Banks Could Still Blow Up The World

Big banks are perfectly safe these days, unless you count all those weapons of mass financial destruction they've got lying around. And who's counting those? Certainly not the banks.

Some in Washington are doing a premature victory dance over the relatively gentle new regulations that have been applied to Wall Street since the financial crisis. But the job of regulating one of the of central causes of that crisis -- the trading of derivatives -- is far from finished.

The world's biggest banks still can't fully account for all the risks they're taking when they trade derivatives, according to a report last week by a group of 10 of the world's financial watchodgs, including the Federal Reserve.

Derivatives, in case you don't know, are essentially side-bets that banks and hedge funds and other investors make with each other on the prices of things trading in other markets. These other things include everything from corn prices to subprime mortgages. Sometimes derivatives are helpful ways to buy insurance against wild price swings (see corn futures, for example). Sometimes they're dangerous ways to feed Wall Street's addiction to obscene bonuses (see subprime mortgage-backed securities, for example). Sometimes they're both!

Though banks these days aren't trading too many subprime mortgage-backed securities -- the derivatives that blew up the world last time -- they're still trading plenty of other such stuff, including the credit-default swaps that recently cost JPMorgan Chase $6 billion in the London Whale debacle. Even years after the crisis, JPMorgan didn't see that one coming.

And JPMorgan is probably not alone, according to this new regulatory report. Heck, banks can't even always identify who's on the other side of their trades -- which, as you can imagine, is somewhat vital information.

"Five years after the financial crisis, firms' progress toward consistent, timely and accurate reporting of top counterparty exposures fails to meet supervisory expectations as well as industry self-identified best practices," the regulators wrote.

Read more @ http://www.huffingtonpost.com/2014/01/21/banks-derivatives_n_4638942.html?ref=topbar

Seems they can't draw their money out, maybe they should go to another bank and have the money transferred to the new bank account and then draw all their money out.... smiley: eyes 


HSBC imposes restrictions on large cash withdrawals

Some HSBC customers have been prevented from withdrawing large amounts of cash because they could not provide evidence of why they wanted it, the BBC has learnt.

Listeners have told Radio 4's Money Box they were stopped from withdrawing amounts ranging from £5,000 to £10,000.

HSBC admitted it has not informed customers of the change in policy, which was implemented in November.

The bank says it has now changed its guidance to staff.

New rules

Stephen Cotton went to his local HSBC branch this month to withdraw £7,000 from his instant access savings account to pay back a loan from his mother.

A year before, he had withdrawn a larger sum in cash from HSBC without a problem.

But this time it was different, as he told Money Box: "When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved."

Mr Cotton says the staff refused to tell him how much he could have: "So I wrote out a few slips. I said, 'Can I have £5,000?' They said no. I said, 'Can I have £4,000?' They said no. And then I wrote one out for £3,000 and they said, 'OK, we'll give you that.' "

He asked if he could return later that day to withdraw another £3,000, but he was told he could not do the same thing twice in one day.

He wrote to complain to HSBC about the new rules and also that he had not been informed of any change.

The bank said it did not have to tell him. "As this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change," HSBC wrote.

Frustrated customers

Mr Cotton cannot understand HSBC's attitude: "I've been banking in that bank for 28 years. They all know me in there. You shouldn't have to explain to your bank why you want that money. It's not theirs, it's yours."

Peter from Wiltshire, who wanted his surname withheld, had a similar experience.

He wanted to take out £10 000 cash from HSBC, some to pay to his sons and some to fund his long-haul travel plans.

Peter phoned up the day before to give HSBC notice and everything seemed to be fine.

The next day he got a call from his local branch asking him to pay his sons via a bank payment and to provide booking receipts for his holidays. Peter did not have any booking receipts to show.

The following day he spoke to HSBC again and this time, having examined his account, it said he could withdraw the £10,000.

Belinda Bell is another customer who was initially denied her cash, in her case to pay her builder. She told Money Box she had to provide the builder's quote.

Customer protection

HSBC has said that following customer feedback, it was changing its policy: "We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for."

"The reason being we have an obligation to protect our customers, and to minimise the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologise to any customer who has been given incorrect information and inconvenienced."

Money Box asked other banks what their policy is on large cash withdrawals.

They all said they reserved the right to ask questions about large cash withdrawals.

But none of them said they would require evidence of what the money was being used for before paying out.

Douglas Carswell, the Conservative MP for Clacton, is alarmed by the new HSBC policy: "All these regulations which have been imposed on banks allow enormous interpretation. It basically infantilises the customer. In a sense your money becomes pocket money and the bank becomes your parent."

But Eric Leenders, head of retail at the British Bankers Association, said banks were sensible to ask questions of their customers: "I can understand it's frustrating for customers. But if you are making the occasional large cash withdrawal, the bank wants to make sure it's the right way to make the payment."


Read more @ http://www.bbc.co.uk/news/business-25861717



"What lies behind us and what lies before us are small matters compared to what lies within us."  ~ Ralph Waldo Emerson ~

Edited 1 time by PeacefulSwannie Jan 28 14 8:25 PM.