US: ‘Break Up Banks’ Bills Have Wall Street Nervous

Sen. Sherrod Brown (AP Photo/Mark Duncan, File)

Stephen: Not sure any of us would expect Wall Street would do anything other express its ire at the prospect of the Brown-Vitter US Senate bill, which will require banks with over $400 million in value to hold at least 15 per cent of their assets (which still seems incredibly low to me) in ‘hard capital”. But the Brown Vitter bill follows calls by stalwart Senator Bernie Sanders late last month that he would introduce his own bill to break up the banks that were ‘too big to jail’ (see story below) Judging by the reactions of the banking lobbyists, the banks can already see such suggestions are quickly gaining support.

‘Break Up The Banks’ Bill Gains Steam In Senate As Wall Street Lobbyists Cry Foul

By Zach Carter and Ryan Grim, The Huffington Post – April 8, 2013

http://www.huffingtonpost.com/2013/04/08/break-up-the-bank-bill-senate_n_3040095.html

WASHINGTON — Momentum to break up the nation’s largest banks is building quickly on Capitol Hill, just weeks after a unanimous, symbolic vote in the Senate to end taxpayer subsidies to Wall Street. The latest sign of this swift and unexpected shift in the political wind came Monday when Rob Nichols, a lobbyist with the Financial Services Forum, attacked new capital standards proposed by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) as “comically high.”

The Brown-Vitter bill is, in fact, designed to put banks in a difficult position. As Brown told HuffPost in February, he hopes to move legislation this year to break up big banks; Vitter echoed Brown’s comments on the Senate floor. By crafting a bill that requires banks with more than $400 billion in assets to hold at least 15 percent of those assets in hard capital, the senators hope to encourage the handful of multi trillion-dollar behemoths to split up into smaller firms.

Brown has been pursuing this line of attack for years, pushing a ‘break up the banks’ bill during the 2010 debate over the Dodd-Frank financial reform bill. Wall Street endured the heat, however, and emerged from the fracas without having to downsize.

But bank lobbyists are growing increasingly wary of the Senate. On Monday, Financial Services Forum CEO Nichols attacked the Brown-Vitter bill in Politico’s “Morning Money,” a D.C. newsletter focused on the financial industry. The entry was headlined: “WALL STREET REACT TO BROWN/VITTER: ‘COMICAL.’”

Brown spokeswoman Meghan Dubyak responded in a statement to HuffPost: “Not surprising coming from a group that thinks deregulation is the answer to the credit bubble and Great Recession.”

Nichols’ comment to “Morning Money” comes just days after a Vitter spokesman said that a bank lobbyist “stole” a draft of the legislation in order to generate opposition to it.

“A Wall Street lobbyist stole and distributed a copy of our draft bill to try and drum up support for protecting the big banks’ taxpayer funded handouts — and ultimately remain too-big-to-fail,” Vitter spokesman Luke Bolar said Friday.

Lobbyists and lawmakers are typically very cordial, and such tactics and rhetoric underscore unusual tensions between Wall Street and Washington.

Laena Fallon, a spokeswoman for Financial Services Forum, which represents major banks, told HuffPost that, despite the temperature of the rhetoric, the group’s underlying argument is valid. “Every dollar of additional capital reduces banks’ ability to lend by a considerable multiple. Given that banking system capital is already at record highs and that economic growth stalled to just 0.4 percent last quarter, while 23 million Americans remain out of work or under-employed, it is not the time to remove that kind of lending capacity from our economy,” she said.

Lending, in fact, has been stagnant since the recession hit, with banks preferring to funnel money into securities and government debt rather than issue loans to businesses, as former FDIC Chair Shiela Bair noted in March.

“The reality is we’re not getting new lending and jobs,” Bair told the Atlantic Economy Summit. “You look at bank balance sheets, what happens is they’ve increased their excess reserves, they’ve increased their securities investments.”

But the fact that a bank lobbyist even felt the need to make a public assault on Brown-Vitter suggests there is momentum behind the legislation, which would likely have gone ignored last year.

In late March, the Senate voted 99-0 on a nonbinding resolution to end taxpayer subsidies to too-big-to-fail banks.

The Senate’s moves come as Wall Street is making significant inroads on deregulation in the House. Last month, the House Agriculture Committee cleared six bills to deregulate derivatives — the same instruments that were tied to mortgages at the heart of the 2008 financial crash.

The Brown-Vitter bill would force all banks to carry at least 10 percent of their total assets in shareholder equity, limiting the amount of borrowed money they can put on the line. Banks with at least $400 billion in assets would have to carry an additional 5 percent, bringing their total capital ratio to 15 percent.

Perhaps more importantly, Brown-Vitter eliminates many of the loopholes that currently exist in capital standards that allow banks to exempt some assets from the total and include some types of debt as capital. While the international capital standards, agreed to under the Basel III accord in the wake of the crisis, require banks to hold at least 7 percent of their risk-weighted assets in so-called Tier 1 Capital, only 3 percent of total assets must be reserved in hard equity. While the 3 percent minimum is stricter than the standards in place prior to the crisis, it would not have affected the sort of risk-taking in which banks, including Lehman Brothers, engaged during the housing bubble.

In February, Boston Federal Reserve President and CEO Eric Rosengren gave a speech emphasizing that banks burn through their capital very quickly during a financial crisis as overvalued assets plummet in value.

Senaor Bernie Sanders

Sanders to Introduce Bill to Break Up Banks ‘Too Big to Jail’

By Ramsey Cox, The Hill – March 28, 2013

http://thehill.com/blogs/floor-action/senate/290777-sanders-to-introduce-bill-to-force-break-up-of-too-big-to-jail-banks

Sen. Bernie Sanders (I-Vt.) said Wednesday that he would introduce a bill to break up banks that are “too big to jail.”

Sanders’s announcement comes after the Department of Justice said some banks have grown so big that it has not pursued prosecutions for fear an indictment would “have a negative impact on the national economy.”

“In other words, we have a situation now where Wall Street banks are not only too big to fail, they are too big to jail,” Sanders said. “That is unacceptable and that has got to change because America is based on a system of law and justice.”

Sanders said his bill would give Treasury Secretary Jacob Lew 90 days to make a list of commercial banks, investment banks, hedge funds and insurance companies that he deems too big to fail. One year later, the Treasury Department would be required to break up those financial institutions identified by the secretary.

“If an institution is too big to fail, it is too big to exist,” Sanders said. “We need to break up these institutions because of the tremendous damage they have done to our economy.”

Sanders opposed the $700 billion bank bailout after the financial crisis in 2008. He added that the 10 largest banks in the United States have only grown since the taxpayer bailout.

“No single financial institution should be so large that its failure would cause catastrophic risk to millions of American jobs or to our nation’s economic wellbeing,” Sanders said. “No single financial institution should have holdings so extensive that its failure could send the world economy into crisis.”

Sanders said that U.S. banks have become so big that the six largest financial institutions in the United States — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley — have nearly $9.6 trillion in assets.

Super-Rich Hide Their Wealth Through False Company ‘Directors’

What links the Rwandan genocide, a C.I.A. secret prison, and Saddam Hussein? All used anonymous fronts offshore.

Stephen: The International Consortium of Investigative Journalists (ICIJ) continues its multi-faceted probe into the financial lives of the super-rich. I can’t emphasise enough how incredibly huge this whole truth exposé is.

Today’s story reveals the hidden network of people – some ordinary citizens – who become directors of dozens of companies in name only. They hire their names out, knowing nothing about the companies they then become ‘directors’ of; and thus protect the real identities of the company owners – and their mammoth hidden wealth. It’s big, big business.

Faux Corporate Directors Stand in for Fraudsters, Despots and Spies

By Gerard Ryle and Stefan Candea, ICIJ – April 7, 2013

http://www.icij.org/offshore/faux-corporate-directors-stand-fraudsters-despots-and-spies

Worldwide network of ‘nominee directors’ helps hide real people, and organizations, behind offshore companies.

On November 14, 2006, a man going by the name Paul William Hampel was arrested at a Canadian airport on charges of being a Russian spy. Hampel’s carefully constructed identity portrayed him as a successful businessman, yet for a decade his company did no business.

Only months before his capture, the same apparatus used to create his alias was also employed by a very different spy agency – the U.S. Central Intelligence Agency —to build a secret prison in Lithuania, where U.S. agents interrogated suspected al-Qaeda terrorists.

Earlier again, it was used by the regime of former Iraqi dictator Saddam Hussein to cheat the Oil for Food program.

All three deceptions employed a common subterfuge: far-flung corporate entities used as anonymous fronts, with “executives” who lacked knowledge of what the firms were up to.

The activities of these so-called nominee directors are a little noticed part of the world of secretive offshore finance that’s grown so vast that it touches more than 170 of the globe’s 206 countries, but it’s one that’s often drenched in intrigue.

For a fee as low as $90, men and women who often appear to have little or no formal business qualifications lend their names as directors to enterprises they later can claim to know nothing about – even after those enterprises are linked to everything from stock fraud to money laundering.

As one Panama-based offshore financial services firm tells clients, “It doesn’t matter who the front man for your corporation is, as long as it’s not you.” The firm promises that the nominee directors it supplies will be “completely ignorant to the happenings of your corporation.”

The service the nominee directors provide is, in itself, not illegal. They generally say they are helping owners of companies preserve legitimate privacy.

But the scale and the organization of their networks became vivid as the International Consortium of Investigative Journalists (ICIJ) scoured millions of secret files from the offshore world.

The documents are client records and internal emails largely associated with two firms — Commonwealth Trust and Portcullis TrustNet — that form offshore entities for a range of other middlemen and have offices in many offshore havens.

The documents lay bare complex interrelationships the two financial service providers — and there are many more like them, found largely on tropical islands — have with the nominee directors and hundreds of tax agents, banks and law firms scattered around the world.

It’s a secrecy system on a gigantic scale that obscures ownership of billions of often-untraceable dollars that flow through those entities every year, adding to a global flood that exceeds $1 trillion and has grown so large that it can distort and even destabilize the global economy.

What emerges is that drug cartels, arms dealers and rogue nations take advantage of the same system as the covert arms of the Russian and U.S. governments.

Uncovering the secrets

Most offshore companies and nominee directors are up to “pretty boring things,” says Jason Sharman, a scholar at Australia’s Griffith University who studies offshore secrecy, but “you’re certainly going to be using a nominee director if you’re doing anything bad.”

A 2011 World Bank and United Nations study co-authored by Sharman found that nominee directors regularly emerge in what it calls “grand corruption” scandals around the globe.

The study says the complexity of the relationships in the offshore world often produces a maze that can sometimes discourage investigators, regulators, lawyers and others who are trying to track corruption, money laundering and other misconduct.

“Offshore jurisdictions take a relaxed view of the duties of nominee directors, particularly if the director is in another jurisdiction,” Sharman explains. “Onshore authorities are very unlikely to go through all the effort of an extradition to get some foreign nominee director.” Law enforcement work across borders, he says, “is a major pain.”

Few nominee directors personify this better than Stan Gorin and Erik Vanagels. From a base in Latvia, a tiny nation in the Baltics, their names have been attached to hundreds of corporations around the world, some of which can be linked to “grand corruptions.”

Gorin and Vanagels have proved so good at acting as straw men that questions have arisen about whether or not they even exist.

A Ukrainian journalist working for television station TVi sought to track down the pair in 2011, and discovered the real live Gorin was an insurance broker in the Latvian capital, Riga, who denied all knowledge of his alleged work around the globe. Gorin also denied knowledge for this story.

In a follow-up report, the same journalist failed to find Vanagels, who was described by a woman who said she knew him as a half-blind vagrant, living on the city’s streets.

The ICIJ could not locate him either.

What is undeniable, according to the documents obtained by ICIJ, public records searches and the findings of other journalists, is the litany of intrigue that can be tied to the two identities.

The ICIJ documents show the names Gorin and Vanagels were used to set up a series of offshore entities linked to Mukhtar Ablyazov, the former head of Kazakhstan bank BTA.

Some of the entities were incorporated through Commonwealth Trust by Ablyazov’s business associate Paul Kythreotis and Ablyazov’s brother-in-law, Syrym Shalabeyev.

Ablyazov stands accused in his home country of embezzling up to $5 billion from BTA in what British media describe as one of the biggest frauds in history. He fled Britain last year, where he had been living, shortly before being sentenced there to 22 months in jail for failing to disclose full details about his wealth, leaving behind a string of luxury homes financed allegedly using fake loans, backdated documents and offshore accounts.

Then there was the case of the MV Faina, a merchant vessel captured by pirates en route from Ukraine to Kenya in September 2008.

International concern at the time focused both on the plight of the crew and on the cargo: 33 Soviet-made T-72 tanks, plus grenade launchers and small arms ammunition, destined for the rebel government of South Sudan, then under a United Nations arms embargo.

An anonymous Panamanian company, Waterlux AG, officially owned the ship. But behind Waterlux AG were two other Panamanian companies, Systemo AG and Cascado AG — both of which were fronted by Gorin and Vanagels.

A very different but equally eye-popping event dates to July 9, 2003, when a Panamanian entity linked to Gorin, Star Group Finance and Holdings, was used to register an entity in Washington, D.C., called Elite LLC.

The CIA later used Elite LLC to buy a former horse-riding academy outside Vilnius, Lithuania, in March 2004. The U.S. agency flew in prefabricated elements to build a secret prison there. It opened in September 2004 and was later the subject of a European Parliament inquiry after ABC News reported that it was used to covertly and harshly interrogate suspected al-Qaeda terrorists.

ABC quoted a human rights researcher who claimed that prisoners suffered “various forms of torture, including sleep deprivation, forced standing, painful stress positions.”

No persuasive reasons

A report released in January by the nongovernmental European Network on Debt and Development, “Secret Structures, Hidden Crimes,” finds that opaque legal structures are one of the key ways to hide the real ownership of entities that can sometimes facilitate tax evasion, corruption and related crimes.

“Using nominees is a key way of hiding the real owners,” says the report’s author, Alex Marriage. Investigators, he says, have “found no persuasive reasons for nominee shareholders.”

“There may be very special circumstance where a nominee director is needed,” he adds, citing the example of two international corporations needing neutral territory to conduct business, “but small changes in the law would make this unnecessary.”

A June 2012 report from the U.K.-based advocacy group Global Witness points out that one of the problems is that legal authorities in the United States, United Kingdom and many other countries don’t hold nominee directors responsible for the conduct of the companies they front.

In addition, documents setting up offshore companies often include clauses that shield nominees from financial liability if the companies get sued.

“It is perfectly legal in many countries to avoid having your name appear as the director or owner of a company by employing the services of a nominee, whose name appears instead,” the Global Witness report states.

“Nominees are, in essence, renting out their name, and in doing so, providing the anonymity that corrupt officials, tax evaders and other criminals require to move dirty money around the world.”

Gorin and Vanagels are far from lone players in this regulatory wilderness.

The group of 28

The ICIJ, working with The Guardian newspaper in England and the BBC’s Panorama program, identified a group of 28 other nominee directors who have represented more than 21,000 companies between them, with individual nominees representing as many as 4,000 companies.

For example, Jesse Grant Hester — a nominee director based on the English Channel island of Sark and later the Indian Ocean tax haven of Mauritius — was the director for an Irish entity Candonly Limited, which an official inquiry later found was used by the regime of Iraqi dictator Saddam Hussein to cheat the United Nations’ Oil for Food Program.

Hester, who did not respond to a request for comment, has been listed as a director for at least 1,500 other companies in the British Virgin Islands, Britain, Ireland and New Zealand, according to the ICIJ analysis.

Until the practice was stamped out in the late 1990s, it was common for Sark residents like Hester to lend their names as directors to businesses around the world wanting anonymity.

At the height of what became known as the “Sark Lark” the BBC reported, the 600 inhabitants of the island held 15,000 directorships between them, some of which later led to controversy.

One extreme example was a resident John Donnelly who lent his name as director to an Isle of Man company, Mil-Tec Corporation Ltd., which shipped rifles, rockets, mortar bombs and ammunition to Rwanda that were used in the 1994 genocide.

After a crackdown by the British government, many nominee directors from Sark relocated to other jurisdictions like Cyprus, the United Arab Emirates, Mauritius and Ireland and, as the secret documents obtained by ICIJ show, they simply resumed operations.

Russian spy

The ICIJ documents identify three other former Sark islanders who formed parts of the mysterious backstory of Hampel, the alleged spy for Russia arrested in Canada.

According to the National Post, Hampel had established a corporate presence in Ireland from July 1997, two years after he received his first Canadian passport using a fraudulent Ontario birth certificate.

Corporate documents described the Irish entity, Emerging Markets Research & Consulting Ltd., as a tourism venture — and Hampel as a travel consultant. But the National Post reported that the company’s annual accounts showed it didn’t do any business and that it appeared to be merely a cover for his spying activities.

Though he denied the allegation made in court that he was a member of the Sluzhba Vneshney Razvedki, the successor to the infamous KGB, Hampel was eventually deported to Russia after admitting to being in Canada illegally.

Appearing as nominee directors in Hampel’s Irish entity at various times were Sean Lee Hogan, Simon Ashley Couldridge and Michael Andrew Gray, who each show up over and over in the documents obtained by ICIJ. Each declined emailed requests for comment.

Among Hogan’s many other directorships — including nearly 100 in the British Virgin Islands, 743 U.K. companies and dozens in the U.S., Panama, Austria, Ireland and New Zealand — are companies linked to a Norwegian professor, the Russian gas and oil giant Gazprom and a music publishing company, Plaza Mayor, whose website claims that they represent the work of Julio Iglesias, Ricky Martin and Placido Domingo.

Couldridge, who recently put up his Sark home for sale for nearly £5 million, is publicly listed as a director of more than 1,000 companies in Ireland.

Gray runs the Alterego Group, a Cyprus company that boasts in one email obtained by ICIJ: “We at Alterego Management are the visible other self. … The desire to obtain complete privacy, often bordering on total anonymity, is a major reason why so many professional firms do use our services.”

In an example of how much the players in the offshore world overlap, the data obtained by ICIJ reveals that one of Gray’s other clients was Roger Alberto Santamaria del Cid.

In October 2010, Santamaria was named in press reports as the Panamanian contact for an Internet investment scam, Imperia Invest IBC, which defrauded 14,000 investors worldwide of about $7 million. They included about 6,000 deaf people from the U.S. states of Utah, Maine, Wisconsin and Texas.

The U.S. Securities and Exchange Commission, the Monetary Authority of Singapore, the Swedish Financial Supervisory Authority and the Swiss Financial Market Supervisory Authority all issued alerts regarding Imperia.

There is no suggestion that Gray was in any way involved in Imperia, and the data obtained by ICIJ and searches of public company registers indicate that Santamaria was a nominee director himself. Santamaria could not be contacted for comment.

His fellow officials in one Panamanian entity? Gorin and Vanagels.

Contributors to this story: Arta Giga and Hamish Boland-Rudder

Key findings of this exposé to date:

■ Government officials and their families and associates in Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries have embraced the use of covert companies and bank accounts.

■ The mega-rich use complex offshore structures to own mansions, yachts, art masterpieces and other assets, gaining tax advantages and anonymity not available to average people.

■ Many of the world’s top’s banks – including UBS, Clariden and Deutsche Bank – have aggressively worked to provide their customers with secrecy-cloaked companies in the British Virgin Islands and other offshore hideaways.

■ A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.

■ Ponzi schemers and other large-scale fraudsters routinely use offshore havens to pull off their shell games and move their ill-gotten gains.

For more information and investigative articles head to http://www.icij.org/

Aisha North: The Manuscript of Survival – Part 297

As channeled by Aisha North – April 8, 2013

http://aishanorth.wordpress.com

Time is passing quickly now dear ones, but for some, it cannot go quickly enough. For they are so eager for change to occur in their lives, and as such, their patience seems to be stretching more than thin at times.

We know you so well dear ones, as you have once more been exposed to the healing forces of the light, but as the light will expose everything to the light in order to make it heal, it will also bring what it exposes to your attention.

So with this light comes focus, and with this focus, comes an overwhelming feeling of not being good enough for so many of you. For what you see, is what is brought to light, and that is also all you see.

In other words, you fail to see the greatness in yourself, for what you focus on, is mostly that which has been pushed up to the surface by this endless stream of energetic lifeforce. And so you see yourself as if crawling with infestations of anger, fear and so many other issues you will consider as shortcomings.

But is that what this really is about? A process to make you feel less and less pleased about yourself? For as the sun rises every day, so too are you rising in our esteem. For what you are doing in all of this, is actually to cleanse yourself of any residue that has been left unattended within, and remember, this residue is a residue collected through many a lifetime.

So even to the lightest of you, this residue at times may seem to be more than plentiful. But remember, that is why the light has come into your life, and that is why you have taken upon yourself to let this light enter into your very core. For it is you and only you who can decide whether or not the light will be allowed to penetrate into the darkest corner within, and when you say yes to this, this is what results from it.

For the light is unstoppable, and it will not stop before it has pushed any and all remains of the old up to the surface and out into the light. And there you will be able to see it all, and for many, the magnitude of old dross will at times seem to be more than a little overpowering.

But again we say, this is not something to fear, this is something to celebrate. For it is only visible to you because it is coming out, never to be seen again. And as such, this final cleansing, for that is truly what this is, will seem to be more dramatic than what it really is. For you are not to sit down and take account of it all.

This is not about balancing the books, keeping a close score of anything that may come out of this cleansing process. This is simply a case of releasing what the light is driving out, and as such, the process is in fact more easier on you than you mayhaps have gotten into your mind. For remember, the mind still have a mind of its own at times, and for the mind, this seeming accumulation of old energy might set it into a spin.

But do not let yourself be deceived by all of this, for you are doing good. And do not fall for the temptation to start to compare yourself to that of your neighbour, for as always, this is an individual process, and each and every one of you must take their own path in this, not try to emulate your brother and sister in any way.

For you must simply go forth and do your thing, whether that involves a lot of releasing, or whether that seems to be s slightly less strenuous path. For it is up to each and every one of you to do what makes you feel lighter, and you must do so at your own pace. But do not forget, the light will stop for no one and no thing, so you cannot tell the light to stop.

But you can give yourself some leeway in all of this, and you do that best by stepping back and relinquishing the controls, and by surrendering yourself to this process, you will assure that it runs as smoothly as possible. For if you do try to take matters into your own hands, you will feel the squeeze from this energy more than if you just let it run its course.

So again we say breathe, and let yourself go with the flow. Only by doing that will you feel better able to sail through all of this without feeling as if your heart is being smothered by these, the last remnants of the old you. For they will surface in one way or the other, and the more you accept this, the faster this flow will pour out, and the faster this process will go. So let go, and let it come, and whatever it is, it is nothing to fear.

For it is lifted out of you in order to let you lift yourself up and away from the one you used to be, but are no longer. For you have already entered the halls of tomorrow, but as you are still a many layered being, not yet fully merged, you will still need some help to get everything together as it were by making sure that nothing is left of the old.

For you cannot carry any extra weight if you want to become the truly enlightened one, so just look upon this process as the lightening of the load it truly is, no matter how burdensome the process in itself may seem at times.