Capital Punishment for "Capital" Crimes

For the past five years, one of the most theatrical topics of superficially deep debate by both regulators and legislators has been a simple one: how to end the abuse of power and relentless gambling with zero fear of consequences by systemically important, Too Big To Fail banks, which led to the unprecedented 2008 spectacle of Goldman's Treasury Secretary Hank Paulson demanding that Congress give him a blank check to bail out anyone and anything (mostly his former employers) he deems fit.

The theatricality is also grossly comic, because every other week central bankers around the world release philosophical papers with scnietific notation including that fancy Integral sign, musing over the apparent unsolvability of this epic dilemma (just in case it is still unclear, the central bankers work for the commercial bankers) all the while the global megabanks get megabigger until, at one inevitable point in the future, JPMorgan Merrill Fargogroup of America Sachs will be the only bank left standing. And be in complete control of not only the country, but courtesy of its $1+ quadrillion "galatically important" balance sheet, the entire world.

What is funniest, of course, is that there is a gloriously simple solution to all the world's TBTF problems, one that could be enacted in a HFT millisecond by pulling the trigger, so to speak.

The solution comes from none other than that historic US nemesis, Vietnam, where unscrupulous financiers don't just go to jail. Sometimes, they get death row.

Global Post reports:

Amid a sweeping cleanup of its financial sector, Vietnam has sentenced three bankers to death in the past six months.

 

One duo now on death row embezzled roughly $25 million from the state-owned Vietnam Agribank. Their co-conspirators caught decade-plus prison sentences.

 

In March, a 57-year-old former regional boss from Vietnam Development Bank, another government-run bank, was sentenced to death over a $93-million swindling job.

 

According to Vietnam’s Tuoi Tre news outlet, several of his colluders were sentenced to life imprisonment after they confessed to securing bogus loans with a diamond ring and a BMW coupe. And last week, in an unrelated case, charges against senior employees from the same bank allege $47 million in losses from dubious loans.

Wait, so if you get the proverbial nail gun in the back of the head for a measly $25 million, what should banks that "received" trillions in involuntary taxpayer gifts get? Obamacare?

But these death sentences nevertheless are high profile scandals in Vietnam.

That’s the point. Human rights watchdogs contend that splashy trials in Vietnam are acts of political theater with predetermined conclusions. The audience: a Vietnamese public weary of state corruption. But these sentences also sound loud alarm bells to dodgy bankers who are currently running scams.

 

“It’s a message to those in this game to be less greedy and that business as usual is getting out of hand,” said Adam McCarty, chief economist with the Hanoi-based consulting firm Mekong Economics.

 

“The message to people in the system is this: Your chances of getting caught are increasing,” McCarty said. “Don’t just rely on big people above you. Because some of these [perpetrators] would’ve had big people above them. And it didn’t help them.”

 

Like most nations that crush dissent and operate with little transparency, Vietnam is highly corrupt.

Also, just like the US, only here the theft occurs at such a far more grand scale, that few can even conceptualize it, let along come up with an appropriate sentence.

According to a World Bank study, half of all businesses operating within the communist state expect that gift giving toward officials is required “to get things done.” Transparency International, which publishes the world’s leading corruption gauge, contends Vietnam is more corrupt than Mexico but not quite as bad as Russia.

 

Unlike in America, where judges can’t sentence white-collar criminals to death, Vietnam can execute its citizens for a range of corporate crimes.

 

Amnesty International reports that death sentences in Vietnam have been handed down to criminals for running shady investment schemes, counterfeiting cash and even defaulting on loans. This is unusual: United Nations officials have condemned death for “economic crimes” yet Vietnam persists with these sentences — as does neighboring China.

 

Though statistics on Vietnam’s opaque justice system are scarce, a state official conceded that more than 675 people sit on death row for a range of crimes, according to the Associated Press.

 

It’s still unclear how the bankers will be killed. Vietnam’s traditional means of execution involves binding perpetrators to a wooden post, stuffing their mouths with lemons and calling in a firing squad. The nation wants to transition to lethal injections. But European nations refuse to export chemicals used in executions (namely sodium thiopental) to governments practicing capital punishment.

 

Fraudulent bankers are receiving heavy sentences at a moment when Vietnam is enacting major financial reforms.

And guess what: it will work. Because there is nothing as deterrant to criminal, sociopath behavior than knowing that no matter how many trillions of derivatives on your balance sheet, the final outcome is a blindfold and a cigar.

Then again, in "democratic, uncorrupt" America, this solution will never take place, for the simple reason that the same bankers who would be executed, not only print the money that everyone else uses, certainly the politicians, but also own and run everything. So why on earth would they suggest the only thing that could possibly end the party?

 

Source:  http://www.zerohedge.com/news/2014-04-04/how-end-tbtf-do-what-vietnam-does-sentence-bankers-death-firing-squad

Debit Cards Carry Risks

One of the big selling points of debit cards, highlighted in ad campaigns and on bank websites, is that you'll have "zero liability" for losses if your card is lost or stolen—just like credit cards.

Turns out that's only sort of true.

In fact, nearly every debit card comes with restrictions in cases of theft. Some banks limit your coverage if you are slow to report a lost card or potential fraud. Some don't cover fraudulent ATM transactions. Some may require that you show "reasonable care" in protecting your card or PIN number.

The matter is a significant one. There were 38.6 billion debit-card transactions last year, far more than the nearly 23 billion credit-card transactions, according to the Nilson Report newsletter in Carpinteria, Calif. Banks encourage customers to use debit cards, since they are far more lucrative than cash or checks.

Debit cards, by contrast, are covered under a different law, and the rules are much more complex. If you call your bank within two business days of discovering your card is missing, your losses are limited to $50. But if you wait, you could be on the hook for up to $500. And if you don't report the problem within 60 days after it shows up on a statement, you might face unlimited losses.The loopholes grow out of different federal regulations for different cards. Under federal law, your losses from unauthorized charges on your credit card are limited to $50, and there is no time limit for when you must report the problem. Many issuers go further, waiving all losses due to unauthorized credit-card use.

In the late 1990s, Visa and MasterCard went beyond those requirements, promising reduced liability for their branded debit cards. But there are several loopholes: Visa's "zero-liability policy" doesn't cover ATM transactions, some business cards or PIN transactions that don't go through the Visa network. It does cover transactions where you sign, which bring in more revenue than PIN transactions.

MasterCard doesn't cover any transactions that require a PIN, and it won't cover more than two theft events in a 12-month period. You must also exercise "reasonable care" to prevent your card from being misused. But that term is subject to interpretation. Have you failed to show reasonable care if you forget your card at a restaurant? That depends on the circumstances and your bank, a spokeswoman says.

Discover Financial Services and PayPal debit-card policies require losses to be reported within two business days. Bank of America, which has been advertising its zero-liability policy heavily, offers a 60-day window, as does Wells Fargo. Like many banks, they go beyond what Visa and MasterCard offer, covering ATM and PIN transactions, for instance.

To avoid problems, you should keep cards you don't use often in a safe place, protect your PIN and check your account regularly for suspicious activity. Here are few other things to keep in mind:

• Many banks—but not all—will replace your missing funds the next day. In a 2009 survey of how the 25 largest banking companies handle debit cards, Javelin Strategy & Research found that 20% of the large banks didn't replace missing money the next day, down from 28% in 2008. Under federal law, banks have up to 10 days to replace the funds.

• Expect any additional protections to come with stepped-up fraud monitoring of both debit and credit cards. Though fraudulent dealings constitute far less than 1% of all transactions, they are costly, reaching close to $7 billion globally last year, up 7% from 2008, says Dennis Moroney, a research director at TowerGroup, which advises financial-services companies.

Sophisticated software from Fair Isaac, the company that created the FICO credit score, tracks the real-time activity of more than 2 billion cards worldwide for issuers, scoring transactions based on spending patterns, where they are made, their size and other factors.

The higher the score, the more likely the bank may decline the purchase until you clear it, or call you afterward to confirm the transaction was legitimate.

Mike Urban, senior director for FICO's fraud products, says that about 20 calls may be made to customers for each fraudulent transaction caught, a ratio that allows the majority of crooked deals to be stopped without unduly disrupting consumers.

• Though they say "debit card" on them, prepaid debit cards have fewer protections than regular ones. These cards, which have money loaded on them and aren't connected to a bank account, aren't covered by debit-card regulations.

Issuers like Wal-Mart Stores may limit losses and replace funds, and Visa and MasterCard offer the same zero-liability protections for prepaid cards as for their debit cards, with the same loopholes.

—karen.blumenthal@wsj.com

Is a Merrill Lynch Broker Targeting You???

Merrill Lynch has been aggressively recruiting brokers from other firms with huge bonus incentives. According to an article published in Financial Planning, new Merrill recruits can earn 140% of their trailing 12 month production in addition to annual bonuses as high as 60% of their annual production!

As you can imagine, Merrill brokers (as well as others) have a tremendous incentives to increase their assets under management. The use of aggressive bonus policies has given Federal regulators cause for concern. SEC Chief Warns Broker Firms of Aggressive Recruiting Tactics .

WHO'S LOOKING OUT FOR YOU?

It goes without saying that investors need to be more cautious than ever regarding their financial decisions. If the Bernie Madoff case doesn't show you how easy it is to get duped, then your are setting yourself up for disaster. Needless to say, in tough economic times, more and more people are out to get your money. Who's Looking Out For You? Certainly you can't expect your salesperson to be looking out for you. He or she only has an obligation to offer you products that are "suitable" for you. It doesn't matter that the products are loaded with front-end or back-end fees, or that the salesperson is making a huge commission off of the sale. It's all legal!!

Is the Government Looking Out For You?

This thought might even cause you to chuckle a little. Favorability ratings for the government continue to drop to new lows while the politicians live the high life at our expense. Taxes keep going up, government perks keep going up and government effectiveness falls. If you have been following the analysis of the SEC's action in the Bernie Madoff case, you should be aware that the government IS NOT looking out for you. And even if they were, laws currently in place do not seem to be very effective.

I was once a regulator and remember speaking with a person who was grossly violating the law. I talked to him and he clearly and logically explained his actions to me and why he would not stop doing it. He told me that he was making millions of dollars a day doing what he was doing and what would we do about it? The maximum penalty would be a $10,000 fine! He said that the fine was merely the cost of doing business.

YOU CAN'T AFFORD NOT TO HAVE A PERSONAL FINANCIAL CONSULTANT

The financial world is getting way too complex and product salespeople often just sell you the sizzle. You generally don't ever find out that you are getting ripped off until you talk with another broker who is trying to get your business. Only then do you learn of the high fees and commissions you paid for some product that really wasn't in your best interest. And then what does this new salesperson do? I'll leave it to your imagination.

Each week I meet with people who not only make costly decisions about their money but it doesn't stop there. Mistakes are found in nearly every aspect of their financial life: taxes, insurance, estate planning and so forth. How sad it is that so many aren't willing to spend the money to hire competent advisers who are free of conflicts of interest. In the end, they lose so much more than the fee they might pay for such service. Usually only after it is too late do they seek advice.

WHO CAN YOU TRUST?

When choosing an adviser, be weary of someone who also sells products or manages money. If they call themselves financial planners and are also engaged in selling products or gathering assets under management, their goal is but one thing - to sell you products or get your assets under management. How can you expect them to provide you with the best advice possible? You can't.

Check Their ADVs or U4s

Every Investment Adviser or Investment Adviser Representative is required to fill out certain government forms in order to be registered. It is your right to review these documents and you should. Not only does it disclose all conflicts of interest (other ways the adviser makes money), it also discloses all unethical actions, complaints and undesirable actions that the adviser had been involved in. It is your right to know and your obligation to review this information. If you hire an adviser to provide you with comprehensive planning, make sure that this person is not trying to replace all of your other advisers (investment broker, insurance agent, etc.). Instead, direct your adviser to research all of your current advisers to be sure that they are living up to the standards that you expect.

For more information on how to protect yourself against high fees, taxes, and fraudulent financial practices, contact me at gary@assetdesigncenter.com.