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SSSShady Bro!

Comment from thebrackpipe.com:  More douchebaggery from one of America’s biggest banks.  Now, does J.P. Morgan snatch ‘supreme douche’ status from Goldman Sachs?  You be the judge.

Article below by Dan Fitzpatrick, Scott Patterson and Gregory Zuckerman of the WSJ:

J.P. Morgan Chase & Co. brushed off internal warnings and misled regulators and investors about the scope of losses on its “London whale” trades last year, according to a scathing Senate report.

One risk gauge at the largest U.S. bank projected in February 2012 that the firm could lose $6.3 billion on the trades.  But the warning was dismissed by a key risk manager as “garbage,” according to the 301-page report by the Senate’s Permanent Subcommittee on Investigations.  The New York company’s trading losses ultimately exceeded $6 billion.

The report, the product of more than 50 interviews and a review of 90,000 documents, found that the bank ignored alarms triggered weeks and in some cases months before Chief Executive James Dimon dismissed concerns about them as a “tempest in a teapot” on an April 13, 2012, earnings conference call.  “While we have repeatedly acknowledged mistakes, our senior management acted in good faith and never had any intent to mislead anyone,” J.P. Morgan said Thursday.

The Senate effort is the first comprehensive account of an episode that has hit the company’s reputation for risk management, which once was viewed as the best on Wall Street.  J.P. Morgan’s board halved Mr. Dimon’s 2012 pay following the trading losses, even as the company posted a record profit of $21.3 billion.

In an unrelated move, on Thursday the Federal Reserve cited the company for weaknesses in its capital planning and said J.P. Morgan would have to resubmit this year a plan to expand its share buyback and raise its dividend.

Senate investigators “found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public,” said Sen. Carl Levin (D., Mich.), head of the subcommittee, in a press briefing Thursday.

The panel’s report, which includes 1,654 footnotes, details several episodes previously reported by The Wall Street Journal—including the doubts and reservations of the J.P. Morgan trader nicknamed the “London whale” and pressure exerted on him to boost valuations on the losing positions.

The report shows that traders at the bank’s Chief Investment Office were highly paid.   Former Chief Investment Officer Ina Drew was paid a combined $29 million for 2010 and 2011.  Achilles Macris, the trader in charge of the unit’s Europe operations, pulled in $31.75 million over the two years, and Bruno Iksil, nicknamed for his large trading positions, made $14.1 million.

On Friday, several J.P. Morgan officials who oversaw the trades, including Ms. Drew, will testify before the Senate panel.  While Mr. Dimon won’t testify, Mr. Levin said at the Thursday press briefing that the subcommittee might hold additional hearings.

The panel will also question officials with the Office of the Comptroller of the Currency, the bank’s front-line regulator, including its head, Thomas Curry.

Sen. John McCain (R., Ariz.), ranking member of the subcommittee, said the firm “misled investors and the American taxpayer,” calling the losses a “massive failure not only by J.P. Morgan but also by the federal government.”

An OCC spokesman said in a statement Thursday that the regulator recognizes “shortcomings” in its supervision and is taking “steps to improve our supervisory process.”

The Chief Investment Office, which manages the bank’s excess cash, was a little known profit center that pulled off winning trades through the financial crisis and into 2011.

But then a group of traders in its London office, which included Mr. Iksil, started building a complicated position in indexes that track the health of a group of companies.  That bet morphed into a hard-to-unwind position that led to losses starting in January 2012.

In mid-March 2012, Mr. Iksil called the positions “more and more monstrous” and referred to the values the company had booked them at as “idiotic,” according to recorded conversations released by the panel.  Another trader told Mr. Iksil that the outcome of the trading would be “a big fiasco” and “big drama when, in fact, everybody should have…seen it coming a long time ago.”

Later in March, Mr. Iksil became despondent as the losses mounted.  “It is over/it is hopeless now…I tell you, they are going to trash/destroy us,” he says in one message to a colleague.  Ms. Drew also became alarmed as she learned that the size of the positions was growing.  “Ina is freaking,” said one risk manager, referring to Ms. Drew.

Ms. Drew and lawyers for Messrs. Iksil and Macris couldn’t be reached for comment.

J.P. Morgan has acknowledged in its own reports on the trading fiasco that some expressed concerns about the portfolio as early as January 2012 and traders placed inaccurate values on certain positions as they debated the size of the losses in late March and early April.

But the Senate report alleges that traders began hiding these losses as early as January 2012 and the bank didn’t have a problem with how the positions were being treated.  A May 10 internal assessment from the bank’s controller concluded that the pricing decisions were “consistent with industry practices.”

J.P. Morgan has acknowledged it didn’t have the necessary limits in place to catch the mounting problems.

But the Senate panel concludes J.P. Morgan disregarded multiple warnings.  Of the five big risk measures that are tracked almost continuously at the bank, all five were breached during the first three months of 2012.  From Jan. 1 through April 30, the measures were breached more than 330 times.

In February 2012, a warning system known as the Comprehensive Risk Measure showed the portfolio could incur a yearly loss of $6.3 billion, the report said.  Peter Weiland, who at the time was a top risk executive called the $6.3 billion estimate “garbage” in an email to one trader.  But the head of the bank’s model risk group, C.S. Venkatakrishnan, defended the model and attributed the sizable figure to the additional positions taken in the portfolio.  He communicated that in an email to Ms. Drew and chief risk officer John Hogan, among others.

On April 10, when the total losses in the portfolio climbed above $1 billion for the first time due to a one day loss of $412 million, Chief Financial Officer Douglas Braunstein said to Mr. Hogan in an email: “A bit more than we thought.”

Mr. Hogan replied: “Lovely.”

The OCC told the panel that J.P. Morgan provided “material misrepresentations” about the size of the losses and denied the positions had been valued unfairly despite disputes with counterparties about prices assigned to certain positions.  Mr. Dimon was aware of the disputes, the panel’s report said.

Comment from thebrackpipe:  Are you kidding me?  Marissa Mayer built a nursery in her office so she could bring her new son to work but she denied the entire rest of the company the ability to work from home!!!  This woman is out of control!

Article below from the Daily Mail:

Yahoo CEO Marissa Mayer built a nursery in her office so she could bring her baby to work, which has angered some stay-at-home employees following her demand that all remote workers report back to the office.

The former Google Inc. executive took the demanding top job at Yahoo! when she was five months pregnant and stirred up controversy when she took only two weeks of maternity leave after giving birth last fall. 

But at her own expense, Mayer built a nursery adjacent to her office to be closer to her son.

‘I wonder what would happen if my wife brought our kids and nanny to work and set em up in the cube next door?’ the husband of one remote-working Yahoo employee asked in an interview with AllThingsD‘s Kara Swisher.

Many employees are upset because they don’t have the money or clout to build their own nurseries at work.  And many assume Mayer has a whole team of people, from nannies to cooks and cleaners, helping her raise her son – after all, she does have a $5 million penthouse atop the Four Seasons hotel in San Francisco in addition to her $5.2 million 5-bedroom home in Palo Alto. 

But Mayer has demanded that all remote employees report to office facilities by June 1.

‘Speed and quality are often sacrificed when we work from home,’ read the memo to employees announcing the change. ‘We need to be one Yahoo!, and that starts with physically being together.’

The move will only impact a small percentage of the company’s workforce, primarily customer service representatives or staffers who work in cities where Yahoo does not have an office.

The order is described as harsh since it requires employees to ‘either comply without exception or presumably quit.’

‘Many such staffers who wrote me today are angry, because they felt they were initially hired with the assumption that they could work more flexibly.  Not so, as it turns out,’ Swisher wrote in a blog posting about the change expected to impact several hundred workers.

Yahoo! declined to comment for this story, saying it won’t discuss personnel matters.

One Yahoo! employee said she worries that Mayer’s actions could set a damaging standard for working mothers across all industries.

‘When a working mother is standing behind this, you know we are a long way from a culture that will honor the thankless sacrifices that women too often make,’ a Yahoo! staffer told Swisher.

Some former Yahoo! employees agree with Mayer’s new policy, however, arguing that some stay-at-home workers were trying to ‘milk’ the system.

‘I agree with what she did,’ a former online editor at Yahoo! told Huffington Post on the condition of anonymity.  ‘Many workers were milking the company… There was a ton of flexibility, and I remember several times going to ask my manager a question — and he was nowhere to be found.’

Another former Yahoo! employee recalled a similar situation at the Internet company in an interview with Business Insider.

‘For what it’s worth, I support the “no working from home” rule,’ a former online engineer told the news site.  ‘There’s a ton of abuse of that at Yahoo…  people slacking off like crazy, not being available, spending a lot of time on non-Yahoo projects.’

The company headquarters is located in Sunnyvale, California, near San Jose.  The public corporation employs 11,500 people in more than 20 countries across the globe.

The 37-year-old Silicon Valley whiz kid was appointed the head of Yahoo in July 2012.

She was brought to the internet giant to re-energize the tech company founded by Jerry Yang and David Filo in 1995.

Though Yahoo!, which stands for Yet Another Hierarchical Officious Oracle, is one of the most visited websites on the Internet, it had started to lose its way as a company before she was brought on the team.

The upbeat blonde was seen as a breath of fresh air and morale booster.

She instituted free lunches at the company headquarters and started giving out smartphones to employees.

‘I want Yahoo to be the absolute best place to work, to have a fantastic culture.  We’re working really hard right now to remind people about all the opportunities that are there,’ she said shortly after she was hired at a Fortune magazine event in November.

With all the hype over her hiring, it came as a bit of a shock when she revealed that she was pregnant the day she was appointed head of Yahoo.

Much in the vein of Facebook COO Sheryl Sandberg, Mayer has unabashedly said that her job is not her number one priority in life.

She boldly revealed that her most significant concerns were ‘God, family, and Yahoo! – in that order.’

Given that she has stated she personally prioritizes her faith and family before her job, some see it as hypocritical that she has pulled the plug on flexible working arrangements which provides work-life balance for many.

Tech companies are noted for offering creative work arrangements and were pioneers in offering the option for staff to check in remotely.

Richard Branson, head of Virgin Group, said the move by Yahoo! undermined the trust that staff would get their work done wherever, without supervision, as working is no longer 9-5.

‘This seems a backwards step in an age when remote working is easier and more effective than ever,’ Branson wrote in a blog on the Virgin website.

‘If you provide the right technology to keep in touch, maintain regular communication and get the right balance between remote and office working, people will be motivated to work responsibly, quickly and with high quality.’

Britain’s BT Group, one of the first UK companies to adopt teleworking, said about 69,000 of its 89,000 staff were equipped to work flexibly of which about 9,400 are home workers.

The company said this led to benefits like accommodation savings, increased productivity and reduced sick absence, adding 99 per cent of women returned to BT after maternity leave.

‘Our flexible working policies can also achieve a better balance between work and family commitments, which can be especially important for those with young families or caring responsibilities,’ a BT spokesman said.

Now some wonder if Yahoo! has learned a lesson and that the work from home option was too good to be true.

It remains to be seen if other tech firms will similarly yank the flexible work arrangement, which may leave many employees in the lurch who have grown accustomed to that lifestyle.

Read more: http://www.dailymail.co.uk/news/article-2284828/Yahoo-boss-Marissa-Mayer-angers-employees-building-nursery-baby-office.html#ixzz2N42gNbwW
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Article below by Matt Taibbi:

The deal was announced quietly, just before the holidays, almost like the government was hoping people were too busy hanging stockings by the fireplace to notice.  Flooring politicians, lawyers and investigators all over the world, the U.S. Justice Department granted a total walk to executives of the British-based bank HSBC for the largest drug-and-terrorism money-laundering case ever.  Yes, they issued a fine – $1.9 billion, or about five weeks’ profitbut they didn’t extract so much as one dollar or one day in jail from any individual, despite a decade of stupefying abuses.

People may have outrage fatigue about Wall Street, and more stories about billionaire greedheads getting away with more stealing often cease to amaze.  But the HSBC case went miles beyond the usual paper-pushing, keypad-punching­ sort-of crime, committed by geeks in ties, normally associated­ with Wall Street.  In this case, the bank literally got away with murder – well, aiding and abetting it, anyway.

For at least half a decade, the storied British colonial banking power helped to wash hundreds of millions of dollars for drug mobs, including Mexico’s Sinaloa drug cartel, suspected in tens of thousands of murders just in the past 10 years – people so totally evil, jokes former New York Attorney General Eliot Spitzer, that “they make the guys on Wall Street look good.”  The bank also moved money for organizations linked to Al Qaeda and Hezbollah, and for Russian gangsters; helped countries like Iran, the Sudan and North Korea evade sanctions; and, in between helping murderers and terrorists and rogue states, aided countless common tax cheats in hiding their cash.

“They violated every goddamn law in the book,” says Jack Blum, an attorney and former Senate investigator who headed a major bribery investigation against Lockheed in the 1970s that led to the passage of the Foreign Corrupt Practices Act.  “They took every imaginable form of illegal and illicit business.”

That nobody from the bank went to jail or paid a dollar in individual fines is nothing new in this era of financial crisis.  What is different about this settlement is that the Justice Department, for the first time, admitted why it decided to go soft on this particular kind of criminal.  It was worried that anything more than a wrist slap for HSBC might undermine the world economy.  “Had the U.S. authorities decided to press criminal charges,” said Assistant Attorney General Lanny Breuer at a press conference to announce the settlement, “HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized.”

It was the dawn of a new era. In the years just after 9/11, even being breathed on by a suspected terrorist could land you in extralegal detention for the rest of your life.  But now, when you’re Too Big to Jail, you can cop to laundering terrorist cash and violating the Trading With the Enemy Act, and not only will you not be prosecuted for it, but the government will go out of its way to make sure you won’t lose your license.  Some on the Hill put it to me this way:  OK, fine, no jail time, but they can’t even pull their charter?  Are you kidding?

But the Justice Department wasn’t finished handing out Christmas goodies.  A little over a week later, Breuer was back in front of the press, giving a cushy deal to another huge international firm, the Swiss bank UBS, which had just admitted to a key role in perhaps the biggest antitrust/price-fixing case in history, the so-called LIBOR scandal, a massive interest-rate­rigging conspiracy involving hundreds of trillions (“trillions,” with a “t”) of dollars in financial products.  While two minor players did face charges, Breuer and the Justice Department worried aloud about global stability as they explained why no criminal charges were being filed against the parent company.

“Our goal here,” Breuer said, “is not to destroy a major financial institution.”

A reporter at the UBS presser pointed out to Breuer that UBS had already been busted in 2009 in a major tax-evasion case, and asked a sensible question.  “This is a bank that has broken the law before,” the reporter said. “So why not be tougher?”

“I don’t know what tougher means,” answered the assistant attorney general.

Also known as the Hong Kong and Shanghai Banking Corporation, HSBC has always been associated with drugs.  Founded in 1865, HSBC became the major commercial bank in colonial China after the conclusion of the Second Opium War.  If you’re rusty in your history of Britain’s various wars of Imperial Rape, the Second Opium War was the one where Britain and other European powers basically slaughtered lots of Chinese people until they agreed to legalize the dope trade (much like they had done in the First Opium War, which ended in 1842).

A century and a half later, it appears not much has changed.  With its strong on-the-ground presence in many of the various ex-colonial territories in Asia and Africa, and its rich history of cross-cultural moral flexibility, HSBC has a very different international footprint than other Too Big to Fail banks like Wells Fargo or Bank of America.  While the American banking behemoths mainly gorged themselves on the toxic residential-mortgage trade that caused the 2008 financial bubble, HSBC took a slightly different path, turning itself into the destination bank for domestic and international scoundrels of every possible persuasion.

Three-time losers doing life in California prisons for street felonies might be surprised to learn that the no-jail settlement Lanny Breuer worked out for HSBC was already the bank’s third strike.  In fact, as a mortifying 334-page report issued by the Senate Permanent Subcommittee on Investigations last summer made plain, HSBC ignored a truly awesome quantity of official warnings.

In April 2003, with 9/11 still fresh in the minds of American regulators, the Federal Reserve sent HSBC’s American subsidiary a cease-and-desist­ letter, ordering it to clean up its act and make a better effort to keep criminals and terrorists from opening accounts at its bank.  One of the bank’s bigger customers, for instance, was Saudi Arabia’s Al Rajhi bank, which had been linked by the CIA and other government agencies to terrorism.  According to a document cited in a Senate report, one of the bank’s founders, Sulaiman bin Abdul Aziz Al Rajhi, was among 20 early financiers of Al Qaeda, a member of what Osama bin Laden himself apparently called the “Golden Chain.”  In 2003, the CIA wrote a confidential report about the bank, describing Al Rajhi as a “conduit for extremist finance.”  In the report, details of which leaked to the public by 2007, the agency noted that Sulaiman Al Rajhi consciously worked to help Islamic “charities” hide their true nature, ordering the bank’s board to “explore financial instruments that would allow the bank’s charitable contributions to avoid official Saudi scrutiny.” (The bank has denied any role in financing extremists.)

In January 2005, while under the cloud of its first double-secret­-probation agreement with the U.S., HSBC decided to partially sever ties with Al Rajhi.  Note the word “partially”: The decision­ would only apply to Al Rajhi banking and not to its related trading company, a distinction that tickled executives inside the bank.  In March 2005, Alan Ketley, a compliance officer for HSBC’s American subsidiary, HBUS, gleefully told Paul Plesser, head of his bank’s Global Foreign Exchange Department, that it was cool to do business with Al Rajhi Trading.  “Looks like you’re fine to continue dealing with Al Rajhi,” he wrote.  “You’d better be making lots of money!”

But this backdoor arrangement with bin Laden’s suspected “Golden Chain” banker wasn’t direct enough – many HSBC executives wanted the whole shebang restored.  In a remarkable e-mail sent in May 2005, Christopher Lok, HSBC’s head of global bank notes, asked a colleague if they could maybe go back to fully doing business with Al Rajhi as soon as one of America’s primary banking regulators, the Office of the Comptroller of the Currency, lifted the 2003 cease-and-desist order: “After the OCC closeout and that chapter is hopefully finished, could we revisit Al Rajhi again?  London compliance has taken a more lenient view.”

After being slapped with the order in 2003, HSBC began blowing off its requirements both in letter and in spirit – and on a mass scale, too. Instead of punishing the bank, though, the government’s response was to send it more angry letters.  Typically, those came in the form of so-called “MRA” (Matters Requiring Attention) letters sent by the OCC. Most of these touched upon the same theme, i.e., HSBC failing to do due diligence on the shady characters who might be depositing money in its accounts or using its branches to wire money.  HSBC racked up these “You’re Still Screwing Up and We Know It” orders by the dozen, and in just one brief stretch between 2005 and 2006, it received 30 different formal warnings.

Nonetheless, in February 2006 the OCC under George Bush suddenly decided to release HSBC from the 2003 cease-and-desist­ order.  In other words, HSBC basically violated its parole 30 times in just more than a year and got off anyway.  The bank was, to use the street term, “off paper” – and free to let the Al Rajhis of the world come rushing back.

After HSBC fully restored its relationship with the apparently terrorist-friendly Al Rajhi Bank in Saudi Arabia, it supplied the bank with nearly 1 billion U.S. dollars.  When asked by HSBC what it needed all its American cash for, Al Rajhi explained that people in Saudi Arabia need dollars for all sorts of reasons.  “During summer time,” the bank wrote, “we have a high demand from tourists traveling for their vacations.”

The Treasury Department keeps a list compiled by the Office of Foreign Assets Control, or OFAC, and American banks are not supposed to do business with anyone on the OFAC list.  But the bank knowingly helped banned individuals elude the sanctions process.  One such individual was the powerful Syrian businessman Rami Makhlouf, a close confidant of the Assad family.  When Makhlouf appeared on the OFAC list in 2008, HSBC responded not by severing ties with him but by trying to figure out what to do about the accounts the Syrian power broker had in its Geneva and Cayman Islands branches.  “We have determined that accounts held in the Caymans are not in the jurisdiction of, and are not housed on any systems in, the United States,” wrote one compliance officer.  “Therefore, we will not be reporting this match to OFAC.”

Translation: We know the guy’s on a terrorist list, but his accounts are in a place the Americans can’t search, so screw them.

Remember, this was in 2008 – five years after HSBC had first been caught doing this sort of thing. And even four years after that, when being grilled by Michigan Sen. Carl Levin in July 2012, an HSBC executive refused to absolutely say that the bank would inform the government if Makhlouf or another OFAC-listed name popped up in its system – saying only that it would “do everything we can.”

The Senate exchange highlighted an extremely frustrating dynamic government investigators have had to face with Too Big to Jail megabanks: The same thing that makes them so attractive to shady customers – their ability to instantaneously move money around the world to places like the Cayman Islands and Switzerland – makes it easy for them to play dumb with regulators by hiding behind secrecy laws.

When it wasn’t banking for shady Third World characters, HSBC was training its mental firepower on the problem of finding creative ways to allow it to do business with countries under U.S. sanction, particularly Iran.  In one memo from HSBC’s Middle East subsidiary, HBME, the bank notes that it could make a lot of money with Iran, provided it dealt with what it termed “difficulties” – you know, those pesky laws.

“It is anticipated that Iran will become a source of increasing income for the group going forward,” the memo says, “and if we are to achieve this goal we must adopt a positive stance when encountering difficulties.”

The “positive stance” included a technique called “stripping,” in which foreign subsidiaries like HSBC Middle East or HSBC Europe would remove references to Iran in wire transactions to and from the United States, often putting themselves in place of the actual client name to avoid triggering OFAC alerts. (In other words, the transaction would have HBME listed on one end, instead of an Iranian client.)

For more than half a decade, a whopping $19 billion in transactions involving Iran went through the American financial system, with the Iranian connection kept hidden in 75 to 90 percent of those transactions.  HSBC has been headquartered in England for more than two decades – it’s Europe’s largest bank, in fact – but it has major subsidiary operations in every corner of the world. What’s come out in this investigation is that the chiefs in the parent company often knew about shady transactions when the regional subsidiary did not. In the case of banned Iranian transactions, for instance, there are multiple e-mails from HSBC’s compliance head, David Bagley, in which he admits that HSBC’s American subsidiary probably has no clue that HSBC Europe has been sending it buttloads of banned Iranian money.

“I am not sure that HBUS are aware of the fact that HBEU are already providing clearing facilities for four Iranian banks,” he wrote in 2003.  The following year, he made the same observation. “I suspect that HBUS are not aware that [Iranian] payments may be passing through them,” he wrote.

What’s the upside for a bank like HSBC to do business with banned individuals, crooks and so on? The answer is simple: “If you have clients who are interested in ‘specialty services’­ – that’s the euphemism for the bad stuff – you can charge ’em whatever you want,” says former Senate investigator Blum.  “The margin on laundered money for years has been roughly 20 percent.”

Those charges might come in many forms, from upfront fees to promises to keep deposits at the bank for certain lengths of time.  However you structure it, the possibilities for profit are enormous, provided you’re willing to accept money from almost anywhere.  HSBC, its roots in the raw battlefield capitalism of the old British colonies and its strong presence in Asia, Africa and the Middle East, had more access to customers needing “specialty services” than perhaps any other bank.

And it worked hard to satisfy those customers.  In perhaps the pinnacle innovation in the history of sleazy banking practices, HSBC ran a preposterous offshore operation in Mexico that allowed anyone to walk into any HSBC Mexico branch and open a U.S.-dollar account (HSBC Mexico accounts had to be in pesos) via a so-called “Cayman Islands branch” of HSBC Mexico.  The evidence suggests customers barely had to submit a real name and address, much less explain the legitimate origins of their deposits.

If you can imagine a drive-thru heart-transplant clinic or an airline that keeps a fully-stocked minibar in the cockpit of every airplane, you’re in the ballpark of grasping the regulatory absurdity of HSBC Mexico’s “Cayman Islands branch.”  The whole thing was a pure shell company, run by Mexicans in Mexican bank branches.

At one point, this figment of the bank’s corporate imagination had 50,000 clients, holding a total of $2.1 billion in assets.  In 2002, an internal audit found that 41 percent of reviewed accounts had incomplete client information.  Six years later, an e-mail from a high-ranking HSBC employee noted that 15 percent of customers didn’t even have a file.  “How do you locate clients when you have no file?” complained the executive.

It wasn’t until it was discovered that these accounts were being used to pay a U.S. company allegedly supplying aircraft to Mexican drug dealers that HSBC took action, and even then it closed only some of the “Cayman Islands branch” accounts.  As late as 2012, when HSBC executives were being dragged before the U.S. Senate, the bank still had 20,000 such accounts worth some $670 million – and under oath would only say that the bank was “in the process” of closing them.

Meanwhile, throughout all of this time, U.S. regulators kept examining HSBC.  In an absurdist pattern that would continue through the 2000s, OCC examiners would conduct annual reviews, find the same disturbing shit they’d found for years, and then write about the bank’s problems as though they were being discovered for the first time.  From the 2006 annual OCC review: “During the year, we identified a number of areas lacking consistent, vigilant adherence to BSA/AML policies. . . . Management responded positively and initiated steps to correct weaknesses and improve conformance with bank policy. We will validate corrective action in the next examination cycle.”

Translation: These guys are assholes, but they admit it, so it’s cool and we won’t do anything.

A year later, on July 24th, 2007, OCC had this to say: “During the past year, examiners identified a number of common themes, in that businesses lacked consistent, vigilant adherence to BSA/AML policies.  Bank policies are acceptable. . . . Management continues to respond positively and initiated steps to improve conformance with bank policy.”

Translation: They’re still assholes, but we’ve alerted them to the problem and everything’ll be cool.

By then, HSBC’s lax money-laundering controls had infected virtually the entire company.  Russians identifying themselves as used-car salesmen were at one point depositing $500,000 a day into HSBC, mainly through a bent traveler’s-checks operation in Japan.  The company’s special banking program for foreign embassies was so completely fucked that it had suspicious-activity­ alerts backed up by the thousands.  There is also strong evidence that the bank was allowing clients in Sudan, Cuba, Burma and North Korea to evade sanctions.

When one of the company’s compliance chiefs, Carolyn Wind, raised concerns that she didn’t have enough staff to monitor suspicious activities at a board meeting in 2007, she was fired.  The sheer balls it took for the bank to ignore its compliance executives and continue taking money from so many different shady sources­ while ostensibly it had regulators swarming­ all over its every move is incredible.  “You can’t make up more egregious money-laundering that permeated an entire institution,” says Spitzer.

By the late 2000s, other law enforcement agencies were beginning to catch HSBC’s scent.  The Department of Homeland Security started investigating HSBC for laundering drug money, while the attorney general’s office in West Virginia snooped around HSBC’s involvement in a Medicare-fraud case.  A federal intra-agency meeting was convened in Washington in September 2009, at which it was determined that HSBC was out of control and needed to be investigated more closely.

The bank itself was then notified that its usual OCC review was being “expanded.”  More OCC staff was assigned to pore through HSBC’s books, and, among other things, they found a backlog of 17,000 alerts of suspicious activity that had not been processed.  They also noted that the bank had a similar pileup of subpoenas in money-laundering cases.

Finally it seemed the government was on the verge of becoming genuinely pissed off.  In March 2010, after seeing countless ultimatums ignored, they issued one more, giving HSBC three months to clear that goddamned 17,000-alert backlog or else there would be serious consequences. HSBC met that deadline, but months later the OCC again found the bank’s money-laundering controls seriously wanting, forcing the government to take, well . . . drastic action, right?

Sort of! In October 2010, the OCC took a deep breath, strapped on its big-boy pants and . . . issued a second cease-and-desist order!

In other words, it was “Don’t Do It Again” – again. The punishment for all of that dastardly defiance was to bring the regulatory process right back to the same kind of double-secret-probation­ order they’d tried in 2003.

Not to say that HSBC didn’t make changes after the second Don’t Do It Again order. It did – it hired some people…

Read the rest of the article at – http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214#ixzz2MMBGVL1E 

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Comment from the brackpipe.com:  “The rigging [of the LIBOR rate] continued even after traders learned that Libor submissions were being probed.”  And RBS gets to keep its banking license?  

From the Globe and Mail:

Britain’s Royal Bank of Scotland will pay U.S. and British authorities $615-million (U.S.) and plead guilty to wire fraud in Japan to settle allegations it manipulated global benchmark interest rates.

“The RBS board acknowledges that there were serious shortcomings in our systems and controls and also in the integrity of a small group of our employees,” chairman Philip Hampton said on Wednesday.

“This is a sad day for RBS, but also an important one in continuing to put right the mistakes of the past.”

More than a dozen traders at RBS offices in London, Singapore and Tokyo manipulated the London interbank offered rate (Libor), which is used to price trillions of dollars worth of loans, from at least 2006 until 2010.

The rigging continued even after traders learned that Libor submissions were being probed.

In a bid to avoid a political firestorm, the part state-owned bank will cut into its staff bonuses to pay the fines, the second-largest so far in an international investigation that has already implicated Switzerland’s UBS and Britain’s Barclays.

Some £87.5-million ($137.1-million U.S.) will be paid to Britain’s Financial Services Authority, $150-million to the U.S. Department of Justice and $325-million to the U.S. Commodity Futures Trading Commission.

Like UBS, RBS did not have to admit criminal liability in the United States, meaning it can retain its banking licence there and avoid a fire sale of its U.S. business Citizens.

The bank said John Hourican, head of RBS’s investment bank, had agreed to leave following the misconduct of staff in that business. Hourican had no involvement in or knowledge of the misconduct, RBS said.

Critics say the scandal over manipulation of Libor shows banks’ riskier activities should be separated from basic lending functions.

UBS agreed in December to pay fines of $1.5-billion to regulators in the United States, Britain and Switzerland over Libor rigging. Its unit in Japan, where much of the wrongdoing occurred, pleaded guilty to criminal fraud. U.S. prosecutors also filed criminal conspiracy charges against two former UBS traders allegedly at the heart of the scheme.

Barclays got a non-prosecution agreement and paid $453-million in penalties. Barclays’ three most senior executives, including then chief executive Bob Diamond, were also forced to leave the bank in the wake of the Libor debacle.

Article by Victor David Hansen, senior fellow at the Hoover Institute

“Limousine liberal” is an old American term used against those who inherited lots of money and then became “traitors to their class” by embracing populist politics.

The Roosevelts and Kennedys enjoyed the high life quite apart from the multitude that they championed. And they were exempt, by virtue of their inherited riches and armies of accountants and attorneys, from the higher taxes they advocated for others. Few worried about how their original fortunes were made long ago, or that as lifelong government officials they had their needs met by the state. Most were relieved instead that as very rich people they wanted less rich people to pay their fair share to help the poor.

But the new liberal aristocracy is far less discreet than the old. Most are self-made multimillionaires who acquired their money through government service, finance, law, investment, or marriage. If the old-money liberals lived it up tastefully within their walled family compounds, the new liberal aristocrats are unashamed about living openly in a manner quite at odds with their professed populist ideology.

Take former vice president Al Gore. He has made a fortune of nearly a billion dollars warning against global warming — supposedly shrinking glaciers, declining polar-bear populations, and the like — while simultaneously offering timely remedies from his own green corporations, all reminiscent of the methodology of Roman millionaire Marcus Licinius Crassus, who profited from fires and putting them out. Now Nobel laureate Gore has sold his interest in a failing cable-television station for about $100 million — and to the anti-American Al-Jazeera, which is owned by the fossil-fuel-rich royal family of Qatar. Gore rushed to close the deal before the first of the year to avoid the very capital-gains tax hikes that he has advocated for others less well off. That’s a liberal trifecta: enhancing a fossil-fuel consortium, attempting to beat tax hikes, and empowering an anti-American and anti-Semitic media conglomerate run by an authoritarian despot — all from a former vice president of the United States who crusades for ending our reliance on fossil fuels and for raising taxes on the wealthy.

Class warrior Barack Obama spent his winter break in a ritzy rental on a Hawaiian beach. It cost the taxpayers $7 (or is it $20?) million to jet him and his entourage 6,000 miles for their tropical vacation. But whether the first family escapes to Hawaii or Martha’s Vineyard or Costa del Sol, the image of a 1 percent lifestyle seems a bit at odds with the president’s professed disdain for “millionaires and billionaires,” “fat cats,” and “corporate-jet owners” who supposedly can afford such tony retreats only because they have done something suspect. The media used to ridicule grandees like Ronald Reagan and George W. Bush for wearing cowboy hats and wasting precious presidential time chopping wood or chain-sawing dry underbrush on their respective overgrown ranches. But for liberal class warriors, golfing and body surfing in the tropical Pacific while staying at a zillionaire’s estate become needed downtime to prepare for the looming battle against 1 percenters. One wonders about the conversation between the Obamas and their landlord. “We will stay here, but only on the condition that you remember that you didn’t build it”?

Multibillionaire Warren Buffett is a tireless advocate of hiking inheritance taxes on small businesses and farms. But he has pledged much of his wealth to the Gates Foundation, a ploy that will cost the federal Treasury billions of dollars in lost revenue. Meanwhile, if inheritance taxes go up, millions of terrified Americans will double up on their life-insurance policies — an industry central to the multibillion-dollar Buffett empire. It never seems to occur to the liberal-minded Buffett that there is something tawdry about advocating a policy that he not only seeks mostly to avoid, but will even profit from.

So tax avoidance is another characteristic of the new aristocracy — ask Jeffrey Immelt, the General Electric CEO and Obama point man on jobs and growth, who endorses the Obama agenda even as he managed to skip taxes altogether on his company’s 2010 profits. What should Immelt say? “Taxes are for the little people whom we try to help”?

Senator John Kerry, who will soon become secretary of state, is a tireless advocate of higher taxes while enjoying his multimillionaire wife’s multiple estates. In 2010, Massachusetts resident Kerry docked his new $7 million yacht in nearby Rhode Island in order to avoid paying about $500,000 in taxes to his home state. Should not Kerry have welcomed the chance to chip in half a million to an insolvent treasury, given his advocacy for higher taxes? Could Kerry not have purchased a smaller yacht for $4 million in order to budget for the necessary taxes? Gore, Obama, and Kerry, after all, tirelessly boast that the taxes they advocate would fall mostly on people like themselves — omitting the fact that, as we see from Kerry’s boat deal, Gore’s TV deal, and Obama’s adjacent-lot deal with Tony Rezko, politicians not only mostly live on the public dole without the expenses that the rest of us incur, but also have miraculous ways of avoiding the sort of taxes they harangue others about.

During the 2008 financial meltdown, Goldman Sachs was a recipient of federal cash bailouts. Recently its CEO, Lloyd Blankfein, wrote an op-ed in which he said, “I believe that tax increases, especially for the wealthiest, are appropriate.” Why, then, would Goldman Sachs rush to pay out $65 million in restricted stock bonuses to its own corporate elite in time to beat the new higher tax rates that began on January 1, 2013? Isn’t that inappropriate? What would have happened had Blankfein timed his op-ed for publication in early 2013 rather than November 2012, and also added “– and that’s why I am not rushing Goldman Sachs stock payouts just to lessen the tax burden on our wealthiest at a time of national insolvency.”

Secretary of the Treasury Timothy Geithner, who nominally oversees the IRS, did not just not pay his own taxes while advocating higher taxes on others, but found incredible ways not to pay what was due — avoiding payroll taxes, improperly deducting his children’s camp costs, and taking improper charitable deductions, improper retirement-plan withdrawals, improper small-business deductions, and so on. The question in Geithner’s case was not whether he had avoided taxes, but whether there was any category of taxes that he had not avoided. Perhaps the creativity by which Geithner avoided his own taxes was seen as an asset in finding new ways to catch other tax-avoiders.

What explains the hypocrisy of the new liberal aristocracy?

The medieval concept of offsetting your sins through public penance is back in play: The more loudly you talk about helping the proverbial people, the more you are allowed to live quite apart from them without guilt. Do not expect a garbage collector, in the fashion of the anti–Mitt Romney ad, to make a video complaining that the Obamas never ventured outside their coastal compound to compliment him on his work or just to chitchat. Al Gore’s lamentations for the polar bear allows him to try to finagle a $9 million tax savings. The money for Media Matters apparently offsets the fact that the speculations of a conniving George Soros once almost bankrupted the British small depositor and earned him an insider-trading conviction in France. Each speech blasting the uncaring Bush tax cuts translates into a hundred thousand less in taxes to be paid on your yacht.

To be cool is now not just to be rich, but to appear caring. Hollywood still seeks hundreds of millions in tax breaks unavailable to small businesses without shame because it is so manifestly compassionate. Occupy Wall Street does not camp out in Beverly Hills or Malibu, although the likes of Johnny Depp and Leonardo DiCaprio make more per year than do most Wall Street fat cats. The public wonders why Hollywood is so liberal — is it the Bohemian culture surrounding the arts? The natural creative temperament of actors? The Lotus-land surf and sun of the southern-California beach milieu? Perhaps. But penance plays a role as well. For the overpaid and pampered Hollywood movie star, calling for raising taxes, banning guns, ending global warming, and legalizing gay marriage means never having to feel too bad about living on the beach and making, under our capitalist system, more money in a month than do many Americans in a lifetime.

The growing size and clout of government, and its intrusion into globalized finance, also play a role. Former Obama OMB director and liberal Peter Orszag went on to a multimillion-dollar gig at Citigroup. He now writes warnings about the uncontrollable debt that he helped accumulate; would that he would sermonize about the incestuous revolving door that Obama pledged to end. Did he learn anything from Franklin Raines, James Johnson, and Jamie Gorelick, who occupied top spots at Fannie Mae in the Carter and Clinton administrations and who all walked away with millions while the federal mortgage-insurance corporation went insolvent? The problem is not just that none of the three did anything to ensure Fannie Mae’s viability, or at least to justify the millions that they took out, but also that none of them had a reputable record of banking expertise to justify their being hired in the first place. In short, there is just too much big money — and temptation — for even the most liberal class warrior not to cash in on his ample government contacts and influence.

All these paradoxes pose existential questions: Are the elite architects of high taxes and big government the self-interested and conniving who found the path to the good life through cynically embracing such ideas (ask Franklin Raines or Al Gore), or were they so rich to begin with as to be unaffected by the ramifications of their ideology — or both?

Comment from thebrackpipe.com:  Well, well, well… let’s have a look at who is involved here – ‘Bank of America will pay the most to borrowers as part of the deal — nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase roughly $4.2 billion. Citigroup will pay about $1.8 billion and Ally Financial will pay $200 million. Those totals do not include $5.5 billion that the banks will reimburse federal and state governments for money spent on improper foreclosures.’

Article from the Associated Press:

WASHINGTON (AP) — U.S. states reached a landmark $25 billion deal Thursday with the nation’s biggest mortgage lenders overforeclosure abuses that occurred after the housing bubble burst.

The deal requires five of the largest banks to reduce loans for about 1 million households at risk of foreclosure. The lenders will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

It’s the biggest settlement involving a single industry since a 1998 multistate tobacco deal.

Federal and state officials announced at a news conference that 49 states had joined the settlement. Oklahoma announced a separate deal with the five banks.

The settlement ends a painful chapter that emerged from the financial crisis, when home values sank and millions edged toward foreclosure. Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures — an action known as robo-signing.

Under the deal, the states said they won’t pursue civil charges related to these types of abuses. Homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges.

“There were many small wrongs that were done here,” said U.S. Housing and Urban Development Secretary Shaun Donovan. “This does not resolve everything. We will be aggressive about going after claims elsewhere.”

Reducing loan principal will help some homeowners who are current on their payments but are “underwater,” meaning they owe more than their homes are worth.

But consumer advocates and housing activists said the deal is flawed because it covers only a fraction of at-risk homeowners. Critics note that the settlement will apply only to privately held mortgages issued from 2008 through 2011.

Banks own about half of all U.S. mortgages — roughly 30 million loans. Those owned by mortgage giants Fannie Mae and Freddie Mac are not covered by the deal.

“The deal announced today is too small,” said Pico National Network, a faith-based group that is active on housing issues. “It falls far short of providing real justice for homeowners and American families.”

Economists also cited the size of the deal: Some said it was hardly enough to have much impact on the troubled housing market.

The settlement will be overseen by Joseph A. Smith Jr., North Carolina’s banking commissioner. Lenders that violate the deal could face $1 million penalties per violation and up to $5 million for repeat violators.

About $10 billion of the settlement total will be used to reduce mortgage payments for underwater homeowners. Paul Diggle, an economist at Capital Economics, said that’s a “drop in the ocean,” considering that 11 million borrowers are underwater “to the tune of $700 billion.”

Mark Vitner, a senior economist at Wells Fargo Securities, said the settlement helps the housing market in the long run because it allows banks to proceed with millions of foreclosures that have been stalled. Many lenders have refrained from foreclosing on homes as they awaited the settlement.

“We’ve got a lot of issues to work our way through in the housing market,” Vitner said. “What thissettlement does is allow that process to get started.”

Bank of America will pay the most to borrowers as part of the deal — nearly $8.6 billion. Wells Fargo will pay about $4.3 billion, JPMorgan Chase roughly $4.2 billion. Citigroup will pay about $1.8 billion and Ally Financial will pay $200 million. Those totals do not include $5.5 billion that the banks will reimburse federal and state governments for money spent on improper foreclosures.

The deal also ends a separate investigation into Bank of America and Countrywide for inflating appraisals of loans from 2003 through most of 2009. Bank of America acquired Countrywide in 2008.

“The settlement includes far reaching relief that will help many of our customers and complement our already extensive efforts to improve our borrower assistance efforts and servicing processes,” JPMorgan Chase said in a statement.

Under the deal, banks must make foreclosure their last resort. They are also barred from foreclosing on a homeowner who is being considered for a loan modification.

The banks and U.S. state attorneys general agreed to the deal late Wednesday after 16 months of contentious negotiations.

New York and California came on board late Wednesday. California has more than 2 million “underwater” borrowers, whose homes are worth less than their mortgages. New York has some 118,000 homeowners who are underwater.

In addition to the payments and mortgage reductions, the deal promises to reshape long-standing mortgage lending guidelines. It will make it easier for those at risk of foreclosure to make their payments and keep their homes.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement.

Some critics say the proposed deal doesn’t go far enough. They have argued for a thorough investigation of potentially illegal foreclosure practices before a settlement is hammered out.

Under the deal:

— Roughly $1.5 billion for direct payouts, in the form of $2,000 checks, for about 750,000 Americans who were unfairly or improperly foreclosed upon; another $3.5 billion will go directly to states.

— At least $10 billion for reducing mortgage amounts.

— Up to $7 billion for other state homeowner programs.

— At least $3 billion for refinancing loans for homeowners who are current on their mortgage payments but who are underwater.

The deal is subject to final approval by a federal judge.

___

Associated Press Writers Michael Virtanen in Albany, N.Y., Pallavi Gogoi in New York and Christopher S. Rugaber and Marcy Gordon in Washington contributed to this report.

Comment from thebrackpipe.com:  Oh, now this is just precious.  Douchebaggery at it’s finest – “UBS’s attempts to rig the rates mean that every version of Libor and other benchmarks in which UBS was involved “is at risk of having been improperly influenced” between January 2005 through 2010, the FSA, the British regulator, said Wednesday.  

According to regulators, dozens of UBS employees, seeking to bolster their trading profits and to improve outside perceptions of the bank’s health, tried at least 2,000 times to manipulate a variety of benchmark interest rates, often with the knowledge or even encouragement of senior managers at the bank. The FSA called the efforts “routine and widespread.”

From the WSJ.com:

Two former traders at UBS were charged in the U.S. on Wednesday with conspiring to manipulate a key global interest rate as officials around the world reached a $1.5 billion settlement with the bank.

The former traders, Tom Alexander William Hayes, 33 years old, of England, and Roger Darin, 41, of Switzerland, were both charged with conspiracy, the Department of Justice said. Mr. Hayes was also charged with wire fraud and price fixing.

UBS’s unit in Japan pleaded guilty to fraud and admitted that it manipulated the London Interbank Offered Rate, or Libor, officials said.

U.S., U.K. and Swiss authorities alleged a vast conspiracy led by UBS to rig interest rates tied to trillions of dollars in loans and other financial products, indicating the practice was far more pervasive than previously known.

UBS agreed to pay about $1.5 billion to settle charges against the Swiss bank, and a unit in Japan where much of the wrongdoing occurred pleaded guilty to criminal fraud. U.S. prosecutors also filed criminal conspiracy charges against two former UBS traders allegedly at the heart of the scheme.

UBS acknowledged the regulators’ charges. “We are taking responsibility for what happened,” UBS Chief ExecutiveSergio Ermotti said in an interview. He said all employees with any connection to the scandal have left UBS, including 36 over the past year. As a result of the fine, the bank expects to report a loss for the fourth quarter of up to 2.5 billion Swiss francs ($2.7 billion).

Regulators described the alleged illegality as “epic in scale,” with dozens of traders and managers in a UBS-led ring of banks and brokers conspiring to skew interest rates to make money on trades. The six-year effort “seriously compromised” the integrity of financial markets, said the U.S. Commodity Futures Trading Commission.

Traders openly boasted to each other about their prowess at moving the influential rates up or down at their whims. “Think of me when yur on yur yacht in Monaco,” one broker said in an electronic chat in 2009 with the UBS trader at the center of the alleged conspiracy, according to the Justice Department. The broker congratulated the trader on “getting bloody good” at rate-rigging, regulators said.

The ringleader, who wasn’t named in the settlement documents, was 33-year-old Thomas Hayes, according to people familiar with the investigation. Mr. Hayes was charged separately by U.S. prosecutors Wednesday, along with another former UBS trader, 41-year-old Swiss national Roger Darin. Neither Mr. Hayes nor Mr. Darin could be reached for comment Wednesday.

Mr. Hayes, a star trader who made nearly $260 million for the Swiss bank in the three years he worked there between 2006 and 2009, was open about his rate-rigging, prosecutors said. Libor “is too high cause I have kept it artificially high,” he allegedly boasted in an electronic chat in 2007.

UBS isn’t facing criminal charges. Justice Department officials said they decided not to charge the Zurich-based company, fearing such a move could endanger its stability.

The settlement is a landmark moment in a sprawling regulatory probe that began more than four years ago after The Wall Street Journal published an article questioning the credibility of Libor.

“Great article in the WSJ today about the Libor problems,” a UBS manager wrote to a trader, according to the U.K. Financial Services Authority. Two hours later, the regulator said, the manager asked the trader to boost the bank’s Libor submissions in an apparent effort to rig the rate.

The scandal over attempted manipulation of Libor and other rate benchmarks, which determine everything from the values of complex derivatives to the monthly interest rates many people pay on their mortgages, has been brewing for years. A $450 million settlement over Libor-rigging at Barclays  PLC last summer led to the ouster of the bank’s chairman and chief executive.

Wednesday’s deal with UBS paints a picture of wrongdoing that was more widespread. That is one reason the penalty is more than three times the size of Barclays’s.

The settlement could signal large settlements at other banks still under investigation. The deal also is valuable ammunition for dozens of lawsuits filed in U.S. courts against banks by aggrieved customers, investors and others, seeking billions of dollars for alleged Libor manipulation.

Fannie Mae and Freddie Mac, the two U.S. mortgage giants, might have lost more than $3 billion as a result of banks’ alleged Libor manipulation, according to an internal report by a federal watchdog that was reviewed by the Journal. The unpublished report from the inspector general for the Federal Housing Finance Agency urges Fannie and Freddie to consider suing the banks involved in setting Libor.

UBS’s attempts to rig the rates mean that every version of Libor and other benchmarks in which UBS was involved “is at risk of having been improperly influenced” between January 2005 through 2010, the FSA, the British regulator, said Wednesday.

According to regulators, dozens of UBS employees, seeking to bolster their trading profits and to improve outside perceptions of the bank’s health, tried at least 2,000 times to manipulate a variety of benchmark interest rates, often with the knowledge or even encouragement of senior managers at the bank. The FSA called the efforts “routine and widespread.”

Traders dangled financial rewards, such as cash or favorable trading opportunities, to coax employees at other financial institutions to participate in the attempted manipulation. During one 18-month period, UBS was paying one firm of outside brokers £15,000 ($24,363) every three months to help the Swiss bank work with rival lenders to manipulate the rates. U.S. and British regulators called it clear evidence of collusion.

More bankers likely will be charged. British fraud authorities last week arrested three individuals, including Mr. Hayes, and are readying charges for next year against other people enmeshed in the case, according to people familiar with the case.

About a dozen banks remain under investigation, and a string of settlements is expected in coming months and years, along with more arrests, according to people close to the world-wide probe.

Benchmarks like Libor and the euro interbank offered rate, or Euribor, are calculated every day based on estimates from banks about how much it would cost them to borrow money from other banks. The estimates are compiled into an average, with the highest and lowest bunches of estimates excluded.

Libor and Euribor are vital cogs in the global financial system. Interest rates on hundreds of trillions of dollars of loans and other financial contracts are pegged to the benchmarks. Central banks rely on them to help determine their monetary policies.

Banks have incentives to skew the rates. Investors closely scrutinize banks’ borrowing costs, and rising costs signal financial distress. UBS and Barclays have acknowledged submitting artificially low Libor readings in order to damp concerns about their health during the financial crisis. British regulators have recommended a variety of steps to overhaul how Libor is calculated.

Traders make bets on how rates will move, and millions of dollars in profits can rest on a tiny movement in Libor.

The bulk of UBS’s efforts were concentrated on the Japanese yen version of Libor. Mr. Hayes used a three-pronged strategy to make sure his bets on Yen Libor were profitable, regulators said.

He rigged UBS’s submissions to the panel that calculated the rate, colluded with traders at four other banks on that panel and bribed individuals at outside firms of brokers, regulators said.

The role played by these so-called interdealer brokers was crucial in helping the small band of traders rig a global interest rate, according to regulators. Banks use these brokers to help decide their Libor submissions.

One broker emailed how the honest banks on the panel were being guided to submit an artificially high rate, saying: “hopefully the sheep will just copy,” regulators said.

UBS tried to enlist employees at six brokerage firms to act as middlemen to coordinate the submissions of Libor data across multiple banks. Those firms include ICAP PLC, R P Martin Holdings Ltd., and Tullett Prebon, according to a person familiar with the matter.

ICAP and R P Martin representatives declined to comment. Charlotte Kirkham, a Tullett spokeswoman, said that the firm didn’t help UBS manipulate rates and none of the broker’s employees have been disciplined in connection with Libor.