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THE EUROPEAN COMMISSION said on Monday it suspected that 13 top investment banks including Barclays, Deutsche Bank and Goldman Sachs, colluded over derivatives trading in breach of EU antitrust rules.
A preliminary investigation showed that banks colluded to exclude exchanges from the over-the-counter market because they feared involvement by the exchanges “would have reduced their revenues from acting as intermediaries,” the Commission said.
The banks instead allegedly continued over-the-counter trading in the massive credit default swaps (CDS) market between 2006 and 2009 — an opaque business that was seen as contributing to the global financial crisis, the Commission said in a statement.
The EU’s Competition Commissioner Joaquin Almunia said the banks would now have the chance to respond to the accusations, and that if the charges were confirmed once the investigation was completed they could face fines.
“If it is confirmed that banks collectively blocked exchanges from the derivatives market, the Commission could decide to impose sanctions,” Almunia said at a press briefing.
A ‘serious breach of our competition rules’
“Exchange trading of credit derivatives improves market transparency and stability,” he said, adding that collusion between the banks to prevent this type of trading would be “a serious breach of our competition rules”.
Almunia declined to give an estimate of the size of possible fines on the banks but he said the CDS market at the moment is worth about 10 trillion euros ($13 trillion).
The collapse of Lehman Brothers in 2008 “showed how derivatives trading is able to destabilise the entire financial system,” Almunia said.
The European Commission investigation began in 2011 and has focussed on claims that Deutsche Boerse stock market and the Chicago Mercantile Exchange were excluded from the derivatives market.
It said the two exchanges decided to turn to the International Swaps and Derivatives Association (ISDA) and data service provider Markit to obtain the necessary licences.
But the banks “had instructed them not to do so”, Almunia said.
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So the bankers and politicans are annoyed at us for anglo tapes etc. The real reason it would seem is that our idiots were recorded and were caught. They are all at it. Capitalist cartels and political lackies. And we the coping class will bale them out and suffer
To be honest, even when Merkel etc commented on Anglo tapes, I think they knew it was bankers that were the big problem and not the ordinary people. Mind you, it’s the ordinary people who are getting punished
@Dermot Lane
yes its always the ordinary Joe soap that get punished but why oh why are these crooks,gangsters conmen allowed to hold on to their perks,pensions,mansion,s cars,boats etc etc ,
they should be stripped of ALL assets why isnt C.A.B brought in surely if the wealth they gained is by criminal actions it should be sized.
again Dermot yer right it only the ordinary people that get punished
Looks like they’re all at it.
The financial sector has replaced the church as the untouchables in society.
If found guilty there will be sanctions, feck that, change the laws and start jailing.
JAIL.
Of course they’re all at it.
Theft of personal wealth.
Bankers cannot be trusted to operate the banking utility on behalf of society. The banking function needs to be nationalised and run for the common good and not for the enrichment of an elite few.
While that sounds like a great idea you’ll just be introducing totalitarianism through the back door.
Killjoy, can you explain how nationalising the banking utility will lead to totalitarianism?
Take no chances, intern peter sutherland straight away.
I second that.
They’re quick enough to intern dissidents in the north without trial!
What about the financial terrorists?
I agree he is another corrupt Goldman Sachs minnion……a traitor to this country
Oh dear and there was me thinking that free education was good for our society. With the above comments it seems as if it was all a waste of time. Why do people publicly expose themselves in such a fashion. If you don’t understand the subject the basic rule says……..don’t comment!
Yes dont comment as,I am a champion.
Most of the top banks are corrupt – and rob the people in variius ways – incliding HSBC – who were found guilty of Money laundering , adjusting the Libor interetst rate -
—– but they sposor the Lions rugby tour – and ODriscoll – one of countries ” heroes ” wears their logo on his shirt .
Why should Banks respect fools ??
ALL the top banks are corrupt. Our government sat on evidence of AIB fraud for years in the hope they could until the statute of limitations for fraud runs out. Six years. They held the evidence for five. Bastards. Sociopaths. Enemies of the State.
Oh what a surprise….
And that would the same private banking interests that designed the Euro currency system as a milking machine by ensuring they get to dictate interest rates on government debt. Most especially doubling, trebling or more the costs to nations at the very time, in a cyclical downturn or shock induced recession (as now), that countries need to apply counter cyclical measures to restore jobs & economic stability.
For sovereign currency issuing country’s, like US, UK or Japan (or Iceland etc) their governments effectively set borrowing rates, not ‘markets’. (Even whilst they pretend otherwise – but go & look at the data, bond interest rates go down in periods of higher public (gov) debt, not up!)
That facility was removed from Euro zone countries in what amounts to a deeply flawed, by design, currency system.
Deeply flawed, as in undermining what governments’ can, & should, do for their citizens and instead institute a system of wealth extraction in favour of bankers & owners of capital. – the top few percent.
In order to do this, the very basis of ‘macro’ economics – national economic management being profoundly different to that of households just ‘added up’ – has been relentlessly obfuscated or denied by the mainstream of economics thinking for over 30 years.
What we see is the logical conclusion of this, both in the ever increasing endemic control fraud & greed of banking & finance that caused the financial crisis, and in the endless recession which that triggered, globally. Recession in which countries like UK & US pretend to lack the means to stimulate recovery, and Euro countries actually wrote such a straitjacket voluntarily into treaties.
For over 50 years after Keynes seminal work in the 1920s that established the basic facts of macro economics, which had to work in many ways in an opposite sense to household ‘micro’ economics, these facts were known and acted on, successfully, by most governments.
Even today, whilst a mainstream narrative from both economists & media is in virtual denial, almost no economist would dare to publicly refute basic macro principles. Yet their policy prescriptions continue to contradict – with the inevitable +entirely predicted+ results of either economic stagnation (UK, US etc) or deepening recession (Euro la-la-land).
Unfortunately, most citizens have had no education in even the basic, often counter-intuitive facts. (Wonder why?)
If you do not understand what the phrase ‘paradox of thrift’ means, you are not just incapable of making appropriate macro economics (voting) choices, rather, by default of only understand ‘household’ micro, you are only equipped to swallow all the anti-government action propaganda & make precisely the +opposite+ choices to those that are in the economic interests of the vast majority of citizens.
By my estimation, noting comments on Journal.ie and elsewhere, that is at least 90% of the voting public, educated, by design, to make completely the wrong democratic choices for economic policy. Democracy without +informed+ choice is not democracy at all.
International banking (cartels) has now, in all but announcement, succeeded in a coup d’etat over citizens without firing a shot. Every month now, it seems another story surfaces describing what amounts to criminal organised theft within banking and finance.
90% (at least) of politicians & leaders appear either equally ignorant of the basic ‘macro’ facts, or are ideologically ‘captured’ by those who seek to deny that Keynes work ever existed.
If YOU don’t understand what is meant by ‘paradox of thrift’ GO FIND OUT.
If you do not understand how the UK, carrying by far the most national debt ever in its history, in post WWII 1945, could launch from scratch their NHS , their welfare state & free education to third level, & much public investment besides, over the late 40s, 50s & into the 60s, then FIND OUT. Just as now, the traditional, Tory friends of bankers claimed to borrow for all this would be bankrupting & all the rest from hyper inflation to the sky falling….none of which happened.
@ Mike Hall, magnificent, correct and profound comment. This is truly enlightening.
If everyone cuts back due to austerity, the only consequence is severe recession developing into prolonged depression. If everyone adopts thrift and frugality, consumption declines and there is a negative feedback loop of self reinforcing decline.
Read Austerity : A History of a Dangerous Idea by Mark Blyth or The Body Economic: Why Austerity Kills by David Stuckler and Sanjay Basutoland.
Your comment above would make an excellent article. It should be mandatory reading for every TD.
The Government wants the people of Ireland to bail out the banks and the high net worth bond holders. In so doing, the Irish economy is destroyed and unemployment increased. Not smart.
Thank you for this invaluable comment. The Journal should publish it as an article.
Many thanks Tony :)
It’s always nice to know someone connects with my comments. As you’ve probably realised I’m trying summarise key points, & only sacrificing a little ‘completeness’ rather than basic truth in order to condense. This ‘denial’ of macro economics’ (at least as anything that it’s originator would recognise – Keynes) was a recent light bulb moment. So I’m pleased to see you find this insight as enlightening & useful.
I know the Mark Blyth (very good) but wasn’t aware of the other, thanks for that.
Yes the whole Euro policy approach over the last 5 years is astonishing isn’t it? No private creditor left behind from public bail out, regardless of their reckless behaviour or the concept of equal ‘due diligence’. (Until Greece would have had to make a disorderly exit from the Euro.)
Combine that with other public spending cutbacks (austerity), residual high household debt (needing deleverage) & we have a perfect ‘paradox of thrift’ storm. We see the entirely predictable results – the Euro zone continues in recession & unemployment rises. Yet still, ‘authorities’ persist in ‘growth fairy’ religious doctrine.
The effect is to reduce the ability of debt to be serviced at the very time it is being increased to make good losses of high rollers we had no responsibility for.
This surely would not be possible in a democracy if even the basic principles of +macro+ economics, especially as related to the role of government distinct from non-government (us), had been taught in schools. Perhaps as some wider, obligatory course in our responsibilities in a participatory democracy. Clearly the problem extends to most all EU countries & the US as well. Ergo, where is there meaningful democratic economic management? Anywhere?
Einstein’s (attributed) definition of insanity perhaps applies…..repeating the same actions & expecting different results. But does it?
Well, no, ‘authorities’ are not insane – variously ignorant, naive, greedy, socio-pathic, or even psychopathic (who aren’t really insane, just lacking normal ‘empathy’).
But they are pretty much all members of the top few percent club who either are already deriving most income from ownership of capital (renters), or who expect to at a very early retirement age. For near all of this group (& all at the higher levels), there is no recession, rather increasing wealth that far exceeds in % terms the rest of society, in average or median terms.
Whether consciously considered or not, there are no financial incentives to represent the majorities’ interests (& probably a few to actively resist).
Add in the fact that any financial ‘markets’ trader will tell you – volatility (+not+ stability) is their friend & benefactor, and I believe Occam’s razor gives the interpretation of the facts of the last decades just as I’m telling them (from the shoulders of the giants ably assisting my vision).
Speaking of whom, Professor Bill Mitchell, who besides other things is a superb econometrist (analyst in the tricky (by design?) business of economic stats), has another timely piece on Ireland today. Oh that one could read such lucidity from the pen of an Irish economist (no hope whatever).
‘Ireland still located in the Irish Sea despite multibillion-euro austerity drive’
Mike, this is truly astonishing. I read Professor Bill Mitchell’s article on that link that you so helpfully provided. This economic debate is going on, there are deep thinkers on this subject, and to listen to Irish economists and to Irish TDs, you know that they they are oblivious to or in denial about other perspectives. It seems that our economists and politicians have bought into an old orthodoxy, an orthodoxy which precedes Keynes and the later neo-Keynesian.
Reducing the ability to service debt at the time tat debt is being loaded on to us is exactly right.
I read that in the USA real incomes of the middle class have decreased since the 70s and that increasing personal debt bridged the gap.
‘Growth fairy is a wonderful term. We hear ERSI and Central Bank make wonderfully positive projections as to growth and seem repeatedly surprised, puzzled and impatient that the projection are not me.
I am going to print out your comment and consider it fully. You have drawn my attention to the fact that there are some, perhaps small in total numbers, who are actually thinking about the current crisis, it true causes, and how to respond to it.
This has been truly enlightening for me.
Accusing ‘top banks’ are they? Big schwinging micky. Too little , too late. I await with interest news of any sanctions against these banks, together with proposals for reform to ensure no repetition of their criminal activities.
who’d've thougt it Goldman Ballsachs involved in Economic tryanny …………amazing!!!!!!
When will it finally dawn on all of us. The SYSTEM is broken. We continually search for scapegoats & personalities to blame. BUT its clear to a blind man, its not even teetering any more. It’s gone. Time for a change……..
NO WAY!!!!!!
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