Another Day, Another Bank Scam….or Two

The Banks Are Still Scamming

It never ends, does it?

More than half of the derivatives- trading business of Goldman Sachs Group Inc. (GS), Morgan Stanley and three other large banks could fall largely outside the Dodd- Frank Act if they succeed in lobbying regulators to exempt their overseas operations, government records show.

The debate over the reach of Dodd-Frank has been among the most contentious aspects of the regulatory overhaul enacted by President Barack Obama after the 2008 credit crisis. The banks have met with regulators, testified to Congress and filed dozens of letters contending that they will suffer a competitive disadvantage if the regulations apply to their foreign arms.

Bluntly: “F” ’em.

There’s a simple solution to this problem — if you want to do business with a United States banking license, you will bring all operations worldwide under US laws.

If you don’t want to do that then leave.  Some other enterprising entity will then take the business from you, since you won’t be able to run securities in the US at all.

Our market is plenty large to attract entrepreneurs (if not existing smaller banks) to fill the vacuum.  The premise that being the largest campaign contributors to both parties should give the banks the ability to effective buy regulators is nonsense — our nation’s response to this, whether from OWS, the “Tea Party” or simply from the American people, should be one giant middle finger and the jingling of a pair of handcuffs for those who want to continue to press the issue.

I’ve had enough of this crap and you should have as well.

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Another Law That Doesn’t Apply To “Big (Bank) People”

How many more examples do we need to see before the people demand handcuffs — and threaten that if they don’t see them applied to the pigmen they’ll take matters into their own hands?

Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.

As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.

Nonsense.  Money does not “vaporize.”  It goes somewhere through someone.  In this case…

As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase & Co. and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing Corp. and LCH.Clearnet Group Ltd., people familiar with the matter said.

Now here’s the scam.  Try receiving stolen property as any ordinary business or person and then claim that you don’t have to give it back (even if it’s gone later on) and see how well that works.

You’ll lose and be forced to give it back — even if you don’t have it any more.

There are, of course, exceptions that various entities have managed to get written into the law.  One of the more-outrageous in recent years has been pawn shops, where you can find your stolen property, be able to prove it’s yours, and yet be forced to buy it back — even though the pawn shop has no legal title to it as the seller (who stole it) never had title to convey.

Common business balance and in fact the law in virtually every other case requires that if the title to whatever you receive is defective your recourse is against the person who sold it to you — you can’t acquire title to something that the seller never lawfully had!

But when it comes to segregated funds, which are allegedly held in escrow for customers and are represented as same by every brokerage in the land, it appears this principle doesn’t apply.  If it did then banks would be really careful about taking moved funds proffered in response to a margin call or other “stress” situation and require proof that the funds were in fact owned by the firm tendering them, lest they be forced to cough them back up.

That in turn would stop these frauds cold.

And make the pigmen legally and financially responsible for their scams.

The only way we’re ever going to see these schemes and scams stopped is when we, the people, demand and are willing to back up our demand to whatever degree is necessary that the same laws that apply to you and I when we accept transfer of some property — that we cannot acquire title to something if the seller does not have lawful title himself — be applied to the pawn shops, the banksters and other “connected” institutions and people.

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