Can The Banking Industry Make It 24 Hours Without A New Scandal?

In the last 10 days:

• The LIBOR inquiry in London early last week revealed that the Bank of England pressed Barclays to lower their quoted rate.

• The next day it was discovered that Peregrine Financial Group was missing $215 million of customer money.

• Later we found out that for many years Peregrine was submitting falsified financial statements to the National Futures Association (NFA).  No one at the NFA independently verified these statements with the banks supposedly holding these funds.

• At the end of the week, JP Morgan’s quarterly call revealed that CDS prices were made up to the point that Q1 earnings need to be restated and a criminal probe is underway.  A similar mispricing of CDS at UBS led to prison time.

After the close on Friday we learned that the New York Federal Reserve (headed by Tim Geithner at the time) was aware of Barclay’s LIBOR scandal and essentially did nothing about it.

• Yesterday, as detailed above, we found out that HSBC has been used as a money-laundering and terrorist financing operation (Senate Probe Faults HSBC).

None of this should move the markets in the short-term on its own, but collectively it paints the financial industry as an out of control criminal organization with either incompetent or complicit regulators.

Today the reputation of bankers is between that of a used car salesmen and drug dealers.  The last 10 days has made it worse.

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