On July 17, the U.S. Senate pulled off a Half Ginsburg by convening three Capitol Hill hearings on why the crooks and crackpots in charge of global finance find it ridiculously easy to make suckers out of you and me and Swiss cheese out of American laws.
William Ginsburg, you may recall, represented Monica Lewinsky in the tawdriness that enveloped Bill Clinton’s second presidential term.
On Feb. 1, 1998, lawyer Ginsburg appeared on all five network Sunday morning news shows to establish a new lip-flapping standard: the Full Ginsburg.
The senate’s Half Ginsburg involved the Homeland Security, Agriculture and Banking committees. The question before each was simple: Why do global banks, commodity firms and Wall Street financial titans seem—literally—free to break any law that hinders their money-making mission.
The morning began with the Homeland Security Committee grilling executives from HSBC, a London-based bank with as many assets, $2.6 trillion, as Great Britain’s total economy.
How, asked the senators echoing a July 15 Wall Street Journal story, did the bank “allegedly allow (its) units… to be used for potential terrorism financing and for drug cartels to launder illicit proceeds” in the U.S.?
Thirty minutes later the Senate Ag Committee put Commodity Futures Trading Commission Chairman Gary Gensler in the frying pan in its attempt to figure out why the CFTC had not fully implemented the Dodd-Frank financial reform law two years after its passage.
(Hint: lobbyists, lobbyist money and the Congressional delays it bought.)
Gensler was then questioned about the Libor scandal, the years-long manipulation of a benchmark, London-set interest rate that most of the world’s banks use when lending money. The British bank behind all the conniving, Barclays—also bigger than England’s GDP—recently confessed its rate-rigging and paid $450 million in fines to U.S. and English authorities.
But Barclays really isn’t paying a pence of the fine, is it? Since the payment must come from the bank’s profits, its customers and shareholders will pay, not the bank.
As Gensler was squirming in his hot seat, Federal Reserve Chairman Ben Bernanke used part of his semi-annual dance with the Senate Banking Committee to coolly side-step any responsibility for the Libor scandal.
Bernanke’s move was particularly smooth given the fact that his shop, the Fed, and some of its biggest mechanics—then New York Fed chairman, now Treasury Secretary Tim Geithner—were alerted by Barclays itself in 2008 that it was posting rigged rates.
While all that Senate chatting and churning was going on, farmers and ranchers across the nation were once again trying to figure out where the money in their hedging accounts went when Peregrine Financial Group, Inc. of Cedar Fall, IA, collapsed in a $215 million sinkhole.
And, no, they did not have to be reminded that the Peregrine crash came just eight months after “the loss of more than $1 billion in customer funds at MF Global Ltd.,” another former kingpin in ag and ranching futures markets, noted the July 12 Wall Street Journal.
Two days after Peregrine’s plunge JPMorgan announced that its estimated $2 billion trading loss this spring was, in fact, a massive $5.8 billion loss this summer.
If anyone anywhere is surprised by anything in this update of financial scandals they haven’t been paying attention. Hardly a week passes when someone or some firm doesn’t rob you, me and markets of either cash, confidence or both.
More troubling than the scandals is the intense navel-gazing Congress has perfected when investigating them. Through deregulation it granted financial chiselers and cheats immense latitude to chisel and cheat. Gee, Congress mapped the road to most of today’s many “moral hazards” and now it’s surprised to find people using it?
Fund the reforms contained in the Dodd-Frank banking law; push the Justice Department into criminally prosecute all who violate American law and sweep clean their own house: stop taking dirty money from dirty bankers for dirty work.
Our job is even simpler: If we lead, our leaders will follow.