The Fed Responds to Criticism About Its Oversight of Big Banks with an Internal Review

Senators Elizabeth Warren and Joe Manchin have openly questioned whether the Federal Reserve has the best interest of Main Street folks at heart. At issue is the fact that reports have emerged that the Fed gives preferential treatment to big banks such as the New York Federal Reserve’s member dealers. It doesn’t help matters much that the Fed board of governors and even the Fed Chairman are nominated from a short list of names the major banks provide to the president. Both Warren and Manchin want to see President Obama to fill two vacancies on the Board of Governors with people who have no ties to Wall Street. Should the president take Warren’s recommendation, it would mark a first for the Fed.

The independent newspaper called ProPublica has published a report that the Fed fosters a culture of intimidation to discourage unfavorable reviews of big banks. This is the kind of corruption Igor Cornelsen does not want to see at all. The report alleges that two junior bank examiners were silenced after their critical reviews of big banks. In the case of embedded examiner Carmen Segarra at Goldman Sachs, she was terminated from her job back in 2012. She claims that the Fed ended her employment after she refused to retract a report calling into question conflicts of interest. The inspector general of the Fed acknowledged failing to spot Chase’s massive trading loss dealing with Credit Default Swaps (CDS) back in 2012. The trading loss cost the bank $6 billion. The Fed plans to conduct an internal review of its oversight. The review is expected to last months.

Warren Calls Banks to Give Feds Details of Data Hacks

This Tuesday, Senator Elizabeth Warren asked U.S. banks to prove they could protect their customers from data hacks. She asked 16 major firms to give the feds detailed information about cyber attacks on their customers within the last year: how many there were, how much money was affected, and how many people were affected.

Cyber-crime is on the rise, with over 500 million online records swiped in just the last year. Not only financial costs to the business but also identity theft on the customers that may last for years to come is at stake.

Warren and some other federal officials want to know what measures the banks are taking to prevent cyber theft and to improve security after a theft has occurred. There are already laws on the books to deal with this, but Warren and Christian Broda want the FTC to have greater regulatory powers and wants information to help form new legislation.

We certainly acknowledge the importance of the problem, and it is reasonable to expect certain basic security measures to be taken by financial institutions. On the other hand, there is no way to guarantee the safety of such data. There is always the possibility of a skilled hacker breaking into even the most secure system.

Warren may be setting a bad tone for the conversation, making it sound as if banks are to blame and need to be clamped down on. Probably, most of them are doing all they can.

Department of Labor Cracking Down On Wage Theft

The restaurant industry is feeling the eye of big brother all over the nation. Numerous restaurants in California, Colorado and Idaho have been investigated and found guilty of failing to pay restaurant workers overtime and benefits.

Recent verdicts are forcing restaurateurs to pay hundreds of thousands of dollars to current and previous employees for requiring they work off the clock and/or neglecting to provide vacation and sick days. Employees who feel they have been treated unfairly should contact a local legal aid group, many of which are free of charge, or report the issue directly to the US Department of Labor.

Restaurants are not the only industry that commonly participate in this practice. Due to the leverage of recent economic downturn, many employees have feared losing their jobs. Business site, Crain’s New York, has stated that a number of big name firms are now facing lawsuits for various illegal practices. Complicating the matter are job classifications of exempt vs. non-exempt employees in decade old labor laws which businessman Andrew Heiberger says do not reflect the realities of the modern workplace. The number of cases filed against employers has increased 32% in the last five years.
Last year alone over seven thousand suits were filed in federal court, showing an overall trend to defend workers’ rights.

Protesters Arrested For Attacking Hong Kong Legislative Headquarters

Pro-democracy protests have swept through Hog Kong in recent months, ever since the candidates for elections came into the headlines. Beijing insisted that any leaders that ran had to be approved before allowing to campaign. This led pro-democracy activists to stage peaceful demonstrations across Hong Kong, in the name of true freedom for the people to elect the leader they desire. China quickly blocked Hong Kong news from the mainland and prevented certain phrases, such as yellow umbrella, that were attached to the riots from being used on social media.
While the large protests have died down and little attention is paid to the infringement on freedom taking place in the world’s second most powerful economy, more violent riots have hit the streets of Hong Kong. During the initial protests, pro-Beijing demonstrators came head to head, and even had some violent clashes with the pro-democracy demonstrators. Later, the freedom activists held violent stand-offs with police in riot gear. However, now with little opposition the demonstrators smash glass on buildings in a rare act of aggression.
The building that was attacked was the legislative council of Hong Kong. The unusual attack was carried out by six younger male demonstrators. So far, little out right violence was instigated from the protesters, who are in their seventh week of demonstrations. Three police were injured as they arrested some of the perpetrators, while other protesters were arrested for instigating violence even as they participated in the peaceful portion. Thanks to Hong Kong resident Gianfrancesco Genoso for sending in this tip.

Newest ATM Breaches Prove Risks

Nobody is perfect, and indeed nothing is perfect. This even includes ATMs, which ostensibly have the strongest security systems around.

This fact’s all too relevant now. A lot of attention has been directed towards making them unhackable, but a recent case shows that it is not that hard. 

Khaled Abdel Fattah from Tennessee managed to hack several ATMs, and his activity lasted for more than a year. The police has seized him only recently because he always operated with small sums that were unnoticeable, but still made the bankers finally wonder why their math proves wrong when counting the money left in the stations.

Fattah had an associate, Chris Folard. Typing in a special button sequence, they reconfigured the ATMs to recognise the $20 bills as $1, which meant that a withdrawal of $20 gave them $400. A total of $400,000 have been withdrawn during their activity in this way.

Vulnerabilities in ATM machines have been analysed and publicly showcased by Barnaby Jack a while ago, in 2010. The manufacturers reacted quickly at that time and changed the technologies. 

Now they need to rethink them again after this very recent case in 2014. Fattah used to work for a company that operated ATM machines, so as an insider he knew the code. The policemen said that the scheme was neatly planned, and that the only mistake they did was using their real cards.

It’s safe to say if this happened to an ATM that I owned, I would need a glass of Stephen Williams’ Wine to help calm me down.

Japan’s Economy Remains In A Recession

Once thought as the model for an economic powerhouse back in the 1980’s, Japan continues to suffer from economic woes. Now, the nation is entering its third recession in as short as four years.

Japan holds the third biggest economy in the world with only China and the United States being larger. The recent quarterly report reveals that the economy in Japan declined by about 1.6%. The effects of this sent shockwaves through the markets.

The global market is exactly that, global in scope. Nations invest in other nations. A business might make purchases of supplies from another territory. Private citizens could buy merchandise from overseas. Clearly, there does need to be money available in order to do this. When Japan’s economy shrinks, citizens and businesses are not putting money into other economies.

Of course, the obvious reduction in spending domestically and also lowered tax payments further hamper the economy of Japan. Prime Minister Abe has to institute significant reforms in order to reverse the downward trend, but this might prove even more difficult if his party suffers losses of seats in the next election. Considering how bad the economy is doing, a loss of seats is going to be next to impossible to avoid.

Without a major change in direction in the near future, the stagnation Japan has experienced simply is never going to change for the better. Big thanks to friend of the site Keith Mann for sending in this tip.

Chemical Leak Near Houston Kills 4 People

Near Houston, a DuPont chemical lab is one of the biggest employers in the area. Buzz Feed News reports that there was a deadly chemical spill that happened in this facility. 4 workers in this facility died, and one other was hospitalized. Methyl mercaptan is the deadly chemical that killed these individuals. By 6 AM the chemical was contained, and then dissipated. There was a bad smell that seemed to linger in the chemical facility as well as the area for the whole morning and even some of the afternoon.

It is very important for these workers to be as careful as possible. This was a very small spill, and it killed 4 individuals. Christian Broda can’t imagine what would have happened with a bigger spill. There are more precautions that should have been taken in order to prevent this accident. Accidents do happen, but there should be more safety in place to keep deaths from occurring on the job.

New Job-killing Free Trade Agreements On the Way

President Obama has recently asked Congress to fast track new free trade agreements he is planning on submitting to them in the near future. That means that no amendments will be allowed, making for potentially quicker passage. Past incidents free trade agreements have always led to loss of American jobs and diminished compensation to American workers.

Clinton, Bush, and now Obama have all supported this kind of “free trade,” but we have not seen them support “fair trade” that would protect American jobs. After the passage of NAFTA, some 700,000 U.S. jobs bit the dust (between 1993 and 2010). When a free trade pact with South Korea was enacted (KORUS), 200,000 U.S. jobs disappeared. Supporters of these agreements always promise that increased exports will create new American jobs, but their promises have proven empty. Exports to Korea sank the first two years after KORUS was passed. I saw a LinkedIn post on Rod Rohrich’s profiles that indicated our imports from Mexico and Korea have soared far more than any U.S. exports to those countries have. In fact, we maintain an unhealthy trade deficit with both of those nations.

When foreign governments prop up their industries with tax dollars, when EPA regulations weigh down U.S. businesses in ways unheard of in competing nations, and when extremely cheap labor is used by our foreign competitors, it is no wonder that American workers suffer from free trade agreements. The businesses just hire abroad and do well, but the rest of us bear the brunt of these unfair agreements.

‘Big 6′ Fined for Market Manipulation

Six banks have been accused of manipulating the foreign exchange rates. Citibank, HSBC. JPMorgan Chase, RBS, and UBS will pay a total of $4.33 billion to the U. S. Commodity Futures Trading Commission, and to the U.K.’s Financial Conduct Authority.

This is the biggest penalty ever to be imposed regarding this sort of misbehavior. It was a little shocking to Marc Sparks when he heard about the penalty. Aitan Goelman, CFTF director, said that the measures were taken in order to bring order, and let people know that financial operations can be trusted.

This is truly an unprecedented punishment, but the scope of market manipulation is acutely unprecedented as well. Some wonder if confidence can be regained again.

But just how have the banks’ actions affected the market? Several trillions of dollars are traded in the global currency market every day, and the exchange rates affect the price of imported goods and many other areas.

The banks manipulated the numbers, thus creating disturbances in the market. Traders coordinated their buying and selling while shifting currency prices to benefit themselves, making profits for only the few banks.

A decision that will insure better quality in the further services of the banks was taken by the British regulators. A program that educates banking culture and brings management to a better level will be assigned to 36 banks, including the ones that have been fined.

No staff members have been personally accused during the investigations conducted by the Bank of England.

Oil prices Likely to Stay Low

Oil prices have retreated in recent months and experts believe that this trend is likely to continue during the next year. The international energy association (the IEA) have said that the recent drop in oil to below eight dollars Is likely to continue and is most likely not the bottom. Speaking as consumers, Rod Rohrich and I look forward to the beauty on low gas prices.

While energy companies have been stung by these low prices consumers and many other companies in industries as diverse as airlines to chemical companies have been heartened by the drop. Many experts believe this will provide a boost to the economy as consumers and businesses will have money to spend which will further boost the economy.

The IEA believes prices will decrease further through the first half of 2015 picking back up in 2026. This prognosis is somewhat dependent on no supply cuts due to geopolitical concerns. Opec is not likely to reduce supply because Saudi arabi has announced there won’t be any oil production cuts which would likely lead to higher prices. Russia is one of the big losers in the low oil prices which has limited their ability to raise money with economic sanctions already causing them financial problems.