Federal Reserve Loans to LIBOR Rigging: Robbing people to pay Paul with scandals, bank fines & flagrant fouls. How God blesses UBS & the rest

On December 11th, HSBC Holdings Plc pled guilty to money laundering and agreed to pay $1.92B to the U. S. This scenario sounded familiar.

Past and current news flashed between temporal and frontal lobes as if I was watching a basketball game of fast breaks with a lot of turnovers. Action went from one end of the court to the other and there was no time to check the score. “Why is HSBC a part of my memory? Is this one of the banks that received money from the United States?”

The answer is yes. Per Bloomberg.com, the U. S. Federal Reserve, loaned HSBC and other banks and companies millions and billions of dollars at very low interest rates.

Some of these borrowers were involved in the LIBOR rigging scandal. Per Bloomberg.com, “More than a dozen banks altered submissions used to set benchmarks such as the “London interbank offered rate” [LIBOR] to profit from bets on interest-rate derivatives or make the lenders’ finances appear healthier.”

Following is a small sample of the banks that received money from Federal Reserve emergency programs from 2007-2010 to help them through a financial crisis still affecting smaller businesses and individuals.

Now, for various reasons, several of the same banks are being investigated and fined. These amounts are not inclusive of everything a single bank may have borrowed or been fined. In some cases, the amount is higher. Although several banks received loans and fines from other countries, this data only includes the U. S. portion unless specified.

Money Laundering

HSBC Holdings Plc borrowed an average daily balance of $500M for 324 days. They were recently fined $1.92B. Their profit this year is estimated at $15.3B.

HSBC also plea bargained for a deferred prosecution agreement. Per Bloomberg.com, “In a deferred prosecution agreement, the government allows a target to avoid charges by meeting certain conditions -- including the payment of fines or penalties -- and by committing to specific reforms, either under the guidance of a monitor, or the creation of an internal compliance panel.”

In other words, we won't prosecute you further if you pay a relatively small amount of your ill-gotten gains, change some policies/procedures and then monitor yourself.

Violating U. S. Sanctions

ING Groep NV borrowed an average daily balance of $1B for 323 days. They were fined $619M for violating sanctions against Iran and Cuba.

Standard Chartered Plc borrowed an average daily balance of $800M for 462 days. They were fined $667M for violating sanctions against Iran.

Mortgage Violations

Credit Suisse Group AG, borrowed an average daily balance of $13.3B for 386 days. They were fined $120M for SEC home loan violations.

Deutsche Bank AG borrowed an average daily balance of $12.5B for 439 days. They were fined $202M for civil claims against their MortgageIT Unit.

LIBOR Rigging For 6 years (2,190 days)

Barclays Plc borrowed an average daily balance of $19.1B for 724 days. They were fined $371M. It has also been proposed Barclays pay a $470M fine for manipulating electricity markets.

UBS AG borrowed an average daily balance of $13.9B for 435 days. They were fined $1.2B. Per Bloomberg.com, “The fines, in total, amount to less than three weeks revenue at UBS, based on figures from 2011.” The settlement included criminal charges against two former traders as sacrificial scapegoats. UBS was fined an additional $48M for letting unauthorized trading go undetected.

Extra Info & Analysis

After the loans above and several hundred billion more in loans to numerous other banks, the U. S. Federal Reserve netted only $13 billion in interest and fee income from these loan programs from August 2007 through December 2009.

It appears the largest fines relative to the amount borrowed were due to violating U. S. sanctions. This means the U. S. is more interested in punishing you for not helping them bully and choke another country than the U. S. is interested in punishing you for financial crimes. Even though Senator Charles Grassley is calling for criminal charges and labels the HSBC fine as a “spit in the ocean,” nothing more will be done since a slap on the wrist is the standard procedure to punish without pain. No pain, no change.

Monitor the news for more investigations and fines and compare to this interactive list from Bloomberg.com. Money will continue to pass back and forth between the same hands. The only thing that changes is the ruse to continue the transfer of wealth from taxpayers to the financial industry. In the meantime, taxpayers continue to face difficulties as a result of this financial crisis.

Summary of Shenanigans

First the U. S. loans millions/billions for a year or more at low rates.
Next, the banks invest the money for a higher return
At the same time, the banks commit other financial crimes
Last, the U. S. takes a little back via fines, spreads it to a few agencies and States and then all of the above is considered justice served and over.

If this was a basketball game, the statistics would record each of America's taxpayer-funded loans and subsequent pitiful bank fines as an assist and a no-look pass, which of course is backwards. The spectators would see each occurrence as a flagrant foul between two, without an ejection, which of course, is against the rules.

Wait! The United States did eject a player from the game. In 2012, “U.S. regulators revoked the registration of Toronto-based brokerage Biremis Corp. and barred its founders from the securities industry for failing to supervise traders who engaged in a manipulative practice.” This is same failure several of the above banks are guilty of yet they are still in the game playing with other people's lives and money.

Related: Crime Defense 101: Inherent Rights – Doing The Right Thing

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More On The UBS Mess

UBS is the largest Swiss bank. The loans from the U. S. helped UBS, the Swiss government and its people. The U. S. provided an average of $13.5B for 435 days. The highest outstanding balance was $77.5B. The Swiss government separately loaned UBS $7.1B. You can see the imbalance. Why is America doing more for the Swiss than the Swiss government?

To make up for this imbalance, when it comes to LIBOR and unauthorized trading fines, the U. S. is due to receive the lion's share of $1.25B ($1,000 million plus $250 million) compared to the Swiss only getting $0.04B ($40 million). Hmmn!

The U. S. loans were from August 2007 thru April 2010. During the middle of this, in February 2009, UBS agreed to pay $780M to avoid U. S. prosecution on charges that it helped thousands of wealthy Americans evade taxes using the infamous Swiss bank account. “UBS is one of the world’s largest managers of private wealth assets.” It is the rich people's bank of choice, capitalism and democracy. To answer the question raised two paragraphs earlier, America's main focus was to help the rich not the Swiss people; America's main purpose was to help out a government that has helped the rich hideout for so long. God Bless UBS & The Rest!