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Bank Robbers Monday August 19, 2013

Bank Robbery

Justice is supposed to be blind. But we all know that it isn't. The justice system favors the rich and powerful, who can afford the best lawyers who know how to work the system. They have the friends with influence in high places.

Let me give you an example of this disparity. If I were to rob a bank using only a note - no weapon - I would be tracked down, arrested, prosecuted and sent to prison for several years. And yet, if a bank robs me and hundreds of thousands of other customers, do you know what happens to the people who orchestrated that thievery? Nothing. The bank, if caught, might pay a fine, and the individuals who planned and executed the scam are never prosecuted. This frustrates the hell out of me, and it must frustrate investigators as well.

The fault lies with the government prosecutors and the judicial system because, as I said, it's stacked in favor of the rich and powerful.

You don't believe me? Do you know what happened to all the Wall Street bankers who perpetrated the Asset Backed Securities problems that almost caused the collapse of the entire American financial system? I'll tell you: Nothing. Not a single prosecution and conviction.

And what about LIBOR? You know, the scandal around the manipulation of the London Interbank Offered Rate. That's the short-term floating rate at which large banks with high credit ratings lend to each other. It's been discovered that bankers conspired to artificially manipulate the rate, in order to make more money for themselves.

Under the LIBOR rules, banks are required to provide the actual interest rate they are paying to borrow from one another, and this combined rated is used to not only assess the health of the banking system, but to affect the derivatives market. All kinds of financial products such as mortgages, derivatives, and even student loans use LIBOR as a reference for interest trends. This means that the manipulation of LIBOR can have profound effects on everyone using the financial markets.

The cost of these manipulations to non-bankers is staggering, yet no one was prosecuted. Oh sure, Barclay's Bank and others paid fines, but that is like your employer paying your parking ticket. It doesn't dissuade you from parking where you shouldn't if the company, and not you, keeps picking up the tab if you're caught.

Recently it was reported that investigators are looking into manipulation in something called ISDAfix, a benchmark used in the multi trillion dollar interest rate swaps market. I don't claim to understand all of these highly sophisticated markets, but I do know this: If past experience is a guide, if fraud and corruption is found, no one will be held personally accountable. The companies will pay a fine and the perpetrators will retreat to their mansions in the countryside.

I say again. The justice system is broken in our Western nations. The world's financial systems will never be safe for you and I until people, not companies, pay for their actions. Their crimes against us. If you or I will go to jail for robbing a bank, a banker should go to jail for robbing you and me. Seems obvious, doesn't it?