Friday, June 28, 2013

This Week in Bank Failures

Five news stories this week — each a different angle on the larger story of corruption in banking.

  1. U.S. Bank and a partner will refund $6 million in fees it failed to disclose to borrowers in an auto loan program.
  2. China is starting to crack down on improper bank loans. Regulators say they have identified $23 billion so far in improper loans, including loans made without real collateral or with no specific purpose, and many where the funds were simply embezzled. It has ordered restitution and has prosecuted 700 people, mostly bank employees and customers, in connection with improper loans.
  3. A senior Vatican official has been arrested in Italy, accused of being involved in a scheme to smuggle cash into the country illegally by airplane — €20 million of it. Investigators discovered the incident during a larger investigation into money laundering at Vatican Bank.
  4. A retired California employee of a Swiss bank kept millions of dollars in secret Swiss accounts to avoid U.S. income taxes. He has pleaded guilty and paid a $1.5 million fine and faces a possible prison sentence.
  5. A former bank executive (of a failed bank) defrauded investors in New York City of at least $375,000 since 2005 with a story about opening the city’s first Sharia-compliant bank. There were no plans to open a bank, and the executive kept the money for his own use, according to an indictment filed today.