In December 2002 ten investment banks settled the case for a total of 1.4 billion dollars and promised to mend their ways. ibid.
Since deregulation began the world’s biggest financial firms have been caught laundering money, defrauding customers and cooking their books again and again and again. ibid.
Using derivatives, Bankers could bet on virtually anything ... A fifty trillion unregulated market. ibid.
In the early 2000s there was a huge increase in the riskiest loans called subprimes. ibid.
The investment banks actually preferred subprime loans because they carried higher interest rates. ibid.
Lehman brothers was the top underwriter of subprime lending. ibid.
The Securities and Exchange Commission conducted no major investigations of the investment banks during the bubble. ibid.
Credit Default Swaps worked like an insurance policy ... Speculators could also buy Credit Default Swaps from AIG in order to bet against CDOs they didn’t own. ibid.
According to a Bloomberg article business entertainment represents 5% of revenue for New York derivatives traders and often includes strip clubs, prostitutes and drugs. ibid.
Goldman Sachs sold at least $3.1 trillion of these toxic CDOs in the first half of 2006. ibid.
By late 2006 Goldman had taken things a step further: it didn’t just sell toxic CDOs it started actively betting against them at the same time. ibid.
The three ratings agencies – Moody’s, S & P [Standard & Poor] & Fitch made billions of dollars giving high ratings to risky securities. ibid.
As early as 2004 the FBI was already warning of an epidemic of mortgage fraud. ibid.
The market for CDOs collapsed. ibid.
In March 2008 the investment bank Bear Stearns ran out of cash and was acquired for $2 a share by JP Morgan Chase. The deal was backed by $30 billion in emergency guarantees from the Federal Reserve. ibid.
Neither Lehman nor the federal government had done any planning for bankruptcy. ibid.
The AIG bailout cost taxpayers over $150 billion. ibid.
The men who destroyed their own companies and plunged the world into crisis walked away from the wreckage with their fortunes intact. ibid.
It has corrupted the study of economics itself. ibid.
Even after the crisis many of them opposed reform. ibid.
Mid-2010: not a senior financial executive had been criminally prosecuted or even arrested. ibid.
The financial system turned its back on society, corrupted out political system and plunged the world economy into crisis. ibid.
Are the banks looking out for the customers or themselves? Dispatches: How the Banks Never Lose, Channel 4 2008
The bankers came armed with an agenda: they wanted government money. Within days of the meeting Gordon Brown agreed to make £50,000,000,000 of taxpayers’ money available to underwrite the banks’ bad debts. ibid.
Adam Applegarth, the chief executive behind the bank’s [Northern Rock] disastrous lending strategy ... continues to be paid £63,000 a month in severance pay and can look forward to a £2,000,000 pension fund. ibid.
The big banking bonus has become so routine that sometimes it’s even given to people who made the wrong decisions. ibid.
4,000 city executives took home a bonus of more than a million pounds each. ibid.
It’s these bonus-driven gambles that helped create the credit crunch. ibid.
If the banks never lose, and are never held to account, then there’s nothing to stop this all happening again. ibid.
When you’ve got a problem with your bank there’s an organisation you can turn to. But can you trust the Financial Ombudsman service to do the right thing? Dispatches: Undercover: Who’s Policing Your Bank? Channel 4 2018
If only it was PPI: we’ve had a decade of financial scandals such as dodgy endowments and credit card protection. ibid.
Many of those decisions are based on the individual judgments of staff. ibid.
We may have bailed them out but the banks are still doing what they want. They’re still paying huge bonuses. And they’re still fighting off reform. Dispatches reveals it’s business as usual for Britain’s banks. Will Hutton, Dispatches: How the Banks Won, Channel 4 2010
The Bank of England say that the output loss now in the future will cost at least another trillion pounds. ibid.
So called quantitative easing – it [Bank of England] printed £200 billion and in effect gave it to the banks. ibid.
Derivatives ... invitations to speculate on a massive scale. ibid.
The bargain that banks pick up the profits while the taxpayer picks up the losses is grotesquely unfair. Yet big finance insists it needs special treatment. ibid.
British banks are being true to type: they’ve never leant much to business. ibid.
Banking is not the special industry it claims to be. ibid.
The assumption is that bankers are best; the danger is bankers and how they think have subtly captured the state. ibid.
British finance is a double menace: it threatens us with another financial Armageddon at the same time as it shamefully neglects British business. As our own research has shown, British banks direct money into property and derivative trading but not into British business and entrepreneurship. ibid.
This is the story of the biggest financial catastrophe in living memory. An unprecedented boom has morphed into bust. It’s the story of how a desperate government fought to prevent a banking meltdown. Will Hutton, Dispatches: Crash: How Long Will It Last? Channel 4 2008
It turned banks into branches of a gigantic global betting shop. ibid.
The bankers sold trillions of dollars of complex new financial products. But their values depended on real things like US house prices. ibid.
Summer 2007 saw the first financial earth tremors. ibid.
Northern Rock had been a dramatic example of how banks ran out of cash when the money markets froze on them. It was not heeded. ibid.
By 2008 RBS had lent more than Britain’s annual gross domestic product, but its balance sheet was a high risk mess of subprime mortgages and bad loans. ibid.
Brown’s faith in the city had betrayed him. ibid.
Brown had combined decisiveness with weakness. He’d shied away from taking a stake in all of the banks, and for the £37 billion he’d handed over, he demanded no direct control or restructuring. Even bonuses were not directly capped. ibid.
Britain’s lead was now being followed in Washington. ibid.
It came at an awesome price. Worse, the banks were now the walking dead. ibid.
Around a quarter of all bank loans are so dodgy they have had to be insured: an astonishing indictment of the banks’ lending practices. ibid.
£1.3 trillion in guarantees, loans and investments to the banks. ibid.
What bankers do with our money is of vital public interest. ibid.
Finance picks up the profits, the taxpayer picks up the risks. Ibid
It wasn’t the government that got us into this mess – if what you mean by mess is an ugly recession, an unbalanced economy, profound uncertainty over recovery, grossly indebted consumers, disadvantaged communities hit hard again and a budget deficit of £175bn. What got us into this mess above all was the 30-year rise of Big Finance before which governments unfurled the white flag. Bankers used their power to bend the rules at home and abroad, to lend ever more riskily and supported by less capital, until, finally, a vastly overextended banking system backed by very little capital collapsed. The result is today’s economic calamity.
There were many culprits in this story, but the damage stemmed from an obsession to keep government small and markets big. Thus, mergers that created banks that were too big to fail went ahead and their daffy mathematical models went unchallenged. We need to reform our financial system from top to bottom, but neither shadow chancellor George Osborne nor shadow business secretary Ken Clarke began to address this question. Their twin attack was on the state – Osborne’s because it was borrowing too much, Clarke’s because it was regulating too much. Will Hutton, The Observer online article 11th October 2009