Wednesday, February 6, 2013

RBS fined $615 million for rate rigging

It must be more profitable to cheat and get caught, than to not cheat at all. Queenbee.

(Reuters) - Britain's Royal Bank of Scotland will pay U.S. and British authorities $615 million and plead guilty to wire fraud in Japan to settle allegations it manipulated global benchmark interest rates.
"The RBS board acknowledges that there were serious shortcomings in our systems and controls and also in the integrity of a small group of our employees," Chairman Philip Hampton said on Wednesday.
"This is a sad day for RBS, but also an important one in continuing to put right the mistakes of the past."
More than a dozen traders at RBS offices in London, Singapore and Tokyo manipulated the London interbank offered rate (Libor), which is used to price trillions of dollars worth of loans, from at least 2006 until 2010.
The rigging continued even after traders learned that Libor submissions were being probed.
In a bid to avoid a political firestorm, the part state-owned bank will cut into its staff bonuses to pay the fines, the second-largest so far in an international investigation that has already implicated Switzerland's UBS and Britain's Barclays.
Some 87.5 million pounds ($137.1 million) will be paid to Britain's Financial Services Authority, $150 million to the U.S. Department of Justice and $325 million to the U.S. Commodity Futures Trading Commission.
Like UBS, RBS did not have to admit criminal liability in the United States, meaning it can retain its banking license there and avoid a fire sale of its U.S. business Citizens.
The bank said John Hourican, head of RBS's investment bank, had agreed to leave following the misconduct of staff in that business. Hourican had no involvement in or knowledge of the misconduct, RBS said.
Critics say the scandal over manipulation of Libor shows banks' riskier activities should be separated from basic lending functions.
UBS agreed in December to pay fines of $1.5 billion to regulators in the United States, Britain and Switzerland over Libor rigging. Its unit in Japan, where much of the wrongdoing occurred, pleaded guilty to criminal fraud. U.S. prosecutors also filed criminal conspiracy charges against two former UBS traders allegedly at the heart of the scheme.
Barclays got a non-prosecution agreement and paid $453 million in penalties. Barclays' three most senior executives, including then chief executive Bob Diamond, were also forced to leave the bank in the wake of the Libor debacle.
Finally some sanity creeps into the Post Office. QB

U.S. Post Office Plans to Stop Saturday Mail Deliveries

The U.S. Postal Service plans to end Saturday mail delivery as soon as August to cut financial losses, a change Postmaster General Patrick Donahoe said it can make without Congress’s approval if necessary.
A postal worker loads her delivery vehicle with mail in Huntington Station, New York. Photographer: Andrew Harrer/Bloomberg
The service, which lost $15.9 billion last year, said it would continue six-day deliveries of packages, deliver mail to post-office boxes and keep open retail locations that now operate on Saturdays.
The change would lead to the elimination of 22,500 jobs and cost reductions of as much as $2 billion a year, Donahoe said. The job cuts can be made by attribution and buyouts, he said at a news conference in Washington.
“We need to generate nearly $20 billion in cost reductions and revenue increases to be able to close our budget gap and repay our debt,” Donahoe said at the service’s headquarters.
Lawmakers have stifled previous cost-cutting proposals, including efforts to end Saturday mail delivery.
Cutting Saturday delivery is allowed under Congress’s continuing resolution funding government operations that expires March 27, Donahoe said.
“It is our opinion with the way the law is set with the continuing resolution, we can make this change,” he said.

Widening Losses

Representative Darrell Issa, a California Republican who leads the House Oversight and Government Reform Committee, which oversees post office operations, backed the proposal. Issa and Oklahoma Republican Senator Tom Coburn, his party’s senior member on the Senate Homeland Security and Governmental Affairs Committee, sent a letter to Congress calling the change to five- day delivery a “common-sense reform” that is “worthy of bipartisan support.”