A day before the U.S. Presidential election finds some Northeast banks using pen and paper, while a big London firm stashes cash for crimes and misdemeanors. Meanwhile another London bank wins a settlement it will never recover, and Greece continues to boil over with economic ailments.
Banks Go Pre-Digital Following Sandy
Homes and businesses in the northeast are cleaning up and beginning to get back to work in the aftermath of Hurricane Sandy. The devastation is widespread and could cost $50 billion.
In any post-storm environment, where severe weather has disrupted power and other services, banks face particular challenges. Not only do they have to deal with their own damaged offices and facilities, they have the responsibility to help their borrowers obtain the money they need for necessities, supplies and repairs. And that means getting cash into their hands as quickly as possible.
But because numerous banks’ ATMs are down and others are unable to access their electronic records, many northeast branches hit by the storm have been forced to revisit some old-fashioned bookkeeping procedures; while waiting for the computers to get up and running, transactions are being recorded by hand.
The Most Indebted Man on Earth
Jerome Kerviel – the former arbitrage trader who lost $6.7 billion several years ago in what his bosses at Société Générale, the French investment bank, say was illegal and unauthorized trading activity – is probably the most indebted man in the world.
Kerviel recently lost his legal appeal of a 2010 lower court ruling that sentenced him to a three-year prison term. The sentence also ordered him to provide complete restitution to his former employer for funds that vanished in trades that Kerviel maintains were approved by bank higher-ups.
Société Générale does not expect Kerviel to refund anything close to the full amount of the fine. However, it’s likely that he will have to repay some percentage of his earnings for the rest of his working life. None of his future earnings will be made in the financial services industry, from which he has been banned permanently.
HSBC’s Mild Mea Culpa
HSBC, the London-based bank embroiled in a long series of financial scandals, continues to draw down its profits in order to pay heavy fines and penalties for various illegal activities perpetrated over the past several years.
The bank has been charged with money laundering for Mexican drug cartels, working with banks accused of financing international terrorism, and selling bogus payment protection insurance to its customers. Now, HSBC is being investigated for its role in the recent Libor rate-rigging scandal.
The bank has downplayed its wrongdoings, stating that it “sometimes failed to meet the standards that regulators and customers expect.” Still, it has a pool of $1.5 billion set aside to pay authorities for misconduct committed, revealing that economic repercussions will be much more severe than the bank’s statement suggests.
Fight Over Online Music Royalties Continues
Music may be as old as mankind, but in the modern world, its transmission into the ears of its listeners continues to evolve at a dizzying pace. In one generation we’ve gone from LPs to tape cassettes, to CDs, to MP3s, to satellite radio and now, to online streaming.
However, laws protecting various segments of the music industry tend to evolve much more slowly and usually more unevenly. This also applies to standards that attempt to divvy up online profits equitably among musical artists, publishers, producers and broadcasters.
Current debate in Washington concerns the discrepancy between royalty costs assigned to satellite stations like Sirius XM, which pays 8 percent of its annual revenue to record companies and artists, while Internet radio platforms like Pandora, pays a fraction of a penny each time a song is streamed. Last year Pandora wound up paying about 54 percent of its revenue for the music it played – approximately $149 million.
This past September, the Internet Radio Fairness Act was introduced in Congress to move online music technology into the same rate category as its sister satellite stations. Some in the music industry believe that the move will short-change artists, while others contend that the more music gets played, the more money can be made by everyone in the business.
Greece’s Drug Shortage
Greece continues to suffer from economic woes, and its citizens continue to suffer from a lack of certain drugs and medical supplies. In June, German pharmaceutical firm Biotest stopped shipments to Greece because of unpaid bills. Another German firm, Merck KGaA, recently stopped delivering the cancer drug Erbitux to Greek hospitals.
In an attempt to resolve the growing crisis, the European Federation of Pharmaceutical Industries and Associations has proposed that international drug companies cap the total amount the Greek government has to pay for medicines in return for a reimbursement of all outstanding debts and a promise to avoid any future delinquencies.
Meanwhile, strikes, work stoppages and protests – staged by a weary and angry Greek public already battered by four years of belt-tightening – continue in the wake of the government’s latest austerity package, introduced in order to free up 31.5 billion Euros in aid from the International Monetary Fund.
Photo: JuliusKielaitis / Shutterstock.com
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at email@example.com.