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Showing posts with label Banking Industry. Show all posts
Showing posts with label Banking Industry. Show all posts

March 31, 2018

The Netherlands: banking industry electronic transactions work against consumers and in favor of banks during Public holidays and weekends - by RM



Banks in the Netherlands and probably also in many other places around the world are saying they can not make automatic electronic transfers during religious and other public holidays.

The question one should immediately pose ,when the banks make that statement is; why? Why should automatic banking transactions done on public holidays be any different from those done during the regular work week?

 For example: if you make an electronic transfer during the 4 day Easter holiday weekend in the Netherlands, say on Good Friday, to another bank account, the transferred money is immediately electronically debited from your own account, but than, the money only re-appears 4 days later on the account to which it was electronically transferred. before you see that transfer on your statement.

Obviously the question it raises is: WHAT DOES THE BANK DO WITH YOUR MONEY during those four days, or any other amount of time they hold it without telling you where it is or what they do with it during that time ?

What is happening to your money while it is hidden those four days of the Easter weekend or less during other regular Public holidays ?

The answer should not be too difficult to figure out . The bank has probably been making millions on interest and other speculative activities with your money.

If you ask the bank, however,  you will certainly get  a rather vague story.

Something definitely needs to be done here, especially given the bad reputation that banks have gained in recent years during and after the financial crises.

Almere-Digest

February 7, 2017

The Netherlands - banking industry: ABN Amro to slash below board level management from 100 to 40

ABN Amro is planning to reduce the number of senior managers from around 100 to just 40 and is shaking up its executive board to make the bank ‘more client-focused, agile and efficient’.

Among those leaving is Chris Vogelzang, who had been tipped to take over when Gerrit Zalm stood down as chief executive. The managerial jobs to go will run across the level below the executive committee.

The 40 jobs remaining ‘will have a stronger involvement in the strategic direction and the leadership of the bank than before,’ the bank said in a statement. The composition of the ‘top 40’ will be reviewed every year.

‘Over the past few years, the number of bank staff has been reduced considerably but there has been no change in the number of senior managers,’ chief executive Kees van Dijkhuizen said. T

he bank will also have a slimmed down executive board made up of CEO Van Dijkhuizen, chief risk officer Wietze Reehoorn and a new financial boss who has yet to be appointed.

Read more: ABN Amro to slash below board level management from 100 to 40 - DutchNews.nl

February 9, 2015

Banking Industry: British HSBC ‘helped clients dodge millions in tax’

The Swiss arm of British banking giant HSBC helped wealthy clients dodge taxes and hide millions of dollars from authorities, according to a report by a network of investigative journalists released Sunday based on a cache of leaked bank files.

The allegations prompted the bank to release a statement admitting it was “accountable for past compliance and control failures” at its Swiss subsidiary HSBC Private Bank.

The files, analysed by reporters in the International Consortium of Investigative Journalists (ICIJ) in collaboration with more than 140 journalists from 45 countries, showed that British banking giant HSBC provided accounts to international criminals, corrupt businessmen, politicians and celebrities.

"HSBC profited from doing business with arms dealers who channeled mortar bombs to child soldiers in Africa, bag men for Third World dictators, traffickers in blood diamonds and other international outlaws," ICIJ reported.

The leaked files were first obtained by French daily Le Monde, which then distributed them through the ICIJ to news outlets around the world, including The Guardian in the UK, Germany’s Süddeutsche Zeitung and 60 Minutes in the USA, who published their reports simultaneously on Sunday.

The Guardian alleged in its report that the files showed HSBC’s Swiss bank routinely allowed clients to withdraw “bricks” of cash, often in foreign currencies which were of little use in Switzerland, marketed schemes which were likely to enable wealthy clients to avoid European taxes and colluded to conceal undeclared accounts from domestic tax authorities.

Read more: Business - HSBC ‘helped clients dodge millions in tax’ - France 24

October 29, 2014

Disparity: How Shadow Banking and Extreme Wealth Inequality Threaten Us - by David DeGraw

Hidden wealth estimates vary widely. Many of them only take a partial look at the most basic methods of offshoring wealth.  Given the unprecedented growth of wealth over the past generation, the secretive methods used to hide it have evolved far beyond well-known tax havens in Switzerland and small-island jurisdictions such as the Bahamas.  While estimates based on banking secrecy and tax havens help to give us a more accurate picture of overall wealth, they do not give a total view.

Research by Gabriel Zucman, which analyzed banking secrecy, estimated that “around 8% of the global financial wealth of households is held in tax havens.”  If we correlate this 8% with the $82 trillion in accounted for wealth reported by the Federal Reserve, that would be an additional $6.6 trillion for the wealthy, bringing the richest 1% up to roughly $39 trillion in overall wealth.

However, to get a more complete understanding of the reality of the situation, the most wide-ranging look into hidden wealth was done in 2012 by economist John Henry in partnership with the Tax Justice Network (TJN).  They estimated that there was $21- $32 trillion hidden globally at the end of 2010. As shocking as that sounds, that estimate still did not give a complete view of hidden wealth.  As they put it, “We consider these numbers to be conservative. This is only financial wealth and excludes a welter of real estate, yachts and other nonfinancial assets owned via offshore structures.”

We also need to consider that overall US household wealth is up 30% and has increased by $25 trillion since the end of 2010. Globally, High Net Worth Individual investible wealth has increased 19% since then, and has begun to accelerate at a record pace.  In 2013, it increased globally by 14%, with a 17% increase in North America, which is now at an all-time high.  Given these factors, and several others that will be explained below, the higher TJN estimation of $32 trillion in 2012 is conservative today.

Correlating TJN’s wealth estimates with US distribution percentages is not an exact science but it gives a much more accurate total of overall wealth than excluding it.  Based on TJN’s estimation, Ultra High Net Worth Individuals (UHNWI) accounted for 48% of hidden wealth.  If we correlate that to the overall estimate of $32 trillion, it equates to $15.4 trillion for the UHNWI population.

The US accounts for 35% of the UHNWI population, which correlates to $5.4 trillion.  In the next tier, High Net Worth Individuals (HNWI) also accounted for 48% of hidden wealth.  The US currently has 42% of the HNWI population, which correlates to $6.5 trillion.  The additional 4% of hidden wealth is estimated to be held below the economic top 1% of the US population, which correlates to roughly $538 billion.

This brings the estimated total of hidden US wealth to $12.4 trillion, with $11.9 trillion of that held within the top 1%.  We can now estimate that the top .01% has $14.5 trillion in wealth, the top .1% has $26.4 trillion and in total the top 1% has $44.5 trillion.

Read more: How Shadow Banking and Extreme Wealth Inequality Threaten Us | Alternet

June 28, 2014

The Banking Industry:Out-of-control Central Banks are Buying Up the Planet - by Ellen Brown:

When the US Federal Reserve bought an 80% stake in American International Group (AIG) in September 2008, the unprecedented $85 billion outlay was justified as necessary to bail out the world’s largest insurance company.

Today, however, central banks are on a global corporate buying spree not to bail out bankrupt corporations but simply as an investment, to compensate for the loss of bond income due to record-low interest rates. Indeed, central banks have become some of the world’s largest stock investors
.
Central banks have the power to create national currencies with accounting entries, and they are traditionally very secretive. We are not allowed to peer into their books. It took a major lawsuit by Reuters and a congressional investigation to get the Fed to reveal the $16-plus trillion in loans it made to bail out giant banks and corporations after 2008.

What is to stop a foreign bank from simply printing its own currency and trading it on the currency market for dollars, to be invested in the US stock market or US real estate market?  What is to stop central banks from printing up money competitively, in a mad rush to own the world’s largest companies?

Apparently not much. Central banks are for the most part unregulated, even by their own governments. As the Federal Reserve observes on its website:

[The US Fed] is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.
As former Federal Reserve Chairman Alan Greenspan quipped, “Quite frankly it does not matter who is president as far as the Fed is concerned. There are no other agencies that can overrule the action we take.”

Read more: Out-of-control Central Banks are Buying Up the Planet | Alternet

March 19, 2014

Banking Industry: The Truth Is Out: Money Is Just An IOU, And The Banks Are Rolling In It - by David Graeber

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, “there’d be a revolution before tomorrow morning”.

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy“, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

To get a sense of how radical the Bank’s new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. 

True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don’t suffice, private banks can seek to borrow more from the central bank.

The central bank can print as much money as it wishes. But it is also careful not to print too much. In fact, we are often told this is why independent central banks exist in the first place. If governments could print money themselves, they would surely put out too much of it, and the resulting inflation would throw the economy into chaos. Institutions such as the Bank of England or US Federal Reserve were created to carefully regulate the money supply to prevent inflation. This is why they are forbidden to directly fund the government, say, by buying treasury bonds, but instead fund private economic activity that the government merely taxes.

It’s this understanding that allows us to continue to talk about money as if it were a limited resource like bauxite or petroleum, to say “there’s just not enough money” to fund social programmes, to speak of the immorality of government debt or of public spending “crowding out” the private sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: “Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits” … “In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits.”

In other words, everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it. They will never get caught short, for the simple reason that borrowers do not, generally speaking, take the cash and put it under their mattresses; ultimately, any money a bank loans out will just end up back in some bank again. 

So for the banking system as a whole, every loan just becomes another deposit. What’s more, insofar as banks do need to acquire funds from the central bank, they can borrow as much as they like; all the latter really does is set the rate of interest, the cost of money, not its quantity. Since the beginning of the recession, the US and British central banks have reduced that cost to almost nothing. In fact, with “quantitative easing” they’ve been effectively pumping as much money as they can into the banks, without producing any inflationary effects.

What this means is that the real limit on the amount of money in circulation is not how much the central bank is willing to lend, but how much government, firms, and ordinary citizens, are willing to borrow. Government spending is the main driver in all this (and the paper does admit, if you read it carefully, that the central bank does fund the government after all). So there’s no question of public spending “crowding out” private investment. It’s exactly the opposite.

Why did the Bank of England suddenly admit all this? Well, one reason is because it’s obviously true. The Bank’s job is to actually run the system, and of late, the system has not been running especially well. It’s possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.

But politically, this is taking an enormous risk. Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

Historically, the Bank of England has tended to be a bellwether, staking out seeming radical positions that ultimately become new orthodoxies. If that’s what’s happening here, we might soon be in a position to learn if Henry Ford was right.

Read more: The Truth Is Out: Money Is Just An IOU, And The Banks Are Rolling In It

February 11, 2014

Corruption - Banking Industry: U.S. banks can match China’s for corruption any day - by David Weidner

Banking Industry, Favoritism and Corruption
"Tian xià wu ya yi yàng hei." I may not have the translation exactly correct, but in Mandarin, loosely, the expression means “in the whole world, all crows are black.”

The proverb isn’t about crows. Crows are a metaphor for bad guys. And the upshot is this: we may judge different cultures for their failings, but we have failings too. We all have our crows. Everywhere they are black. 

This idea of equanimity in how we are all flawed came to mind as the scandal escalates over banks hiring people connected to China’s political and powerful elite. We tend to look at these transgressions — if they can be called that — and pass judgment. Perhaps we say “look at the awful Chinese political system,” or “look at the terrible behavior of U.S. banks.”

In case you missed it, or are a little fuzzy on the details, several foreign banks are being investigated for hiring well-connected Chinese, or “princelings.” They may be the son, daughter cousin of an official or the official him- or herself. 

On Monday, UBS AG  suspended two executives, including its top IPO banker in Asia, in an internal probe into the hiring of an employee related to the head of a Chinese listing hopeful, according to the Wall Street Journal, which cited anonymous sources. UBS declined comment. 

And the same day came revelations that the family friend of an important Chinese regulator — who had say over the bank’s ability to pursue insurance business in the country — was given an audience with J.P. Morgan Chase & Co. CEO Jamie Dimon in June 2012. The friend reportedly received a special internship with the bank and then became a full-time employee. 

“Our CEO played no role in the hiring decision, did not weigh in, and did not follow up,” Joseph Evangelisti, a bank spokesman, said in a statement. “It is his normal practice to pass on referrals without advice to those involved in hiring.” 

The dust-ups at UBS and J.P. Morgan were just the latest in the saga where U.S. financial firms may or may not have used hiring friends or relatives of powerful officials as a way of influencing business decisions in the banks favor. 

OK. Let’s assume they did. So what? This is how business is done in China. And it’s not that different from how it’s done here, even though many of us believe our way is the superior way. 

China is struggling with corruption. It ranks 80th out of 178 countries in Transparency International’s Corruptions Perceptions Index . It is, perhaps, the country’s most pressing problem as it seeks to become the leading global economic power. 

In the same index the U.S. rank is 19th. Maybe it shouldn’t be. After all, this is a perception index. People think the US  is more on the up and up.

In the United States, financial firms use an equally questionable practice of hiring regulators or losing top executives to regulatory roles. 

Consider also that 127 current or former members of the health, education and labor committees in Congress either have worked, or are now working, in the industries they were overseeing as lawmakers, according to OpenSecrets.org. 

The SEC and Congress aren’t the only places where the revolving door swings. Robert Rubin, the former U.S. Treasury Secretary, joined Citigroup Inc.  in 2000 and collected $115 million as the bank took $45 billion in taxpayer-funded bailouts and $300 billion in guarantees on assets. The most recent former Treasury secretary, Timothy Geithner, left to join the private equity firm Warburg Pincus. as new rules were being crafted on the industry. 

At least China and Europe are doing something about their issues. A report in 2010 by the Anti-Corruption and Governance Research Center at Tsinghua University found that in just 11 months of that year the government’s anti-corruption division investigated 119,000 graft cases, resulting in 113,000 people being punished. 

 Recently the EU Commission  came out with an "Anti-Corruption Report", which showed that corruption is widespread in the EU and costs the taxpayer there around 120 billion euros ($160 billion) per year.

Just because US crows are ours, doesn’t mean they’re not black, just as they are all around the world. 

Read more: U.S. banks can match China’s for corruption any day - David Weidner's Writing on the Wall - MarketWatch

February 10, 2014

Economics: How Mainstream Economics Failed To Grasp The Importance Of Inequality - by Jon Wisman

The magnitude of exploding inequality since the mid-1970s is captured by the following: Between 1979 and 2007, inflation-adjusted income, including capital gains, increased $4.8 trillion — about $16,000 per person.

\Of this, 36 percent was captured by the richest 1 percent of income earners, representing a 232 percent increase in their per capita income. The richest 10 percent captured 64 percent, almost twice the amount collected by the 90 percent below. Between 1983 and 2007, total inflation-adjusted wealth in the U.S. increased by $27 trillion

 If divided equally, every man woman and child would be almost $90,000 richer. But of course it wasn’t divided equally. Almost half of the $27 trillion (49 percent) was claimed by the richest one percent — $11.7 million more for each of their households. The top 10 percent grabbed almost $29 trillion, or 106 percent, more than the total because the bottom 90 percent suffered an average decline of just over $16,000 per household as their indebtedness increased.

This soaring inequality generated three dynamics that set the conditions for a financial crisis. The first resulted from limited investment potential in the real economy due to weak consumer demand as those who consume most or all their incomes received proportionately much less. Not being capable of spending all their increased income and wealth, the elite sought profitable investments increasingly in financial markets, fueling first a stock market boom, and then after the high tech bubble burst in 2001, a real estate boom.

As financial markets were flooded with credit, the profits and size of the financial sector exploded, helping keep interest rates low and encouraging the creation of new high-risk credit instruments. This enabled more of the elite’s increased income and wealth to be recycled as loans to workers. Financial institutions were so flush with funds that they undertook ever more risky loans, the most infamous being the predatory subprime mortgages that often were racially targeted. As the elite became ever richer, those below became ever more indebted to them. When this debt burden became unsustainable, the financial system collapsed and was bailed out by taxpayers.

Economists might have stood a better chance of foreseeing the developing financial crisis had they thrown their nets far wider to catch the insights that have been harvested by a wide range of so-called heterodox economists. From the underconsumptionist tradition of Keynes, Kalecki, and Minsky they could have developed an understanding of how inequality affects aggregate demand, investment, and financial stability.

From the institutionalist tradition of Thorstein Veblen they could have learned how consumption preferences are socially formed by humans who are as concerned with social status and respectability as with material well-being. And from the Marxist tradition they could have seen how economic power translates into political power. 

Economists have failed to grasp the wisdom of one of the foremost students of crises: “the economist who resorts to only one model is stunted. Economics is a toolbox from which the economist should select the appropriate tool or model for a particular problem.”

Read more: How Mainstream Economics Failed To Grasp The Importance Of Inequality

August 7, 2013

Dutch Government Planned Student Loan Program Could Fail Based On US Experience

As the costs of higher education continue to skyrocket across the USA and Europe, the student loan debt bubble in America is reaching unprecedented heights as more and more young adults are not able to repay their loans.

A new analysis from the Consumer Financial Protection Bureau in America  found that only half of the more than $1 trillion in student loan debt is being repaid. Specifically, only 42 percent of direct student loans are in repayment while 60 percent of Federal Family Education Loans are in repayment.

The CFPB also found that 13-14 percent of borrowers are defaulting on their loan, which will have secondary effects of making things like buying a home or a car that much more difficult. Experts have said this could create an entire generation of students who can’t achieve the American dream.

An additional 18 percent of former students are either in deferment, putting off paying the loan, or in forbearance because they don’t make enough money to be able to pay the loan and make payments on the rest of their bills.

The CFPB said there are several ways to reduce payments including a plan called Pay As You Earn where payments are equal to 10 percent of your income above the poverty line and after 20 years any remaining balance is forgiven.

The main issue with the government-backed student loans, however, is that these loans have created an education bubble. Both Stafford loans and private bank loans are given to essentially anyone who applies, and this has inflated the cost of education overall. On an individual level, even if a person was to declare bankruptcy later in life, his or her student loans will still stick.

Therefore, banks can make risky loans to students because they know that the government will still back those loans. In addition, with the ease of loan dispersal, students feel less of an incentive to choose degrees that will allow them to easily pay back their student loans and may instead choose programs with less job security.

Unlike 30-50 years ago, it’s nearly impossible for students today to graduate on time without the assistance of student loans or military grants. While scholarships can be a viable answer for some students—particularly those who are eligible for need-based financial aid—the majority of students can’t rely on scholarships and grants alone. So not only are loans necessary to achieve academic goals, but the costs of those goals are increasing as a result of government-backed loans. Like during the housing market crisis, prices are rapidly inflating, but people who aren’t particularly good loan candidates are still getting them because banks know that if borrowers default, then the government will bail them out.

Pursuing higher education is a valuable endeavor and can definitely result in a higher quality of life in the long run. For many, loans are the only way to afford an education. But the ease of receiving government loans is a double-edged sword that both expedites the process for people with solid career prospects and encourages risky behavior by making it easier for students to get degrees that won’t necessarily be valuable in the job market. While the increase in student loan rates is a hardship for most, what may be an even greater hardship is the difficulty of making ends meet later in life, when crippling student loan debt prevents individuals from getting what they want from their careers.

The Dutch government should take note of the above, given the very negative results achieved with the program in the US.

For more: EU-Digest