U.S. investigates Citigroup ties to Mexican billionaire: report

The U.S. Justice Department is looking into Citigroup Inc's dealings with companies linked to Mexican billionaire Carlos Hank Rhon as part of an expanding investigation into the bank's money-laundering controls, Bloomberg reported on Monday August 18.

U.S. officials asked Citigroup (C.N) to provide information on accounts tied to four businesses affiliated with Hank Rhon, according to the news agency. These include two units each of Grupo Financiero Interacciones SA (GFINTERO.MX) and Grupo Hermes SA, which are controlled by Hank Rhon and his family.

The Justice Department asked the bank to provide similar paperwork for a fifth firm, Banco Monex, that's
 not connected to Hank Rhon, Bloomberg said.

U.S. Justice Department spokesman Wyn Hornbuckle declined to comment.

Officials at Interacciones and Citigroup declined to immediately comment while those at Monex and Hermes could not be reached.

The Justice Department is examining anti-money laundering practices at Banco Nacional de Mexico, Citigroup’s Mexico unit known as Banamex, to see if any of its clients were involved in money laundering, the news agency said.

Read more: U.S. investigates Citigroup ties to Mexican billionaire: report | Reuters

Financial Community: International Lawsuits Begin to Build Momentum Against Wall Street Thugs

The Argentinian government has filed a lawsuit against Wall Street firm CitiGroup over debt repayments that Argentine officials say violate national laws, reported The Guardian.

Part of the lawsuit states that the country seeks to file criminal charges against employees of the Argentinian arm of CitiGroup. The bank said in a filing with the Securities and Exchange Commission that Argentine officials had “taken certain adverse actions against Citi Argentina, including filing a lawsuit against Citi Argentina and instituting a suspension of certain activities.”

Because of this bad debt deal, the Argentine government wants not only to file charges against CitiGroup employees, but implement sanctions that bar any future operations within the country. This dispute between Argentina and CitiGroup comes during friction between the country and two other financial institutions, NML Capital and Aurelius Capital Management.

The two institutions did not accept a deal to restructure Argentina’s national debt. Argentina apparently owes a “holdout” debt of $1.3 billion to the two hedge funds, and U.S. judge Thomas Griesa ruled that it must pay that amount before receiving a restructuring deal.

Because Argentina senses a banking scam run by CitiGroup and accuses Griesa of being a banking crony, the country has ignored the judge’s ruling and blocked Citi’s capital market operations and suspended the leader of Citi’s Argentine operations, Gabriel Ribisich — who has been accused of misconduct.

The BBC recently reported that CitiGroup may plead guilty to accusations of manipulating exchange rates in foreign currency markets. Wall Street and Griesa’s cronyism have backed Argentina in a tough spot. Unrealistic expectations and international bullying pushed the country into default as Argentina is refusing to pay the hedge funds, NML and Aurelius.

Read more: International Lawsuits Begin to Build Momentum Against Wall Street Thugs

Banking Fraud: EU Sets"Big"Fines in Settling Libor Case - "but why no jail sentences given?"-by C.Bray and J.Ewing

Demonstrating a new resolve to punish bank misconduct, the European Union fined a group of global financial institutions a combined 1.7 billion euros ($2.3 billion) on Wednesday to settle charges that they colluded to fix benchmark interest rates.

The settlement was the largest combined penalty ever levied by the European competition authorities and is the first time that American banks have been fined in a set of interest rate scandals that have also drawn scrutiny from regulators in Britain and United States. Those regulators still have their own investigations underway.

“By European standards, it’s a large fine,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. “It signals that the time when only the U.S. can impose big fines is probably over.”

At a news conference in Brussels, Joaquín Almunia, the European commissioner responsible for competition policy, said an investigation had uncovered a collusive scheme by traders at some of the world’s largest banks. Citigroup, JPMorgan Chase, Deutsche Bank, Royal Bank of Scotland and Société Générale were found to have improperly influenced the London interbank offered rate, or Libor, as it relates to the Japanese yen and the euro interbank offered rate, or Euribor.

“There is a big need for better supervision of financial markets in Europe,” said Falko Fecht, a professor at the Frankfurt School of Finance and Management. “We don’t have a single supervisor for financial markets. This is a flaw in the design of the banking union so far.”

The announcement on Wednesday means that for the first time two American institutions, Citigroup and JPMorgan Chase, will pay penalties in the rate-fixing investigations. But they will pay only about $200 million, combined — hardly a significant financial hit to banks with tens of billions of dollars in revenue a year.
And the activity under question by the European Union against the American banks only covered short time periods, the longest lasted about three months — not the sort of long-term manipulation that investigators could point to as evidence of an entrenched pattern of corruption. By way of comparison, some of the European banks were engaged in activity that went on for about three years.

Note EU-Digest: this action by the EU is a step in the right direction, but certainly not  satisfactory. When a person steals a package of gum in a grocery store they can be thrown into jail. The financial industry on the other hand has been able to steal and defraud  the Government and the Public for billions of euro's and basically got away with it. It is high time these crooks are not only asked to pay fines, but also that some of the principals responsible get thrown into jail.

Read more: Europe Sets Big Fines in Settling Libor Case - NYTimes.com

Scotland: Citigroup to axe one in six Edinburgh jobs - by Tim Sharp

Around one-sixth of posts at Citigroup's funds administration business in Edinburgh are to be axed as the US banking giant moves work to lower cost locations.

Some 50 jobs are likely to go at the operation, although this will not occur until the end of 2013 and some staff are likely to be offered other roles within the company.

Citigroup said it is committed to retaining a base in the capital and a spokesman  said "Citi is proposing to move a limited number of roles currently based in Edinburgh to locations outside the UK"

Around 300 people currently work for Citigroup in Edinburgh..

Read more: Citigroup to axe one in six Edinburgh posts | Herald Scotland

LIBOR process flawed, U.S. regulator finds - Republican lawmakers object to creation of the office and its mandate

The process for setting a key global interest rate is flawed and poses a risk to the stability of financial markets, according to a report from the U.S. Treasury Department.

A British banking trade group sets the LIBOR every morning after international banks submit estimates of what it costs them to borrow money. The rate affects interest on many loans.

Banks are capable of manipulating the London interbank offered rate (LIBOR), the Treasury's Office of Financial Research said in the report released Friday.

The report cites other risks to financial stability: roughly 12 million U.S. homeowners who owe more on their mortgages than the value of homes; continued risk-taking by big financial institutions; and the European debt crisis. The report also said the agency may require financial companies to submit data on transactions and trading positions. The office says its needs to review that data to better understand what's happening in financial markets.

A number of major banks, including Citigroup and JPMorgan Chase, are also being investigated.

The Office of Financial Research was created by the 2010 financial overhaul law. Under the law, the agency can collect and analyze financial data so it can give early warnings to regulators of potential problems. 

Some Republican lawmakers have objected to creation of the office and its mandate. They say its power to collect confidential information from companies is too broad.

Read more: LIBOR process flawed, U.S. regulator finds - Business - CBC News

Banking Industry: US bank bosses set for tough Libor questions - by Stephen Foley

American bank bosses are set to be questioned on what they knew about Libor rate-rigging and how much the scandal could cost their institutions.

Analysts and investors in Libor panel banks Citigroup and Bank of America get their first chance to quiz management since the £291m Barclays settlement when they report earnings this week. The results come after a new estimate that says banks could end up paying $14bn in regulatory fines and legal settlements.

JPMorgan Chase, Citigroup and BofA are the three US banks on the panel that submits estimates of their borrowing costs for inclusion in the daily Libor averages, which underpin trillions of dollars of derivatives contracts and affect interest rates for everyone from mortgage and credit card holders to small businesses.

Mr Schorr predicted it could be several years before the full cost of the scandal is known, because as well as regulatory investigations there are also multiple lawsuits in the US from investors alleging they lost money on derivatives because of the manipulation.

Read more: US bank bosses set for tough Libor questions - Business News - Business - The Independent

Eurozone: "Look who is calling the kettle black" - Citigroup Says Netherlands No Longer Part of Euro-Area Core - Jurjen van de Pol and Fred Pals

 The Netherlands, the fifth-largest euro economy, shouldn't be counted in the core of the common currency as its borrowing costs climb, Citigroup Inc. said.

"The poor performance of the Dutch economy should make it very difficult for the country to reduce its general government deficit," Juergen Michels, chief euro-area economist at Citigroup in London, and three other economists said in a March 23 note to investors. The Netherlands is in a weaker position than Germany, Finland and Luxembourg, he said.

Prime Minister Mark Rutte's minority coalition must find at least 9 billion euros ($12 billion) in budget cuts this year, equal to 1.5 percent of gross domestic product, to meet European Union deficit rules by 2013 and protect the top credit grade that France and Austria lost in January. The Dutch budget shortfall is forecast at 4.6 percent of GDP in 2013, exceeding the 3 percent EU limit for a fifth year.

Note EU-Digest: Look who is calling the kettle black...

For more: Citigroup Says Netherlands No Longer Part of Euro-Area Core

Alternet: US Economy - Zombie Banks ( Citigroup and Bank of America) are Devouring Our Public Money with No End in Sight - by Bill Moyers

For the complete report from AlterNet click on this link

US Economy - Zombie Banks ( Citigroup and Bank of America) are Devouring Our Public Money with No End in Sight - by Bill Moyers

A zombie bank is a bank that's insolvent that's allowed to continue its activity. It's allowed to go on living as a dead financial entity. The zombie will continue to lose more, and the taxpayer, kind of off the government's budget, will continue to experience larger and larger burden of future losses. President Obama intends to hold these banks fully accountable for the assistance they receive, and this time they will have to clearly demonstrate how taxpayer dollars result in more lending for the American taxpayer. This time CEOs won't be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet. Those days are over. The President also spoke about what you might call free market fundamentalism. Unfettered, unregulated markets as one pole, and what you might call administrative socialism as another pole. We've got to end up somewhere in the middle. Where the market's dynamism and flexibility is honored, but where you have real regulation and real enforcement. It's been a long time since the president has talked like that. So that's a hopeful sign.

Forbes: US Economy - Uncle Sam Pumps Up CitiGroup - Forbes.com

For the complete report from Forbes.com click on this link

US Economy - Uncle Sam Pumps Up CitiGroup

The federal government stepped in Sunday night to bail out Citigroup and restore confidence in the financial system, promising to protect the banking giant against losses on hundreds of billions of dollars worth of troubled assets. The U.S.Treasury guarantees the bank against losses on $300 billion of its riskiest assets and injected another $20 billion in capital.