout fund on Thursday as plans to set up a fully fledged European monetary fund (EMF) gather pace.

 

Banking: Organised Crime

EU financial transaction tax ‘would harm U.K.’: British politicians and business groups have reacted angrily to the proposals, which Jose Manuel Barroso, the President of the European Commission, said were necessary for the “financial sector to make a contribution back to society”.

Osborne expected to oppose EU’s proposal for Tobin tax on banks: The proposed EU tax on financial transactions, which could raise €57 billion a year and force banks to make a “contribution back to society”, is expected to face fierce opposition from George Osborne.

Wrangle over £500 million bait for Northern Rock bidders: The Treasury and Financial Services Authority are heading for a clash over a proposal to allow bidders for Northern Rock’s “good” bank to take about £500 million out of the lender. The Treasury is keen to achieve a price of £1 billion and is exploring the idea of allowing the successful bidder to liberate about half of it after the deal, sources said.

Banks told to prepare for fresh shocks to the system: The Government’s financial watchdog has warned banks to slash bonuses and reduce shareholder dividends as “severe strains” appear in the global financial markets amid the worsening Eurozone debt crisis. In a statement after its meeting last week, the interim Financial Policy Committee said banks should bolster their finances by ensuring “discretionary distributions reflected any reduction in profits”.

Shake-up may see Cheltenham & Gloucester and TSB vanish from High Street: The Cheltenham & Gloucester and TSB brands could disappear from the High Street under plans being drawn up one of Britain’s new banks. NBNK, the lender headed by City grandee Lord Levene, is considering axing the historic marques if it buys the branches Lloyds Banking Group is being forced to sell.

Lord Levene fights for Lloyds branches: NBNK, the banking investment vehicle founded by City grandee Lord Levene, has submitted a second-round bid to buy 632 Lloyds bank branches. It is believed rivals Co-operative Financial Services and Sun Capital have yet to follow suit but can still do so in the weeks to come.

Banks told to prepare for worst as shares lose £20 billion: The Bank of England urged the commercial banks to prepare for the worst amid rising uncertainty over whether a multi-trillion-pound rescue deal for the Eurozone will materialise.

Barclays tops FSA customer complaints: Barclays received more complaints than any other financial institution in the first half of 2011, with 251,563 disputes recorded in the six months to June. However, data from the Financial Services Authority showed that the bank had improved its performance from the previous half year, when more than 276,000 complaints were lodged.

SEC probes banks over mortgage loans: The Securities and Exchange Commission is investigating Royal Bank of Scotland, Credit Suisse and other financial institutions for their handling of problem mortgage loans, according to public disclosures and people familiar with the matter.

Debt crunch threatens China and emerging markets: Europe’s banking woes have begun to set off a funding crunch in the emerging markets of Asia, Latin America, and Eastern Europe, leaving them nakedly exposed as the rich world slides into a double-dip downturn.

UBS reviews business model after £1.5 billion rogue trader loss: Swiss bank UBS has backed its “essential” investment banking arm in the wake of alleged rogue trading that caused a £1.5 billion ($2.3 billion) loss.

 

 

Parasite Food: Snouts in the Trough and Fraud

Beano Levene must wait a year for his fraud trial: A former City broker is to go on trial in October next year over an alleged multimillion-pound fraud against his wealthy investors, including the founders of Stagecoach. Nicholas Levene appeared at Southwark Crown Court, where he pleaded not guilty 13 counts of fraud.

Plea bargains must not let Directors slip off the hook: Incentives and deterrents are counterpoised gingerly in the U.S. style plea bargains envisaged by Edward Garnier, the U.K.’s solicitor general, as a new weapon against economic crime. The deterrent effect of the plea bargains would be that they would carry whacking fines ultimately borne by shareholders. Two cheers then, for the innovation. There is insecurity in British borrowings from the U.S. justice system, which include a supreme court and wailing police sirens. But equivalence in the opportunity for plea bargaining would have the practical benefit of discouraging forum shopping by multinationals. Prosecuting authorities, such as the Serious Fraud Office, would meanwhile be able to resolve cases faster, which would allow them to take more on.

 

Associated Parasites: Feeding off the Illusion

Dodd Frank: CFTC’s imposition limits: America’s financial sector has been waiting for rules covering contentious Section 737 of the Dodd Frank legislation mandating position limits on 28 commodities to land on its desk. The fact that rulings have been delayed once again points to numerous problems. The Commodity Futures Trading Commission is not yet able to collect data on the multi-trillion dollar market for over-the-counter swaps or even define them reliably. Then there is the ever-shifting fine print of who gets commercial exemptions as a bona fide hedger. Do Goldman Sachs’s position for customers get the same treatment as airline United Continental? “Class limits” and aggregation are yet more pitfalls. If rules on offsetting positions are too strict then financial innovation and liquidity could suffer. And if foreign jurisdictions do not follow then traders could look abroad, harming U.S. exchanges such as CME.

Fuel bills may rise by £60 to pay for energy savings abroad: British households could be forced to subsidise the home improvements of their continental counterparts under controversial plans being drawn up by the European Commission. The proposal — part of an EU energy efficiency drive — could add up to £60 a year to household energy bills, adding to the strain on families that are already facing rocketing gas and electricity prices.

Britain’s 50p tax rate is fourth-highest in Europe: Top earners in Britain face the fourth-highest rate of personal income tax in the EU, with only Sweden, Denmark and the Netherlands asking for more, according to figures from the accountancy firm KPMG.

Low pay rises set to limit inflation expectations: Most companies are planning no increase in the level of pay rises next year, despite high inflation hitting what workers earn in real terms, according to a survey of HR Managers form Income Data Services (IDS).

LME has already seen a ‘raft of interest’: The London Metal Exchange has been approached by more than 10 suitors and expects to open its books for inspection in early December, Martin Abbott, Chief Executive of the exchange, told the Financial Times.

Executives see salaries frozen for third year: Europe’s top executives have experienced a third year of base pay freezes, with pay consultants warning them to expect the same again in 2012 in the new era of austerity. “Until we see a more upbeat macroeconomic and political climate, companies will show more restraint in paying executives,” said Carl Sjostrom, Director of executive reward at the Hay Group, the management consultancy.

 

 

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