The Dangers of Contactless Cards

There has been some controversy over the security of "contactless" payment cards (which don't require Pin numbers, merely contact with a reader for payments of up to £20).

All well and good, so long as the right card makes the payment and the wrong one doesn't make a payment when it merely passes by a reader (primed to deduct a payment) because it is in someone's pocket/wallet.

The banking industry have denied there is such a problem.

However, First Direct has written to its customers, as per the Telegraph:

"We have made changes to clarify that if you have a contactless debit card you must remove it from your wallet or purse before using it to make a contactless payment."

A spokeswoman said:

"If you don't remove cards from your wallet there is a danger the payment may be taken from the wrong card. It could be a bit of a nightmare if it came from a card where there wasn't enough money."

In other words there is a potential problem with these cards, not least the possibility that a suitably well positioned felon (ie standing near a person who has a contactless card) with technical knowledge could electronically pick your pocket!

Two Questions For The Good People of Cyprus

1 What will happen to the rule of law in Cyprus when the list of people who removed their money from the country before, and during, the ongoing crisis is made public?

2 What was the Central Bank of Cyprus doing during this period?

Barclays Fines Staff For LIBOR Fraud

Barclays will impose £450M of financial penalties on its staff for rigging LIBOR.

Sky News reports that Barclays will disclose details in its forthcoming annual report. The "fines" will be levied against the "variable pay", ie bonuses and deferred share awards of the staff.

However, it should be noted that Barclays will still award £1.8BN in bonuses to its staff.

LIBOR Still Rigged?

It seems that LIBOR is still rigged.

Happy Bonus Season!

As a bleak and gloomy January draws to a close, the banksters are looking forward to awarding themselves some fat bonuses for all their "hard work" last year.

Sadly for the banksters not everyone is happy at the prospect of their self awarded largess. Step forward Unite which has demanded a meeting with UK Financial Investments Ltd (UKFI), which manages the government's (ie the taxpayer's) investments in RBS, Lloyds and UK Asset Resolution, over RBS's expected bonus payout of £250M.

As if things were not already bad enough for RBS, the Wall Street Journal reports US authorities are pushing for a settlement of LIBOR allegations that would result in the bank not only paying a fine of £500M, but also pleading guilty to criminal charges. Barclays and UBS got away with criminal charges, because they co-operated with the authorities.

RBS executives don't want to plead guilty because they fear that it will cause clients to cut off activity with the bank, and that it could increase exposure to ever more litigation.

Maybe then they should hold back on paying out a bonuses this year, lest the money be needed to pay for ongoing litigation?

Why LIBOR Matters

As per Max Keiser:

"LIBOR and other mrk riggers have just dropped UK 10-yrborrowing costs below 2%. Each £ saved in interest loses 2 £'s from pensions/savers."

In other words the LIBOR riggers profited at the expense of the rest of us!

UBS Fined $1.5BN

Last Friday I wrote that UBS was to be fined $1Bn for its role in the LIBOR rate fixing scandal.

I was wrong, UBS has in fact been fined $1.5BN.

Mea culpa!

UBS $1BN LIBOR Settlement

UBS is, according to the Telegraph, close to agreeing a settlement with UK and US regulators on LIBOR rigging.

The bank is expected to announce next week that it has reached a combined $1BN deal with US and British authorities to settle an investigation into the role it is alleged to have played in rigging global borrowing rates.

To put the $1BN into context, LIBOR is the basis for $800 TRILLION of financial products. The banks that participated in its rigging would have made billions out of this over the years.

Additionally, UBS's bonus pool was $2.79BN in 2011.

Therefore shed no tears for them!

Greece Most Corrupt EU Country

The Corruption Perception Index 2012 has, unsurprisingly, ranked Greece as being perceived as being the most corrupt EU country out of the 27 member states.

Greece's global ranking also took a knock, and has fallen from 80th in 2011 to 94th in 2012.

UBS Banker Kweku Adoboli Guilty of Fraud

A former UBS banker, Kweku Adoboli, has been found guilty of fraud after losing the bank $2.3BN in unauthorised trading.

Euro1.4BN EU Fraud

Bruno Waterfield has just tweeted that the EC has confirmed that 'part of' the proposed roll over of €1.4BN from 2012 to next year are funds 'under investigation'.

Which basically means there is a suspicion of fraud wrt this sum of money.

Don't you just love the EU's budgetary process and financial "controls", the stories that just keep giving.

EU Budget Qualified Again

The European Court of Auditors found that controls over 86% of the EU budget are only "partially effective", this makes the 18th year running that the budget has been qualified.

To add to this annual disgrace, it transpires that the frequency rate for "material error" rose by 8% in 2011 from 36% to 44%, with £4BN in EU payments directly affected by irregularities.

The EU's response?

They intend to increase their expenditure by £95BN over the next eight years.

Who pays for this?

The hapless citizens of the EU, who are themselves being told by their EU overlords to endure years of austerity!

Lloyds PPI Chickens Coming Home To Roost

The old saying "what goes around, comes around" springs to mind when reading that Lloyds has been forced to make an additional PPI provision in Q3 of £1BN.

The total amount set aside by Lloyds for the PPI mis-selling scandal is £5.3BN, giving rise to a Q3 loss of £144M.

Lloyds has paid out £3.7BN in compensation thus far. However, it may have to make further additional provisions next year.

The Telegraph reports that Lloyds is less than pleased to be on the receiving end of fraudulent claims for compensation, driven in part by the plethora of claims management companies that are pushing people to make claims. Lloyds has written to the Financial Ombudsman Service asking for claims management companies to be forced to meet the cost of spurious requests for compensation.

Scam PPI Claim Company

Beware calls from this number 02392997556, according to this thread it is a scam designed to acquire your bank details.

Liborgate

Liborgate, despite the brief interlude provided by the chaff from the DFS over Standard Chartered, rumbles on.

The BBC reports that seven banks (HSBC, Royal Bank of Scotland Barclays, Citigroup, Deutsche Bank, JPMorgan and UBS), are to be questioned in the US for alleged Libor manipulation.

The US authorities will look to see if there is sufficient evidence to support a criminal prosecution.

The coming weeks will see much behind the scenes haggling between the banks, the regulatory authorities and governments, in order to avoid this going to court.

Scrap Libor

Martin Wheatley has called for Libor to be scrapped, and for the fictitious Libor rates be replaced with "reality".

What an excellent recommendation!

Read his full report below:

The BBA Tries To Rewrite History

Zero Hedge have revealed that the hopeless, hapless and despised British Bankers' Association (BBA) has attempted to rewrite history, and is trying to pretend that it had no regulatory role wrt Libor.

Specifically, as per Zero Hedge, here is an extract of the BBA's current governance documentation:

"There is a named individual at each bank responsible for submitting the daily bbalibor rates to Thomson Reuters and this will be the person responsible for the bank's cash - usually their title is 'treasurer' or similar. There is written guidance on what information that person should take into account when calculating that day's rates for his or her bank. As all contributor banks are regulated, they are responsible to their regulators, rather than BBA LIBOR Ltd. or the FX&MM Committee, for maintaining appropriate procedures for contributing, including the maintenance of internal chinese walls."

This is the "same" paragraph a few weeks ago:

"BBA LIBOR Ltd. receives the fixings and underlying contributor data at the same time as all other live data recipients and monitors all submissions into the fixing process. Any anomalous rates are queried with the submitting bank, and a log of these queries is kept and given to the FX&MM Committee on a periodic basis, who may choose at their discretion to follow up these queries in line with established governance and scrutiny procedures."

Now that the arrest warrants are being prepared, the BBA is doing everything it can to distance itself from Liborgate.

Too little too late!

LIEBORGATE The Oncoming Storm

The roll of distant thunder coming across the Atlantic has hit the shores of Britain.

The Washington Post reports that the Bank of England was warned by Timothy Geithner (then President of the Federal reserve bank of New York) in 2008 that Libor needed to be fixed:

"While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way a critical global benchmark called the London interbank offered rate, or Libor, is calculated, according to a June 1, 2008, e-mail obtained by The Washington Post.

Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and establishing a “credible reporting procedure.”

'We would welcome a chance to discuss these and would be grateful if you would give us some sense of what changes are possible,' Geithner wrote."

Here is a link to a copy of the email and the Bak of England's response: Geithner email.

The New York Fed is set to release a treasure trove of documents Friday morning (EST) detailing its response to concerns raised as early as 2007 about Libor, which helps set the standard for $10 trillion worth of corporate bonds, credit cards, mortgages and other loans around the world.

The storm is coming, the Bank of England and others had best batten down the hatches!

Bob Diamond To Receive "Only" £2M

"Good" news everybody, Barclays has agreed a payoff for Bob Diamond.

Diamond has agreed to waive his share awards (worth around £20M) and will walk away with "only" £2M, being 12 months' salary, pension allowance and other benefits.

Diamond is estimated to have earned well over £100m during his career at Barclays.

Here is a statement released by Barclays to confirm Bob Diamond's pay-off arrangements:

"Mr Diamond has voluntarily offered to waive all of his unvested deferred bonus awards and long term incentive share awards.This is in addition to his previous decision to forgo any consideration for an annual bonus this year. The Board has accepted this offer, and all of Mr Diamond's outstanding unvested deferred bonus awards and long-term incentives will lapse, with no compensation made in respect of the lapsed awards.

The Board has asked Mr Diamond to support the transition to the new Chief Executive as necessary, and he has agreed. Consistent with his contract of employment, Mr Diamond will receive up to 12 months' salary, pension allowance and other benefits; and he has agreed to forgo his contractual entitlement to tax equalisation going forward. The Board has agreed with Mr Diamond that he will not receive any future bonus or incentive awards; nor will he receive any further compensation payment in connection with the termination of his employment.

Marcus Agius, Chairman, said: "The Board deeply regrets the circumstances that led to Bob resigning his positions at Barclays. Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that. These circumstances do not detract in any way from the tremendous legacy that Bob has left at Barclays, and his actions are clear indications of his commitment to the institution to which he has contributed so much."

Bob Diamond said: "For the past 16 years I've had the honour of working at Barclays. The wrongful actions of a relative few should not detract from the outstanding work that Barclays employees carry out each day on behalf of clients and customers around the world. It is my hope that my decision to step down and today's agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper."

In other news, Farepak savers after a six year wait have been advised that they will receive 50p for every £1 they saved with the company.

The Diamond and Tucker Emails Obtained By Sky