Bankers Gone Bad -- 70% of banks report cases of insider fraud
The world couldn't handle the truth, Treasury says
| Three grand deceits that cheat the public: bankers with fingers in the till, politicians using political power for personal gain, and Wall Street using fear to wrangle bailouts. We trim, blend, and append three 2009 articles from: (1) DarkReading, Oct 5, on bad bankers by Kelly Jackson Higgins; (2) Weekly Wastebasket, Volume XIV No. 40: Oct 2, on political insider trading by TCS; and (3) MarketWatch, Oct 5, on Treasury lies by Rex Nutting, Washington bureau chief. The appendage is by author Phil Anderson. |
by KJ Higgins, by TCS, by R. Nutting, and by Phil Anderson
- Bankers Gone Bad -- 70+% of banks report cases of insider fraud
A former Wachovia Bank executive, Shirley Inscoe who spent 21 years handling insider fraud investigations and fraud prevention, says banks are in denial; according to new survey data, 70% of financial institutions say they have experienced a case of data theft by one of their employees in the past 12 months.
Inscoe, who co-authored Insidious -- How Trusted Employees Steal Millions and Why It's So Hard for Banks to Stop Them, said, "We are seeing a huge increase in this country of organized crime rings threatening individuals who work in financial institutions and making them [commit fraud on their behalf].”
Meanwhile, nearly half of the banks in a new survey by Actimize say they are losing 1–4% of their total revenues to insider fraud. And nearly 80% of financial institutions worldwide say the insider threat problem has increased in the wake of the economic downturn.
The profile of the banker fraudster that Inscoe and co-author BC Krishna say commit these crimes is one of a bank's top performers, who is well-versed in its operations and how to circumvent them and remain under the radar.
Inscoe says, " The person has been intending to repay the money, almost like a short-term loan they're giving themselves," she says. Unfortunately, the scam continues and the person never gives back the money.
Inscoe says if an employee is caught surfing customer data, banks don't pursue the case because no money was lost or stolen. "But for all they know the employee was selling that data to an external crime ring, incurring huge losses."
- Insider Trading on the Taxpayer Dime
One year ago, then Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke met with a small group of congressional leaders to warn them. There is evidence those Congressmen later pulled their investments out of funds that eventually tanked by as much as 50%. Though it is illegal for corporate insiders to trade on insider knowledge, politicians have not passed laws to restrict themselves.
For years, members of Congress have routinely beat the market average by as much as 1% per month. An extra six or twelve-percent gain per year is an enormous advantage over the average investor. In fact, your average member of Congress did as well as or better than your average corporate insider did when trading his own company’s stock.
The financial information coming out of Washington has become a sellable commodity. Michael Bagley, a former congressional staffer recently started the OSINT group, which sells insider political information to hedge funds.
- Government officials defend their lies
The independent watchdog over the bailout released a report that more or less accuses top officials -- including Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair -- of lying last October when they said that the nine big financial institutions taking the taxpayers' money were "healthy."
In the wake of the collapse of Bear Stearns, Lehman Bros, American International Group, Fannie Mae, and Freddie Mac, everyone knew that the government was desperately shoveling money into the financial sector precisely because some or all of the big banks were not healthy.
And then there's that legalistic fine print that says government officials are supposed to shut down insolvent banks, not shower them with money.
The lies told about TARP and the refusal of the Fed to this day to provide any details about its other bailout programs have fueled universal public skepticism about the government's credibility. And with the Treasury secretary personally involved in the outcome -- Paulson was the former chairman of Goldman Sachs -- few people trust the government to put the public's interests above those of Wall Street.
Phil Anderson: The usual is happening now, all sorts of suggestions on how to strengthen the financial system, or explain it, to stop yet another financial crisis from happening again. For a summary of what authorities have tried -- including the creation of the Fed -- after each of the other land price induced downturns, from 1819 to the present, see The Secret Life of Real Estate .
From the dust jacket: "The American experience over the last 200 years is used as a case study to illustrate the cycle... then each phase of the cycle is repeated, varied only by the new ways bankers find to avoid the regulations put in place after each collapse to ensure 'it will never happen again'..."
Banking reforms cannot fix this issue. Present actions to strengthen the banking system guarantee us another real estate cycle. They’re preserving the same system as is. Of course banks are a part of the problem, but not the problem. The creation of credit is a positive development for the economy. But when it is created against the capitalized rent, then we get a cycle.
|
Also see: Earn Like Goldman Sachs, a ProPublica How-To
Coburn Questions 100 Stimulus Projects
Forbes -- AIG's Larceny |
| Email this article | Sign up for free Progress Report updates via email |
What are your views? Share your opinions with The Progress Report:
| Page One | Page Two | Archive |
| Discussion Room | Letters | What's Geoism? |
