A preliminary EU report says 13 banks and others colluded to prevent Deutsche Börse and Chicago Mercantile Exchange from participating in credit derivatives markets between 2006 and 2009. A trade organization, effectively controlled by the banks, refused to license exchanges for derivatives trading because of worries that the new competition would erode the banks’ profits. Under monopoly laws, trade organizations cannot legally act to squelch competition the same way an individual business can, so the banks could face fines in the matter. European law allows for fines of up to 10 percent of revenue from monopolistic activities, which in theory could amount to trillions of euros in this case.
Spain’s banks do not need any new European capital at this point according to a leaked EU document.
Big changes are underway at the Vatican Bank, with a caretaker executive in charge and two senior executives dismissed this week. The Vatican is trying to get out ahead of a web of money laundering and corruption scandals surrounding the bank.
Faced with the prospect of its banks being indicted in U.S. courts for tax evasion, Switzerland says it has come up with a plan that will allow the IRS to collect information on possible tax evaders, but not the identities of account holders. There are holes in the plan, however, so it will surely have to be revisited. Switzerland has been wrestling with this problem for three years, and during the delay, a criminal tax evasion probe led to one of its banks, Wegelin, being shut down. Even if banks avoid indictments with the limited data releases that the new law authorizes, individual bankers’ careers could be ruined and some could face criminal indictments in Switzerland depending on the tale the data tells.
JPMorgan has settled with the trustee of MF Global, with the settlement getting final court approval on Wednesday. The bank had seized more than half a billion dollars in MF Global accounts when the brokerage went bankrupt, but it ultimately determined it wasn’t entitled to the money and turned it over to the bankruptcy court. With this settlement approved, more settlements by the bankruptcy trustee are on the way, which could lead to all of the brokerage customer money being returned to customers. About 90 percent of customer money has already been paid out, and the remaining 10 percent may be on its way by next year.
U.S. students are now paying higher interest rates than homeowners after Congress doubled student loan interest rates effective July 1. The action from Congress was intended to send a message, but it’s a heavily garbled message that comes across as, “Don’t think we haven’t noticed the way you students have been ripping us off all these years.” The U.S. Treasury was already making a respectable profit on student loans and now stands to make billions of dollars in windfall profits with the higher “subsidized” interest rates.
The NCUA liquidated one credit union last weekend and another this week. Last Friday, it closed Ochsner Clinic Federal Credit Union, which served 3,000 members, particularly medical workers and their families, in New Orleans. It had only $9 million in assets and its finances were not improving. Member accounts and loans were transferred to ASI Federal Credit Union. On Monday, the NCUA liquidated Ohio-based PEF Federal Credit Union, which had been in conservatorship for two weeks. It had 3,000 members. Many of its member accounts were transferred to Best Reward Credit Union. The NCUA will make payments to other account holders for their insured deposits.