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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: Open letter to Australian banks 2012: "Australia's regulators should be asking how they can encourage this state of affairs to continue."

Posted by on in ROYAL COMMISSION URGENT
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AH yes we are not the only ones noticing that something is not quite right with our over-bloated banks.  An American securities manager rang me two years ago: "I have visited Australia three times recently and we could not figure out what you guys were doing to keep the loan circuit still running.  Your banks have been doing exactly the same as us....amazing."

http://www.clmr.unsw.edu.au/article/ethics/white-collar-crime%2C-aml%2C-bribery-%26-corruption/open-letter-australian-banks

An Open Letter to Australian Banks

By Ross Buckley, University of New South Wales

31 August 2012

 

This has been an extraordinary year for bank frauds.  JPMorgan Chase in London loses more than $US2 billion in six weeks placing massive, stupid bets on credit default swaps. HSBC accepts more than $15 billion in bulk cash transactions from Mexico, Russia and other high-risk countries, over three years, without conducting the checks required by anti-money-laundering laws. This prestigious bank thereby facilitates money laundering by major drug cartels and possibly by terrorist groups.

The bank has set aside $700 million in anticipation of US fines for this money laundering and a further $1.3 billion to compensate British domestic customers to whom it had wrongly sold loan insurance and interest rate hedging products. Standard Chartered Bank agrees to pay $340 million to the New York bank regulator after agreeing it undertook $250 billion of transactions in breach of US sanctions against Iran. It joins Barclays, Lloyds, Royal Bank of Scotland, Credit Suisse and ING which, since 2009, have paid $2.3 billion in fines for breaching US sanctions against Iran, Cuba, Libya and other countries.

Then we have the mother of all frauds - the Libor scandal. The London Interbank Offered Rate is the rate at which banks offer to lend to each other in the London market. Investigations are continuing, but it seems that since 2007 up to 16 major British, European and US banks were misstating their rates that go into the calculation of Libor...................But class actions, not fines, will be keeping bank chief executives awake at nights. When one falsifies a rate that is the basis of hundreds of trillions of dollars of transactions - even by only a few hundredths of a percent - the potential damages are massive.................

The law suits will be so complex and numerous that governments may have to establish a statutory claims fund, levy the banks to finance it, and limit claimants to their entitlements from the fund. Numerous highly regarded banks in London are knowingly breaking laws. What is going on? And why, as yet, have we not seen the same here? The answer to both questions lies in bank culture..................

Thirty five years ago, the local bank manager was a highly respected member of the community. He dispensed free financial advice to customers, he gave financial references, he (and it was invariably a he) was respected by the community because he was respected by his bank.

Managers had authority, within limits, to grant loans. Banks had to rely on their judgment and discretion.

This has all changed. A manager today often manages a few branches and has little real authority. This has all been centralised in head office. Employees are not hired by banks today primarily for their probity and discretion. They are hired for their ability to make money.

When the cheery teller asks whether you need any life or unemployment insurance, they ask because they are paid extra for selling you such products.

There is enough old-fashioned banking remaining in Australia for the business not to have lost its soul, as has happened in the City of London. Australia's regulators should be asking how they can encourage this state of affairs to continue, and discourage our banks from following the lead of their peers abroad.

The core business of institutions that have to be bailed out by government when they fail, should not be gambling.

 

* This opinion was published in The Canberra Times on 31 August 2012 

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