Banking. Can you TRUST It?

[Plume]

With individuals that are either nuts or clearly have been bought off, can you trust establishments that handle your savings? Especially if prime individuals have traits similar to a Bill O'Reilly? I mean are people like this, genuine in their harmful psychology and analysis, and are they aware of their prestige and is this prestige what corrupts them? Within their minds they may not call it what it is, which really looks to be a close relation to A superiority complex. Achieve a certain level of success and the mafia inclined will come looking to hire you, I'm assuming. "We need your services". An offer you can't refuse?

French bank blames trader for $7 billion fraud
Societe Generale to seek new capital; swindle is one of history’s biggest
PARIS - French bank Societe Generale said Thursday it has uncovered a $7.14 billion fraud — one of history’s biggest — by a single futures trader who orchestrated a series of bogus transactions.

The fraud destabilized a major bank already exposed to the subprime crisis. France’s second largest bank by market value said it must seek 5.5 billion euros ($8.02 billion) in new capital, and the chief executive offered to resign.

The Financial Times newspaper named the trader as Jerome Kerviel, a French man in his thirties who joined the bank in 2000. He worked for three years in the bank’s back office before being promoted two years ago to the Delta One trading desk, handling proprietary deals in futures for European stock indices, the Financial Times reported.

The bank said it detected the fraud at its French markets division the weekend of Jan. 19-20. In a statement announcing the discovery, it called the fraud “exceptional in its size and nature.”

A bank official said the trader “acted alone.”

Trading in Societe Generale’s shares, which have lost nearly half their value over the past six months, has been suspended.

It said a trader at the futures desk had misled investors in 2007 and 2008 through a “scheme of elaborate fictitious transactions.”

The bank said it detected the fraud at its French markets division the weekend of Jan. 19-20. In a statement announcing the discovery, it called the fraud “exceptional in its size and nature.”

A bank official said the trader “acted alone.”

Trading in Societe Generale’s shares, which have lost nearly half their value over the past six months, has been suspended.

It said a trader at the futures desk had misled investors in 2007 and 2008 through a “scheme of elaborate fictitious transactions.”
The trader confessed to the fraud, the bank said, and was being dismissed. His supervisors were to leave the group. Chief Executive Daniel Bouton offered his resignation but it was rejected by the board.

The trader at SocGen was responsible for basic futures hedging on European equity market indices, the company said, making bets on how the markets would perform at a future date.

Futures trading began with selling commodities like sugar or oil to be delivered at a specified date. The practice has expanded enormously in recent years to include extremely complex financial instruments, but the company statement said the trader was involved in the more basic forms of hedging.

If confirmed, the fraud would far outstrip the Nick Leeson trading scandal in 1995 that bankrupted British bank Barings. Barings collapsed after Leeson, the bank’s Singapore general manager of futures trading, lost 860 million pounds — then worth $1.38 billion — on Asian futures markets, wiping out the bank’s cash reserves. The company had been in business for more than 230 years.

The Bank of Credit and Commerce International failed after a 1991 scandal that led to claims by depositors and creditors exceeding $10 billion at the time.

Gilles Glicenstein, president of asset management at rival French bank BNP Paris — France’s largest — said, “It shows that we are in a very troubled period for banks, and I think that it’s in such troubled periods that difficult things happen.”

“This is not good news for Societe Generale, but also for banks in general. It can create doubt, but at the same time in this period, we are making efforts to be transparent in order to give confidence back,” he said at the World Economic Forum in Davos, Switzerland.

Axel Pierron, senior analyst at Celent, an international financial research and consulting firm, was stunned that a trader could be involved in such a massive fraud 13 years after the Barings Bank collapse.

“The situation reveals that banks, despite the implementation of sophisticated risk management solutions, are still under the threat that an employee with a good understanding of the risk management processes can getting round them to hide his losses,” he said.

Quote:A look at some major bank frauds

2008: French bank Societe Generale uncovers an alleged $7.14 billion fraud by a futures trader who fooled investors and overstepped his authority.

2002: Former currency trader accused of hiding $691 million in losses at Allfirst bank of Baltimore, at the time under parent Allied Irish Bank, pleads guilty to one of the largest bank fraud cases in U.S. history.

1995: Collapse of Britain’s Barings Bank after a trader in Singapore, Nick Leeson, lost 860 million pounds (then worth $1.38 billion) on futures trades. The fraud prompted banks worldwide to tighten internal checks.

1991: Bank of Credit and Commerce International (BCCI), operating in nearly 70 countries, is seized by bank regulators, acting on auditors’ reports of huge losses from illegal loans to corporate insiders and from trading transactions. Some 250,000 depositors left without funds. Claims exceeded $10 billion.

Now who are the losers here?..............The people who have accounts and hear what they want to hear. Never mind the possibility that resolve has been pre-orchestrated.

PS    And they don't even care that they are hurting people with their selfish assessments

[NonEntity]

Ha Ha Ha!  A bank getting defrauded.  The irony is just too good for words!  Bankers should have to lick the floors of the houses they repossess to get them ready for resale.

- NonE (feeling particularly generous at the moment...)