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What's keeping megabank execs out of jail? Fear.

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What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

I think we can finally agree on who really runs things.
WASHINGTON (MarketWatch) — Attorney General Eric Holder, the top U.S. law-enforcement official, finally admitted this week that bank executives truly are above the law and may commit crimes with virtual impunity.

Appearing before the Senate Judiciary Committee, Holder acknowledged under questioning by Republican Chuck Grassley of Iowa, the ranking member, that the megabanks are too big to jail. “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them,” Holder said.

...

In what has become known as the “Geithner doctrine,” documented by numerous eyewitnesses to the administration’s deliberations on the financial crisis, the former Treasury chief consistently advocated preservation of the banks as the paramount objective in any measure.

As a result, as Democratic Sen. Elizabeth Warren of Massachusetts noted in a statement following Holder’s testimony Wednesday: “It has been almost five years since the financial crisis, but the big banks are still too big to fail … and are still not being held fully accountable for breaking the law.”
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

Matt Taibbi has been doing incredible work around the banking stranglehold on the world. His article about the HSBC settlement was the point where *I* personally gave up on any semblance of justice and secretly wonder what it will take to make people truly angry. HSBC literally had operations to enable terrorism and drug running and got a wrist slap. Things we literally fight wars over and no personal prosecutions at all. This stability theory is cockamamie anyway. It is the excuse they use because the truth is that the poliicy legitimately undermines the entire financial systems trustworthiness (and stability long-term). It is only a matter of time before this time bomb goes off in all our faces.

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Re: What's keeping megabank execs out of jail? Fear.

Post by LordMortis »

Too big to jail?

Edit: The easy one was actually in the link.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Pyperkub »

I wouldn't argue that the stability point is cockamanie, but rather that it has been abused, and continues to be abused by enabling these people to act as if they are too important for laws - and it is contributing to a host of other issues throughout our society.

Edit: Taibbi's writinghas been dead on however.
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Re: What's keeping megabank execs out of jail? Fear.

Post by Pyperkub »

Taibbi references Frontline's The Untouchables in one of his articles, and that was the impetus for Holder's testimony. I hope that the DVR still has it (I'm way behind on DVR catchup, and I'm not often in the mood for Frontline's information, however informative it is).
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

Pyperkub wrote:I wouldn't argue that the stability point is cockamanie, but rather that it has been abused, and continues to be abused by enabling these people to act as if they are too important for laws - and it is contributing to a host of other issues throughout our society.

Edit: Taibbi's writinghas been dead on however.
I think it is cockamamie in the sense that somehow prosecuting these guys for laundering money for terrorists or drug lords is somehow going to knock over the bank and the financial universe versus the hand slap. Both publicize bad behavior. How does prosecuting these guys cause the extra damage?

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Re: What's keeping megabank execs out of jail? Fear.

Post by El Guapo »

malchior wrote:
Pyperkub wrote:I wouldn't argue that the stability point is cockamanie, but rather that it has been abused, and continues to be abused by enabling these people to act as if they are too important for laws - and it is contributing to a host of other issues throughout our society.

Edit: Taibbi's writinghas been dead on however.
I think it is cockamamie in the sense that somehow prosecuting these guys for laundering money for terrorists or drug lords is somehow going to knock over the bank and the financial universe versus the hand slap. Both publicize bad behavior. How does prosecuting these guys cause the extra damage?
My recollection is that if HSBC (for example) were criminally convicted for the relevant alleged crimes, it would trigger a variety of collateral consequences under state (and possibly federal) law, the main ones being that they would lose their licenses to bank - i.e. would kill them as a bank.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Pyperkub »

El Guapo wrote:
malchior wrote:
Pyperkub wrote:I wouldn't argue that the stability point is cockamanie, but rather that it has been abused, and continues to be abused by enabling these people to act as if they are too important for laws - and it is contributing to a host of other issues throughout our society.

Edit: Taibbi's writinghas been dead on however.
I think it is cockamamie in the sense that somehow prosecuting these guys for laundering money for terrorists or drug lords is somehow going to knock over the bank and the financial universe versus the hand slap. Both publicize bad behavior. How does prosecuting these guys cause the extra damage?
My recollection is that if HSBC (for example) were criminally convicted for the relevant alleged crimes, it would trigger a variety of collateral consequences under state (and possibly federal) law, the main ones being that they would lose their licenses to bank - i.e. would kill them as a bank.
Here's Taibbi's article and the quote from the NYT:
ederal and state authorities have chosen not to indict HSBC, the London-based bank, on charges of vast and prolonged money laundering, for fear that criminal prosecution would topple the bank and, in the process, endanger the financial system.
Taibbi then follows through:
It doesn't take a genius to see that the reasoning here is beyond flawed. When you decide not to prosecute bankers for billion-dollar crimes connected to drug-dealing and terrorism (some of HSBC's Saudi and Bangladeshi clients had terrorist ties, according to a Senate investigation), it doesn't protect the banking system, it does exactly the opposite. It terrifies investors and depositors everywhere, leaving them with the clear impression that even the most "reputable" banks may in fact be captured institutions whose senior executives are in the employ of (this can't be repeated often enough) murderers and terrorists. Even more shocking, the Justice Department's response to learning about all of this was to do exactly the same thing that the HSBC executives did in the first place to get themselves in trouble – they took money to look the other way.

And not only did they sell out to drug dealers, they sold out cheap.
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

El Guapo wrote:
malchior wrote:
Pyperkub wrote:I wouldn't argue that the stability point is cockamanie, but rather that it has been abused, and continues to be abused by enabling these people to act as if they are too important for laws - and it is contributing to a host of other issues throughout our society.

Edit: Taibbi's writinghas been dead on however.
I think it is cockamamie in the sense that somehow prosecuting these guys for laundering money for terrorists or drug lords is somehow going to knock over the bank and the financial universe versus the hand slap. Both publicize bad behavior. How does prosecuting these guys cause the extra damage?
My recollection is that if HSBC (for example) were criminally convicted for the relevant alleged crimes, it would trigger a variety of collateral consequences under state (and possibly federal) law, the main ones being that they would lose their licenses to bank - i.e. would kill them as a bank.
Yet we managed to prosecute thousands of bankers for the S&L scandal and the world did not end. Frankly I don't believe any of these bizarre theories about why all of a sudden prosecuting *individuals* for bad bank behavior would lead to a collapse. Bottom line is they have built a parallel legal system (and society to a large extent) that is not the same as the one we all live in. This will not end well.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Pyperkub »

Note that the clock is just about done for Civil Fraud cases related to the meltdown - from the Frontline site linked above, this is a sub-article:
the Supreme Court ruled Wednesday that the Securities and Exchange Commission can’t extend the time limit for seeking penalties in civil fraud cases.

The unanimous decision largely ensures no new civil fraud charges will come out of the crisis, now that five-year statute of limitations for such cases has nearly expired.
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Re: What's keeping megabank execs out of jail? Fear.

Post by noxiousdog »

El Guapo wrote: My recollection is that if HSBC (for example) were criminally convicted for the relevant alleged crimes, it would trigger a variety of collateral consequences under state (and possibly federal) law, the main ones being that they would lose their licenses to bank - i.e. would kill them as a bank.
So? The assets are still there. Auction them off.
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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

noxiousdog wrote: So? The assets are still there. Auction them off.
Quick! We need a dark and smokey room, Jamie Dimon, Tim Geithner, and zero oversight. Let's do this!
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

Looks like Elizabeth Warren beat on the regulators again today. I haven't watched the video yet but her previous encounters with them were pretty harsh. Not that it'll make a difference but at least someone with *some* power is talking out loud about it at least.

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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

As the statuate of limitations runs out on the "financial meltdown" shenanigans, some CEOs seem determined to test their immunity once again.

Enter Jamie Dimon:
JPMorgan Chase & Co. (JPM)’s efforts to hide trading losses, outlined in a Senate report yesterday, probably will ignite debate over whether the largest U.S. bank is too big to manage and ratchet up pressure on Chief Executive Officer Jamie Dimon to surrender his role as chairman.

Dimon misled investors and dodged regulators as losses escalated on a “monstrous” derivatives bet, according to a 301-page report by the Senate Permanent Subcommittee on Investigations. The bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary regulator, sometimes at Dimon’s behest, investigators found. Managers manipulated risk models and pressured traders to overvalue their positions in an effort to hide growing losses.

...

After nine months of investigation, the panel concluded that JPMorgan had “a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public,” Chairman Carl Levin, a Michigan Democrat, told reporters yesterday. His team combed through 90,000 documents and interviewed dozens of current and former executives.
Keep in mind, this is for stuff done in 2012, not 2007.
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

I listened to a good deal of the Chase hearings today. It is way worse than I thought it was. It is good to hear Senators beating on them but the fact remains that the regulators are completely and negligently ignoring their jobs. Chase stops reporting data to OCC and lies to OCC regulators? No problem. Chase lies about sending data to OCC to their investors? SEC apparently does not care about that one. Chase made accounting practice changes in the middle of a huge portfolio loss in an attempt to hide the losses? No problem. Good fucking grief.

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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

And all this after the "never again" speeches and handwringing in 2008-2009.
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

FWIW, Matt Taibbi has a very entertaining live blog of the hearing. I guess if you can't beat them...laugh at the absurdity.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Zarathud »

Let's not forget the Republicans who fought against Warren being the bank's regulator.
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

Based on the weekends events I can at least say, "Hey at least we are not in Europe". The European Central Bank just insisted that private savings accounts be looted to fund the bailout of Cyprus. I guess they learned from Greece that taxing people is not an efficient way to loot a nation for the bankers...just go to the source. Ugly.

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Re: What's keeping megabank execs out of jail? Fear.

Post by noxiousdog »

Zarathud wrote:Let's not forget the Republicans who fought against Warren being the bank's regulator.
Yes clearly she would have been much more powerful than the justice department.
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Re: What's keeping megabank execs out of jail? Fear.

Post by Octavious »

malchior wrote:Based on the weekends events I can at least say, "Hey at least we are not in Europe". The European Central Bank just insisted that private savings accounts be looted to fund the bailout of Cyprus. I guess they learned from Greece that taxing people is not an efficient way to loot a nation for the bankers...just go to the source. Ugly.
That doesn't make sense. Won't there be a huge run on people pulling money from their accounts? Didn't they watch "It's a wonderful life"?

Oh wait... Front page of Huffingtonpost has just that. :mrgreen:
Last edited by Octavious on Mon Mar 18, 2013 9:48 am, edited 1 time in total.
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Re: What's keeping megabank execs out of jail? Fear.

Post by Isgrimnur »

malchior wrote:Based on the weekends events I can at least say, "Hey at least we are not in Europe". The European Central Bank just insisted that private savings accounts be looted to fund the bailout of Cyprus. I guess they learned from Greece that taxing people is not an efficient way to loot a nation for the bankers...just go to the source. Ugly.
As long as you're not rich in cash reserves, they're against it:
The European Central Bank opposed taxing Cypriot savings accounts under 100,000 euros ($129,450), a person familiar with the discussions said.

The structure of an unprecedented proposal to take 6.75 percent from every savings account under 100,000 euros to lower the cost of the Mediterranean island’s bailout was designed by Cyprus President Nicos Anastasiades and the Cypriot finance ministry, said the person, who asked not to be named as the discussions are not public. The agreement was announced on March 16 after all-night talks.

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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

Isgrimnur wrote:
malchior wrote:Based on the weekends events I can at least say, "Hey at least we are not in Europe". The European Central Bank just insisted that private savings accounts be looted to fund the bailout of Cyprus. I guess they learned from Greece that taxing people is not an efficient way to loot a nation for the bankers...just go to the source. Ugly.
As long as you're not rich in cash reserves, they're against it:
The European Central Bank opposed taxing Cypriot savings accounts under 100,000 euros ($129,450), a person familiar with the discussions said.

The structure of an unprecedented proposal to take 6.75 percent from every savings account under 100,000 euros to lower the cost of the Mediterranean island’s bailout was designed by Cyprus President Nicos Anastasiades and the Cypriot finance ministry, said the person, who asked not to be named as the discussions are not public. The agreement was announced on March 16 after all-night talks.
I love the backtracking here by the ECB. We did not want a tax under 100K BUT yea...they have to raise 5.8B euros somehow. I'm going to guess the 10% above 100K euros does not come anywhere near close enough to that target and the ECB knows this. Either way they forced a terrible choice on the Cypriots about who to fleece: the Russians, the British and/or tons of other not insubstantial parties.

What a mess. It is true that this is a one-off in a way due to the unique constraints here (oversized bank sector/tons of Foreign tax-haven cash) but the damage they are doing could have terrible consequences. The one thing you don't want to do is undermine depositors/people who actually save. Crazy gold bugs the world round are probably giggling with delight. Heck I'm beginning to think they are only 95% crazy considering... ;)

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Re: What's keeping megabank execs out of jail? Fear.

Post by Octavious »

Every time a Greek goes bankrupt, an angel gets its wings!
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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

malchior wrote:
Isgrimnur wrote:
malchior wrote:Based on the weekends events I can at least say, "Hey at least we are not in Europe". The European Central Bank just insisted that private savings accounts be looted to fund the bailout of Cyprus. I guess they learned from Greece that taxing people is not an efficient way to loot a nation for the bankers...just go to the source. Ugly.
As long as you're not rich in cash reserves, they're against it:
The European Central Bank opposed taxing Cypriot savings accounts under 100,000 euros ($129,450), a person familiar with the discussions said.

The structure of an unprecedented proposal to take 6.75 percent from every savings account under 100,000 euros to lower the cost of the Mediterranean island’s bailout was designed by Cyprus President Nicos Anastasiades and the Cypriot finance ministry, said the person, who asked not to be named as the discussions are not public. The agreement was announced on March 16 after all-night talks.
I love the backtracking here by the ECB. We did not want a tax under 100K BUT yea...they have to raise 5.8B euros somehow. I'm going to guess the 10% above 100K euros does not come anywhere near close enough to that target and the ECB knows this. Either way they forced a terrible choice on the Cypriots about who to fleece: the Russians, the British and/or tons of other not insubstantial parties.

What a mess. It is true that this is a one-off in a way due to the unique constraints here (oversized bank sector/tons of Foreign tax-haven cash) but the damage they are doing could have terrible consequences. The one thing you don't want to do is undermine depositors/people who actually save. Crazy gold bugs the world round are probably giggling with delight. Heck I'm beginning to think they are only 95% crazy considering... ;)
There are a lot of Russian oligarchs with Cypriot accounts, mostly as tax shelters, maybe money laundering. I think the ECB is going after their money.
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Cyprus is known as a hot bed of Russian money laundering.

There's also the fact that Cypriot banks' main way to raise money is from deposits. They don't have bonds, at least from what I've heard.
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

LawBeefaroni wrote:There's also the fact that Cypriot banks' main way to raise money is from deposits. They don't have bonds, at least from what I've heard.
Right. The whole crisis is mostly from the banks over-exposure to Greek debt and they don't have any independent way to survive it. So it is understandably unique but wow...there seem to be a lot of wacky one off conditions in the Eurozone. One has to wonder what the chance is that they leave the Eurozone...probably low again but that is a chance. Peg some new currency to the Euro, flip the switch and let the defaults begin ala Iceland. However, I do think that this technically has a decent chance to minimize the damage to all the parties involved but it is so damn dangerous in a way that it is a real shame they figure they have to go there.

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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

This whole crisis is very dirty under the covers - as Bill McBride at Calculated Risk wrote -- either Cyprus had to accept the bailout on these terms or wipe out the depositors. So much for the 100K euro bank guarantee. Ugly. They are really setting themselves up for a banking crisis. There have been plenty of articles today about how shocked many are that deposits are getting a haircut.

Edit: Oof, just read that the 100K guarantee is the responsibility of each individual government. Yikes.

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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

Ok, this guy gets it mostly wrong but I love his rage and incredulity.

YouTube, VERY NSFW FOUR-LETTER LANGUAGE:
http://www.youtube.com/watch?v=YDXtHsz2q6Q" target="_blank
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Re: What's keeping megabank execs out of jail? Fear.

Post by malchior »

LawBeefaroni wrote:Ok, this guy gets it mostly wrong but I love his rage and incredulity.

YouTube, VERY NSFW FOUR-LETTER LANGUAGE:
http://www.youtube.com/watch?v=YDXtHsz2q6Q" target="_blank
Wow. I only made it through about half before I gave up.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Gavin »

malchior wrote:Based on the weekends events I can at least say, "Hey at least we are not in Europe". The European Central Bank just insisted that private savings accounts be looted to fund the bailout of Cyprus. I guess they learned from Greece that taxing people is not an efficient way to loot a nation for the bankers...just go to the source. Ugly.
I am still entirely baffled by this. Depending on how they decide to hold Cypriot's savings accounts hostage indefinitely after the banks open again, this will likely completely doom the economy. It's like they recommended the absolute worst thing a country can do. Ruin confidence in banks. Any depression is generally started that way, scare people into pulling their money out of a financial institution, be that stocks or banks or both. But to do that on purpose...

I wonder if Cyprus could legitimately sue the European Central Bank for negligence at this point. I mean, I know their president supposedly designed the measure but who the heck signed off on it?!

Were I a citizen of Cyprus I would not rest until my life savings were in a safer location.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Isgrimnur »

Voting on the savings tax in Cyprus failed. Now the ECB is telling them to figure out a new plan by Monday, or they'll scuttle the banks themselves.
Cypriot government officials have said the new plan includes a smaller deposit grab to ease the pain on small savers, restructuring the country’s troubled banks and raising money from domestic sources, including pension funds and subsidiaries of foreign banks active in Cyprus.

Cyprus has to find 5.8 billion euros ($7.5 billion) in order to unlock a 10 billion euros bailout from its euro partners and the International Monetary Fund.

Russia is also expected to pitch in, but its contribution will be smaller than originally hoped for, Cypriot officials have said. Nearly a third of all deposits in Cyprus’ oversized banking sector are held by Russians.

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Re: What's keeping megabank execs out of jail? Fear.

Post by stessier »

How has there not been a run on the banks yet? I can't imagine hearing all that and deciding to leave my deposit in place.
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Re: What's keeping megabank execs out of jail? Fear.

Post by Isgrimnur »

Simple. They closed them all last week and haven't opened them back up yet.
Banks, which have been closed since last Friday, have been ordered shut until Tuesday to prevent a run. In central Nicosia, lines of angry people formed at some ATMs of branches of Laiki Bank, the country’s heavily indebted second-largest lender.

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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

Cyprus is like the Caymen Islands of Europe. I wouldn't consider their banking system typical, except that it's heavily criminal :wink:. While the fear gripping the world is that "taxing" deposits is now on the table for any nation in the Eurozone, I don't think that's the case. The decision to go after desposits was a combination of that fact that that's the only available source of revenue there is in Cyprus coupled with the fact that Russian oligarchs aren't the most sympathetic depositors out there. I don't like the idea but I don't think it's all end-of-the-world like some people do.

Back to the drawing board, I guess.
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Re: What's keeping megabank execs out of jail? Fear.

Post by LawBeefaroni »

Isgrimnur wrote:Simple. They closed them all last week and haven't opened them back up yet.
Banks, which have been closed since last Friday, have been ordered shut until Tuesday to prevent a run. In central Nicosia, lines of angry people formed at some ATMs of branches of Laiki Bank, the country’s heavily indebted second-largest lender.
I think they keep declaring "holidays" (classic Orwellian doublespeak) which automatically shut down banks. ATM withdrawals have been limited to something like 200 Euro per account.
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Re: What's keeping megabank execs out of jail? Fear.

Post by stessier »

LawBeefaroni wrote:
Isgrimnur wrote:Simple. They closed them all last week and haven't opened them back up yet.
Banks, which have been closed since last Friday, have been ordered shut until Tuesday to prevent a run. In central Nicosia, lines of angry people formed at some ATMs of branches of Laiki Bank, the country’s heavily indebted second-largest lender.
I think they keep declaring "holidays" (classic Orwellian doublespeak) which automatically shut down banks. ATM withdrawals have been limited to something like 200 Euro per account.
Yeah, that Tuesday quote, when written, meant Mar 19. Hadn't heard about the "holidays".
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Re: What's keeping megabank execs out of jail? Fear.

Post by Gavin »

In my opinion, this is just a thinly veiled attempt to fund Cyprus' bailout on the shoulders of the Russian money they have in there (something like $19 billion which is a lot for a country this size). The thing is, a lot of the people in power in Russia have money there. I'm somewhat concerned that we may see military action but not too concerned on that front.

It is interesting seeing people make a run for all the ATMs. It is quite clear that this has killed their banking system. They will not rest until their money is out of Cypriot banks. It's interesting to be able to point at the problem while it's happening before the actual crash hits.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Isgrimnur »

That quote is from the previously linked article dated today. If there's time travel involved, I would imagine that solving this just got a lot easier.

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Re: What's keeping megabank execs out of jail? Fear.

Post by Isgrimnur »

Gavin wrote:The thing is, a lot of the people in power in Russia have money there. I'm somewhat concerned that we may see military action but not too concerned on that front.
:D Should they stage through Turkey, a NATO ally to us, Lebanon, Syria, Egypt, or Israel?

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Re: What's keeping megabank execs out of jail? Fear.

Post by stessier »

Isgrimnur wrote:That quote is from the previously linked article dated today. If there's time travel involved, I would imagine that solving this just got a lot easier.
Maybe there is a second page or something, but this article doesn't have that quote. I can't find any other linked articles from today.
Isgrimnur wrote:Voting on the savings tax in Cyprus failed. Now the ECB is telling them to figure out a new plan by Monday, or they'll scuttle the banks themselves.
Not that it really matters, I just remember that exact quote from an article over the weekend where it was referring to Mar 19 because that was the day they would vote on the haircut. I wonder what bankers are doing with all these holidays as the Illuminati are deciding their fate.
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