Bank of America plans to cut 16,000 jobs by end of 2012

 

A view of a Bank of America branch (file photo)

Source: Press TV

http://www.presstv.ir/detail/2012/09/20/262580/bank-of-america-to-slash-16000-jobs/

Major US financial services corporation Bank of America plans to slash 16,000 jobs by the end of the year as part of an extensive cost-cutting measure to make the institution more profitable.

Following the planned reduction in the Bank’s workforce, the multinational US company would no longer hold its current title as the American banking industry’s largest employer, the Wall Street Journal reported Wednesday.

The reported cost-cutting measure for the last six months of the year has been summarized in a financial document prepared for the Bank’s top administrators and described by the paper as “part of a larger effort to retool Bank of America into a leaner and more focused enterprise.”

According to the report, the planned reductions are geared towards making the second largest bank in the US take fewer risks and generate greater revenue from current clients.

The development comes a day after major US passenger airliner, American Airlines, announced plans to cut 11,000 of its workforce as part of a bankruptcy restructuring measure.

Meanwhile, the US Labour Department announced earlier this week that the number of Americans filing for unemployment benefits has jumped to the highest level in the past two months, as the number of applications climbed by 15,000 to a seasonally adjusted figure of 382,000.

The rate of joblessness in the US has remained persistently high in the past years and described by top American financial analysts as a major hurdle to the country’s economic recovery.

 

Worldwide Financial Crisis: Libor Scandal goes Global

By: Robert Stevens

Source: Global Research

http://www.globalresearch.ca/index.php?context=va&aid=32213

The UK Conservative/Liberal Democrat government this week announced the terms of a review into the deepening London Interbank Offered Rate (Libor) crisis.

The review was commissioned by Chancellor George Osborne, and will be led by Martin Wheatley, managing director of the Financial Services Authority (FSA) and chief executive-designate of the Financial Conduct Authority.

Libor is a daily rate covering 10 currencies and is supposed to measure the average cost of short-term loans between major banks. It is set in London by 16 banks and is run by the British Bankers’ Association. The interest rates for tens of trillions of dollars in home mortgages, student loans and credit cards are pegged to Libor, as are derivatives valued at $350 trillion and eurodollar futures worth $564 trillion.

Last month, Barclays Bank was fined a total of £290 million ($455 million) for illegally manipulating its daily Libor submissions between 2005 and 2009.

The Wheatley Review is a damage limitation exercise, proposing only to “undertake a review of the framework for the setting of LIBOR.”

While it is to examine “The potential for alternative rate-setting processes”, the interests of the banks will be prioritized, as its remit will also consider “The financial stability consequences of a move to a new regime and how a transition could be appropriately managed.”

Wheatley has acknowledged that the rigging of Libor was “extremely serious”, but instead of calling for any criminal action to taken against those found guilty he declared it showed that “urgent reform of the Libor compilation process is required”.

The Wheatley Review avoids dealing with any of the illegal practises of Barclays that gave rise to it in the first place. The terms of the review state that it “will not consider any issues relating to the actions or alleged actions of specific financial institutions in attempting to manipulate LIBOR or other benchmark rates. These issues will continue to be investigated by the FSA and other regulators around the world.”

The review is to conclude in just four weeks in order for any recommended legislation to be included in the Financial Services Bill, currently going through Parliament.

Last Friday it emerged that the offices of Barclays in Milan, Italy had been raided in relation to the Libor crisis. Italian police officers seized documents, emails and other electronic communications during the raid. According to the Financial Times, the raid was “part of an investigation that seeks to see if Italian consumers were hurt by the British bank’s manipulation of Libor, the London Interbank Offered Rate, and its euro equivalent Euribor.”

Two consumer watchdogs have estimated that 2.5 million Italian families with mortgages linked to Euribor were financially damaged—to the tune of €3 billion by the rigging of Euribor.

Each day sees a global spread of the crisis.

This week German-based Deutsche Bank acknowledged the involvement of some of its employees in rigging Libor rates. It claimed that only a “limited number” were involved and said an internal inquiry had cleared its senior management of any wrongdoing. Deutsche Bank is currently being sued over claims it manipulated the yen Libor rate and the price of derivatives tied to the Euroyen benchmark by US litigants.

Over the weekend speculation mounted that the Swiss-based global financial services operation UBS was also involved in manipulating Libor. On Saturday, Reuters reported that traders employed by Barclays, RBS and UBS “played a central role” in rigging rates. Based on a review of court documents and other sources, Reuters said, “Between them, the three banks employed more than a dozen traders who sought to influence rates in either dollar, euro or yen rates. Some of the traders who are being probed have worked for several banks under scrutiny, raising the possibility that the rate fixing became more ingrained as traders changed jobs.”

One former Barclays employee under scrutiny is Jay V. Merchant, who oversaw the US dollar swaps trading desk at Barclays in New York from March 2006 to October 2009. He now holds a similar position at UBS in Stamford, Connecticut, Reuters states.

UBS’s role in relation to Libor rigging is being investigated by attorneys general in several US states as well as by the federal Department of Justice.

On Tuesday Deutsche Bank and UBS increased their estimates for unprovisioned litigation risk by a combined €580 million. By the end of June, Deutsche Bank had increased its estimate from €2.1 billion to €2.5 billion. UBS added a further SFr 210 million to its litigation and regulatory provisions estimates.

The exposure of the main banks involved to potential payouts resulting from legal action, including numerous class actions, according to several plaintiff firms, could reach $1 trillion.

On Monday it emerged that New York-based Berkshire Bank is suing 21 banks including Bank of America, Barclays and Citigroup for damages over alleged Libor manipulation. Berkshire’s claim alleges that the rigging of Libor had a detrimental impact on its interest payments. Its legal complaint states, “Tens, if not hundreds, of billions of dollars of loans are originated or sold within this state each year with rates tied to [U.S. dollar] Libor.”

New York banks “were unable to collect the full measure of interest income to which they were entitled”.

Harvard Law School professor John Coates said that litigation resulting from the Libor crisis “has the potential to be the biggest single set of cases coming out of the financial crisis, because Libor is built into so many transactions and Libor is so central to so many contracts. It’s like saying reports about the inflation rate were wrong.”

The banks could only have engaged in such illegal practises because they were given carte blanche to do so by the political establishment and the so-called banking regulators internationally. As the June report indicting Barclays demonstrated, the UK’s Financial Services Authority was nothing more than a facilitator for whatever practises the bank deemed necessary to make a quick buck. On Monday Osborne told Parliament that the FSA’s criminal powers did not actually extend to Libor, or the trading in derivatives by financial institutions.

With public anger toward the banks growing, the UK’s Serious Fraud Office (SFO) was forced to acknowledge Monday that it had the powers to act against the banks involved in the rigging of Libor. The SFO said it was “satisfied that existing criminal offences are capable of covering conduct in relation to the alleged manipulation of LIBOR and related interest rates.”

As investigations over Libor continue into many banks, by at least 10 financial regulatory authorities across three continents, it is expected that a number of them will face accusations of criminal activity.

On Sunday RBS’s chief executive Stephen Hester told the Guardian that he expected the bank to soon face allegations relating to Libor and to be hit with a fine. An investigation of the bank by the FSA was underway, he said, adding, “RBS is one of the banks tied up in Libor. We’ll have our day in that particular spotlight as well.”

RBS is deeply implicated in the speculative and criminal activities of the banks that resulted in the 2008 global financial meltdown. In November 2009 the British government completed the world’s largest bank bailout, with the total cost of its takeover of RBS reaching £53.5 billion.

US banks face suits on mortgage crisis

The federal housing agency is to sue key US banks including Bank of America over mortgage crisis.

Source: Press TV
http://www.presstv.ir/detail/197038.html

The US Federal Housing Finance Agency (FHFA) is set to file lawsuits against several large banks over the US mortgage crisis that triggered a global financial meltdown.

The regulatory agency has accused more than ten major banks of misrepresenting the quality of mortgage securities they sold, and now seeks billions of dollars in compensation.

The lawsuits will be filed before Wednesday in a federal court to meet legal deadlines, The New York Times reported.

The American daily quoted three interviewees as saying that the largest US bank, Bank of America, Goldman Sachs, JPMorgan Chase and Germany's Deutsche Bank are among the accused.

FHFA says that the banks "failed to perform the due diligence required under securities law and missed evidence that borrowers' incomes were inflated or falsified."

The agency's move is seen as a blow to the banks' attempts to recover from the financial downturn.

According to the report, none of the accused banks agreed to comment on the situation, but argued privately that the general economic recession had caused the losses and any deception related to mortgages was irrelevant.

Bank of America shares hit 2-year low

Bank of America's corporate headquarters in Charlotte, North Carolina

Source: Press TV
http://www.presstv.ir/detail/195497.html

Bank of America Corporation (BAC) shares have dropped to an almost two-year low amid fears that it will need to boost its capital by about USD 50 billion to meet new global standards.

BAC shares closed 1.9 percent lower at USD 6.30 after falling as much as 6.4 percent at one point on Tuesday to their lowest level in two and a half years, Reuters reported.

The shares of the largest US bank have now lost nearly 53 percent since the beginning of this year, reducing its market cap by more than USD 70 billion.

The cost of insuring the bank's debt against default also spiked to record levels at one point.

The size of Bank of America presents a particular headache for regulators as it touches almost every aspect of the US financial system.

The largest US bank had been rescued by the US government in the financial crisis.

In 2008, a series of bank and insurance company failures triggered a financial crisis that effectively halted global credit markets.

In the same year, more public corporations had filed for bankruptcy in the United States than in all of 2007. The failures caused a crisis of confidence that made banks reluctant to lend money to anyone.

Dozens of US banks face fraud charges

Source: PressTV
http://www.presstv.ir/detail.aspx?id=121735&sectionid=3510203


The US federal government has targeted around 30 financial companies in new cases of potential fraud.

A US federal court is probing a criminal case involving 29 bankers with prominent financial institutes including Bank of America, JP Morgan Chase, Lehman Brothers, UBS, Wachovia Bank and Societe General which are suspected of co-conspiring in the pricing of certain municipal derivatives, Reuters reported.

None of the individuals or institutions on the list have been criminally charged yet and the identity of the bankers have not been made public,

The issue of co-conspirators was mentioned at a court hearing on March 26 when a federal prosecutor and defense lawyers argued over a review of more than 125 million pages of documents and 670,000 audio tapes in evidence, the report adds.

In 2006, the US Justice Department, Internal Revenue Service, and Securities and Exchange Commission launched a sweeping investigation into how certain derivatives had been priced.

The investigation has gained momentum in the last few months as a number of counties and cities sued the companies involved.

Salaries top bailed-out US banks agenda

Source: PressTV
http://www.presstv.ir/detail.aspx?id=117162&sectionid=3510203

In the post-bailout America, the biggest ailing banks magnanimously paid their employees up to 94 cents out of every dollar of their earnings to in 2009, a report said.

The New York Times unveiled in a report Tuesday that profits of the banks were going toward employee salaries, bonuses and benefits instead of their shareholders.

The report said the five largest banks on Wall Street — Citigroup, Goldman Sachs, Bank of America, Morgan Stanley and JPMorgan Chase — are giving their employees an unheard-of cut of the winnings.

Citigroup's employees received about $24.9 billion in 2009 as the bank posted a $1.6 billion loss at the same time.

"Citigroup is, in effect, paying its employees $1.45 for every dollar the company took in last year. On average, its workers stand to earn $94,000 each," the report said.

Goldman Sachs gave its staff about 45 cents out of every dollar or about $447,000 for each employee. The bank has 36,200 employees.

The banks "are handing out fat slices of their profits, leaving little left over for their shareholders," the report said.

Bank of America also spent 88 cents of every dollar to compensate its workers. At Morgan Stanley and JPMorgan Chase, that figures are 94 and 63 cents out of every dollar.

Citigroup, Bank of America and Morgan Stanley have all defend their decisions about compensation.

Some Analysts, the report said, believe the banks "are rewarding their employees at shareholders' expense."

"The investor in America sits at the bottom of the food chain," said John C. Bogle, the former chairman of the Vanguard Group. "The financial industry gets paid before their clients, and we get paid whether times are good or bad."

"It's not a fair shake," said John A. Hill, chairman of the trustees at Putnam Funds. "I think the shareholders who paid for building that franchise should be getting a bigger share of the franchise's profits."

The revenues of five largest banks on Wall Street stood at $147.4 billion before paying compensation and taxes last year.