07/13/2012 archive

If it weren’t Friday the Thirteenth, you’d think it was April’s Fool. It’s all the usual excuses by the CEO’s and the TBTF banks, “we are just finding it was this bad”

JPMorgan Fears Traders Obscured Losses in First Quarter

JPMorgan Chase, which reported its second-quarter results on Friday, disclosed that the losses on a soured credit bet could mount to more than $7 billion, as the nation’s largest bank indicated that traders may have intentionally tried to conceal the extent of the red ink on the disastrous position. [..]

If the trades, made out of the powerful chief investment office unit in London, had been properly valued, the bank said it would have lost $1.4 billion on the position in the first quarter.

Jamie Dimon, the bank’s chief executive who has consistently reassured investors that the losses would be contained, announced that the bank lost $4.4 billion on the botched trade in the second quarter. So far this year, the bank says it has lost $5.8 billion on the trades in credit derivatives.  [..]

Since announcing the multibillion-dollar mistake, JPMorgan has lost $25 billion in market value.

Jamie Dimon finally admitting what we already knew but still not admitting that the real losses for the bank is closer to $30 billion. He is either the most incompetent CEO or he thinks that we’re all stupid to realize he knew about tis all along.

or  “but Timmy wrote a memo”

Barclays Informed New York Fed of Problems With Libor in 2007

A Barclays employee notified the Federal Reserve Bank of New York in April of 2008 that the firm was underestimating its borrowing costs, following potential warning signs as early as 2007 that other banks were undermining the integrity of a key interest rate.

In 2008, the employee said that the move was prompted by a desire to “fit in with the rest of the crowd” and added, “we know that we’re not posting um, an honest Libor,” according to documents that the agency released on Friday. The Barclays employee said that he believed such practices were widespread among major banks.

In response, the New York Fed began examining the matter and passed their findings to other financial authorities, according to the documents.

But the agency’s actions came too late and failed to thwart the illegal activities. By the time of the April 2008 conversation, the British firm had been trying to manipulate the interest rate for three years. And the practice persisted at Barclays for about a year after the briefing with the New York Fed.

Friday’s revelations shed new light on regulators’ role in the rate manipulation scandal. The documents also raise concerns about why authorities did not act sooner to thwart the rate-rigging.

The perp’s figured they were too big to indict and the Justice Department agreed.

In Barclays Inquiry, the Calculation in Making a Deal

The question needs to be faced in the wake of the bank’s admitted efforts to manipulate the London interbank offered rate, known as Libor, the benchmark for countless interest rate determinations and approximately $450 trillion in derivative contracts.

If the Justice Department was looking for a textbook case of white-collar financial crime – including a conspiracy that was flourishing at the height of the financial crisis – this would seem tailor-made. As the facts released by the government make clear, there were two separate but overlapping schemes to manipulate Libor within Barclays. Yet the bank secured a nonprosecution agreement and agreed to pay a penalty of more than $450 million, a comparatively paltry sum for a bank that had more than £32 billion ($50 billion) in revenue in 2011. “The perception so far has been that the regulators have been toothless,” John C. Coffee Jr., professor of law and specialist in white-collar crime at Columbia Law School, told me this week. [..]

(The criminal division said its agreement with Barclays was reached in conjunction with the antitrust division.)

And this is why Richard Diamond and Jamie Dimon have nothing to worry about and the world is still being screwed.

Financial Fraud Enforcement Task Force is the umbrella group for the RMBS (Residential Mortgage-Backed Security) Task Force. Remember that task force that was so gleefully announced by President Obama in his State of the Union address in January, appointing New York State Attorney General Eric Schneiderman to participate? Yeah, that one. It’s been under the radar for the most part and as yet has inadequate staff no office space or even a phone number.

The gang at FireDogLake has been relentless in tracking down what he FFETF and the RMBS have and haven’t done. My FDL contributor massacio has been a wizard at uncovering new releases that claim the groups are making progress when in reality the Obama DOJ is refusing to go after the big fish:

Like every one else who is following the refusal of the Obama Administration and its cowardly prosecutors to investigate Wall Street for crimes in the run-up to the Great Crash, I figured this was just a name given to a collection of prosecutors around the country who were already working on fraud cases.

The official website of the FFETF confirms this. [..]

I’ve gone back through February looking at the press releases, and this is a fair sample of the work of the FFETF. There is not a single case related to fraud in the creation, sale or operation of real estate mortgage-backed securities, the frauds that led to the Great Crash. The FFETF is a random collection of people working on cases that can be tied to financial fraud.

The FFETF and its 20 subpoenas and its 50 or more personnel and whatever else we hear from them are a sham. Wall Street has nothing to fear from the FFETF and its co-chair, Eric Schneiderman.

Richard (RJ) Eskow points out that Wall St. has nothing to fear from these task forces or for that matter from Attorney General Eric Holder:

Confidential sources say that the President’s much-touted Mortgage Fraud Task Force is being starved for vital resources by the Holder Justice Department. Political insiders are fearful that this obstruction will threaten Democrats’ chances at the polls. Investigators and prosecutors from other agencies are expressing their frustration as the ever-rowing list of documented crimes by individual Wall Street bankers continues to be ignored. [..]

A growing number of people are privately expressing concern at the Justice Department’s long-standing pattern of inactivity, obfuscation, and obstruction. Mr. Holder’s past as a highly-paid lawyer for a top Wall Street firm, Covington and Burling, is being discussed more openly among insiders. Covington & Burling was the law firm which devised the MERS shell corporation which has since been implicated in many cases of mortgage and foreclosure fraud. [..]

But there’s no evidence that Mr. Holder’s Justice Department has mounted a serious effort to investigate bank crime. Its first, much-touted “coordinated effort” to crack down on mortgage fraud turned out to be a PR trick, not a law enforcement effort, which the Columbia Journalism Review described with the headline, “The Obama Administration’s Financial-Fraud Stunt Backfires.” That’s not the kind of press a President wants to see repeated in an election year.

“Democrats have been having good luck painting Romney as the candidate of the one percent,” said one observer. “But that could change quickly with a few bad headlines.”

While nobody we spoke with was willing to raise the subject of a Holder resignation, they did insist that time was running out for the Attorney General to show concrete results.

Without criminal investigations and indictments, bankers will continue to commit crimes. The LIBOR scandal, which implicates a number of leading banks, proves that. The Justice Department’s inaction is putting the world economy at risk by allowing bankers to continue their reckless and illegal behavior.

The clock is ticking on many of these case since there is a five year statute of limitations under federal law for civil charges. There is now mounting evidence that Obama administration is letting that statute of limitations expire on the criminal charges, too. David Dayen at FDL News reports that he spoke with Rep. Brad Miller (D-NC), a member of the House Financial Services Committee, concerning the Justice Department stonewalling prosecutions of securitization abuses. He asked Miller about the coalition of housing advocates charging the Justice Department with stonewalling the investigation and denying it critical resources:

Miller, who at one point was a potential choice to be the executive director of the working group, said that he had not personally spoken with anyone involved in the task force since he missed out on the position in late February/early March. But as an interested observer, he made a few points. “It does appear that the task force is really not doing anything that the various agencies weren’t doing already,” Miller said. “They’re just saying they are doing it as part of this task force.”

And Miller added something else, that members of the various agencies associated with the working group have acknowledged this in conversations with members of Congress. Miller cautioned that he hadn’t heard this from agency officials personally, but that other members have. [..]

Miller also noted that the statutes of limitations, at least on criminal fraud claims, have almost certainly run out. “I said a few weeks ago that the clock on the statute of limitations was ticking like Marisa Tomei’s biological clock in My Cousin Vinny,” Miller said. “If there have not been extensions worked out in private negotiations, and if the law is that the statute runs from occurrence rather than discovery, it’s probably the case that most statutes have expired.”

And unless we forget our erstwhile Treasury Secretary Timothy Geithner, maybe up to his ears in the multi-trillion dollar LIBOR fraud:

The flames of the Libor scandal have been creeping up under the feet of Treasury Secretary Timothy Geithner. Evidence showed that the New York Fed found out about the rate-rigging from Barclays and other banks in 2007, when Geithner was still the bank President. This appeared to display regulatory impotence in the face of massive fraud. Geithner had to respond. And he did with a classic version of CYA. [..]

Geithner passed the documents around to anyone who wanted them last night. If there can be something less than the bare minimum, a two-page document to the Bank of England – not the banks implicated in the rate-rigging over which the NY Fed has control, but some other regulator – would be it. He didn’t speak out publicly, he didn’t use his regulatory power over the banks he had authority and in defense of the stateside financial products calculated using the Libor benchmark rate, he just wrote a memo.

The memo says that the Bank of England should “eliminate the incentive to misreport” Libor on the part of the banks. So there’s no doubt in the minds of the regulators that there was misreporting going on.

Timmy’s excuse for doing nothing now is that he did nothing then

The Federal Reserve Bank of New York will release on Friday documents showing it took “prompt action” four years ago to highlight problems with the benchmark interest rate known as Libor and to press for reform, an official at the regional U.S. central bank said on Wednesday.

As early as 2007, the New York Fed may have discussed problems with the setting of the London Interbank Offered Rate with Barclays Plc, the British bank currently at the center of the Libor scandal and investigation

Well, Timmy did send a memo.

Let’s Talk Turkey About Greece

Ian Welsh

2012 May 26

• Start gun-running and other black market activities up.  European gun-running currently goes through Albania.  Greece has much better ports.  If the Euros don’t like it, they can militarize Greece’s borders at a cost much higher than feeding the Greeks.
• Become a full on black-hole for banking.  If anyone wants to store money in Greece, they can.  No questions asked, no forms needed.
• Make deals with other “pariah” and semi-pariah nations.  Start with Iran and Russia for oil (Iran will be happy to give oil in exchange for black market help).  Make a deal with various 2nd world nations for food, start with Argentina, they have no reason to love the IMF or the European Union, which promised to “punish” them for nationalizing oil in Argentina.  In exchange Greece can offer use of their fleet, for cheap, and port rights for the Russian navy.  They’ve wanted a true warm water port for some time.  Offer them a nice island in the Med with a 30 year lease.

Europe’s Downturn Creates Unlikely Smugglers

By STEPHEN CASTLE and DOREEN CARVAJAL, The New York Times

Published: July 11, 2012

For years, law enforcement officers and smugglers have played cat and mouse in Europe, where contraband cigarettes are stashed in everything from furniture shipments to loads of Christmas trees. But Europe’s four-year-old economic crisis is expanding the black market for cigarettes, robbing European Union nations of valuable revenue and drawing in a new class of smugglers.

…

Hard facts about this smuggling trade are found in the lowliest places: the garbage. In annual surveys, financed by cigarette companies, researchers fan out to major cities in 27 European nations and collect crumpled cigarette packs. In turn those packs are analyzed by laboratories to determine how many are bought across the counter and how many are counterfeit. Some boxes are so meticulously produced in China, Dubai or Eastern Europe that they contain bogus tax stamps for different nations.

The latest results of the garbage scavenging showed the black market competition had increased to record levels. In Spain, illicit sales last year soared 300 percent to more than 4.6 billion cigarettes. In the struggling region of Andalusia, they showed, contraband cigarettes commanded 20 percent of the market.

In Ireland, smugglers are robust competitors with legal cigarette companies, reaching more than 17 percent. Over all, black market cigarettes continued a steady climb for the fifth straight year, topping 10 percent of consumption or 65 billion cigarettes, according to the annual report issued in June by KPMG for Philip Morris International.

…

“A lot of people perceive this as a ‘Robin Hood’ type of fraud and that the ordinary person in the street, who has a lot less money these days, is gaining the benefit,” said Austin Rowan, head of the unit responsible for cigarette smuggling at OLAF, the European Union’s Anti-Fraud Office. “But this trade is financing organizations that are involved in other activities including drugs smuggling.”

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

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Paul Krugman: Who’s Very Important?

“Is there a V.I.P. entrance? We are V.I.P.” That remark, by a donor waiting to get in to one of Mitt Romney’s recent fund-raisers in the Hamptons, pretty much sums up the attitude of America’s wealthy elite. Mr. Romney’s base – never mind the top 1 percent, we’re talking about the top 0.01 percent or higher – is composed of very self-important people.

Specifically, these are people who believe that they are, as another Romney donor put it, “the engine of the economy”; they should be cherished, and the taxes they pay, which are already at an 80-year low, should be cut even further. Unfortunately, said yet another donor, the “common person” – for example, the “nails ladies” – just doesn’t get it.

Amy Goodman: The Pain in Spain Falls Mainly on the Plain (Folk)

As Spain’s prime minister announced deep austerity cuts Wednesday in order to secure funds from the European Union to bail out Spain’s failing banks, the people of Spain have taken to the streets once again for what they call “Real Democracy Now.” This comes a week after the government announced it was launching a criminal investigation into the former CEO of Spain’s fourth-largest bank, Bankia. Rodrigo Rato is no small fish: Before running Bankia he was head of the International Monetary Fund. What the U.S. media don’t tell you is that this official government investigation was initiated by grass-roots action.

The Occupy movement in Spain is called M-15, for the day it began, May 15, 2011. I met with one of the key organizers in Madrid last week on the day the Rato investigation was announced. He smiled, and said, “Something is starting to happen.” The organizer, Stephane Grueso, is an activist filmmaker who is making a documentary about the May 15 movement. He is a talented professional, but, like 25 percent of the Spanish population, he is unemployed: “We didn’t like what we were seeing, where we were going. We felt we were losing our democracy, we were losing our country, we were losing our way of life. … We had one slogan: ‘Democracia real YA!’-we want a ‘real democracy, now!’ Fifty people stayed overnight in Puerta del Sol, this public square. And then the police tried to take us out, and so we came back. And then this thing began to multiply in other cities in Spain. In three, four days’ time, we were like tens of thousands of people in dozens of cities in Spain, camped in the middle of the city-a little bit like we saw in Tahrir in Egypt.”

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

Click on images to enlarge

July 13 is the 194th day of the year (195th in leap years) in the Gregorian calendar. There are 171 days remaining until the end of the year.

On this day in 1930, the first two World Cup matches took place simultaneously on 13 July and were won by France and USA, who defeated Mexico 4-1 and Belgium 3-0 respectively. The first goal in World Cup history was scored by Lucien Laurent of France. In the final, Uruguay defeated Argentina 4-2 in front of a crowd of 93,000 people in Montevideo, and in doing so became the first nation to win the World Cup.

Previous international competitions

The world’s first international football match was a challenge match played in Glasgow in 1872 between Scotland and England, which ended in a 0-0 draw. The first international tournament, the inaugural edition of the British Home Championship, took place in 1884. At this stage the sport was rarely played outside the United Kingdom. As football grew in popularity in other parts of the world at the turn of the 20th century, it was held as a demonstration sport with no medals awarded at the 1900 and 1904 Summer Olympics (however, the IOC has retroactively upgraded their status to official events), and at the 1906 Intercalated Games.

After FIFA was founded in 1904, it tried to arrange an international football tournament between nations outside the Olympic framework in Switzerland in 1906. These were very early days for international football, and the official history of FIFA describes the competition as having been a failure.

At the 1908 Summer Olympics in London, football became an official competition. Planned by The Football Association (FA), England’s football governing body, the event was for amateur players only and was regarded suspiciously as a show rather than a competition. Great Britain (represented by the England national amateur football team) won the gold medals. They repeated the feat in 1912 in Stockholm, where the tournament was organised by the Swedish Football Association.

With the Olympic event continuing to be contested only between amateur teams, Sir Thomas Lipton organised the Sir Thomas Lipton Trophy tournament in Turin in 1909. The Lipton tournament was a championship between individual clubs (not national teams) from different nations, each one of which represented an entire nation. The competition is sometimes described as The First World Cup, and featured the most prestigious professional club sides from Italy, Germany and Switzerland, but the FA of England refused to be associated with the competition and declined the offer to send a professional team. Lipton invited West Auckland, an amateur side from County Durham, to represent England instead. West Auckland won the tournament and returned in 1911 to successfully defend their title. They were given the trophy to keep forever, as per the rules of the competition.

In 1914, FIFA agreed to recognise the Olympic tournament as a “world football championship for amateurs”, and took responsibility for managing the event. This paved the way for the world’s first intercontinental football competition, at the 1920 Summer Olympics, contested by Egypt and thirteen European teams, and won by Belgium. Uruguay won the next two Olympic football tournaments in 1924 and 1928. Those were also the first two open world championships, as 1924 was the start of FIFA’s professional era.

Due to the success of the Olympic football tournaments, FIFA, with President Jules Rimet the driving force, again started looking at staging its own international tournament outside of the Olympics. On 28 May 1928, the FIFA Congress in Amsterdam decided to stage a world championship itself. With Uruguay now two-time official football world champions and to celebrate their centenary of independence in 1930, FIFA named Uruguay as the host country of the inaugural World Cup tournament.

The national associations of selected nations were invited to send a team, but the choice of Uruguay as a venue for the competition meant a long and costly trip across the Atlantic Ocean for European sides. Indeed, no European country pledged to send a team until two months before the start of the competition. Rimet eventually persuaded teams from Belgium, France, Romania, and Yugoslavia to make the trip. In total thirteen nations took part: seven from South America, four from Europe and two from North America.

World Cups before World War II

After the creation of the World Cup, the 1932 Summer Olympics, held in Los Angeles, did not plan to include football as part of the schedule due to the low popularity of the sport in the United States, as American football had been growing in popularity. FIFA and the IOC also disagreed over the status of amateur players, and so football was dropped from the Games. Olympic football returned at the 1936 Summer Olympics, but was now overshadowed by the more prestigious World Cup.

The issues facing the early World Cup tournaments were the difficulties of intercontinental travel, and war. Few South American teams were willing to travel to Europe for the 1934 and 1938 tournaments, with Brazil the only South American team to compete in both. The 1942 and 1946 competitions were cancelled due to World War II and its aftermath.

Saint-Jean-de-Maurienne / Annonay Davézieux (140.4 miles)

Le.  Tour.  De.  France.

You see, it’s not just the 1:26.  You can think of scenarios where you could make that time back.  Nope, it’s the fact that you now need 3 buses and Cadel Evans has demonstrated that he’s not even close to finding a solution to any of the other contenders.

Yes, we have Medium Mountains today.  Two category 1s and a category 3 with the Award point after the two category one climbs.  However much the commentators and organizers may wish it however, it doesn’t seem like that’s any kind of advantage for Evans.  He can’t out climb, out sprint, or out trial them, what exactly is he supposed to do?

Mark Renshaw, Bauke Mollema, Rob Ruijgh, Gustav Larsson, and Lieuwe Westra had to withdraw yesterday, Fabian Cancellara did not start so he could visit his wife and newborn.  Alessandro Petacchi and Yuriy Krivtsov were outside the time limit.  Jean-François Pescheux, the official site analyst, thinks that many more Sprinters will be forced out today.

General Classification

Coverage is customarily on Vs. (NBC Sports) starting at 6:30 am with repeats at noon, 2:30 pm, 8 pm, and midnight.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Saint-Jean-de-Maurienne / Annonay Davézieux (140.4 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

Our idiot ‘Masters of the Universe’ who can’t even make money on carry trades at 0% borrowing costs are soon going to learn that 10%+ return on investment is not part of the Constitution or Bill of Rights.

Get ready for the end of record corporate profits

By MATTHEW CRAFT, AP Business Writer

6 days ago

For almost three years, no matter what has rattled the financial markets – a debt crisis in Europe, high gasoline prices, a slower economy – investors have been soothed by rising corporate profits.

…

Over recent weeks, a motley collection of chain stores, steel producers and technology titans have warned of slowing profits. They all point to similar culprits – flagging sales to Europe and slower economic growth in China.

…

“You’ve seen the evidence,” says Adam Parker, chief U.S. equity strategist at Morgan Stanley, the investment bank. “A ton of companies have already told you the economy is slowing.”

The list of companies that have warned of trouble is long and varied, and includes well-known names such as McDonald’s, Cisco, Starbucks and Tiffany & Co.

Add them up, and 94 companies have lowered their estimates for this earnings season, which begins on Monday when Alcoa, the aluminum maker, reports its results. Only 26 have raised their estimates.

Morgan Stanley’s research team says the ratio hasn’t been that lopsided toward the negative since the summer of 2001, when the economy was in the middle of an eight-month recession brought on by the bursting of a bubble in technology stocks.

Shares Fall for a Sixth Day

By THE ASSOCIATED PRESS

Published: July 12, 2012

Wall Street stocks slid for a sixth consecutive day on Thursday as concern spread that weaker global economic growth and the European debt crisis would hurt American corporate earnings. The Standard & Poor’s 500-stock index was headed for its longest losing streak since mid-May.

…

Aluminum maker Alcoa, which started the second-quarter earnings season on Monday, reported weak revenue because of the faltering global economy. Fastenal, an American industrial distributor, reported revenue Thursday that was weaker than analysts had expected.

Marriott, the hotel operator, and Progressive, an insurance company, both fell after reporting weak financial results.

…

Supervalu, the supermarket operator, plunged by nearly half after it reported a sharp drop in net income late Wednesday and suspended its dividend. The company owns Albertsons, Jewel-Osco and Save-A-Lot.

Supervalu’s losses dragged on a rival grocery chain, Safeway, which fell 10.5 percent. Safeway’s was the biggest percentage decline in the S.&P. 500 index.

The weak corporate results will probably lead analysts to lower their quarterly earnings forecasts for the entire S.&P. 500, said John Fox, a co-manager of the FAM Value Fund, which specializes in small and medium-sized companies.

…

New numbers to be released on Friday are expected to show that China’s growth in the second quarter fell to 7.3 percent from the previous quarter’s 8.1 percent, which was a three-year low. Revenue from the construction, shipbuilding and export manufacturing industries might have been cut in half since last year.

Because LIBOR Investor Fraud is so yesterday.

HSBC Reveals Problems With Internal Controls

By LANDON THOMAS JR. and MARK SCOTT, The New York Tmes

July 12, 2012

The money laundering, which a U.S. Senate subcommittee indicates was linked to terrorism and drug deals, could result in HSBC’s paying fines of up to $1 billion, according to analysts.

…

In the case of the money laundering, the U.S. authorities have been examining HSBC for several years. On Tuesday, officials from the bank are set to testify in Washington before the Senate Permanent Subcommittee on Investigations. A subcommittee spokesman declined on Thursday to discuss the investigation, but the panel’s Web site describes the agenda: “a hearing on the money laundering and terrorist financing vulnerabilities created when a global bank uses its U.S. affiliate to provide U.S. dollars, U.S. dollar services, and access to the U.S. financial system to high risk affiliates, high risk correspondent banks, and high risk clients, using HSBC as a case study.”

…

Adding another political wrinkle: HSBC’s former chairman, Stephen Green, who was in office from 2006 to 2010 when many of the money-laundering detection problems occurred, is currently the trade minister in British prime minister David Cameron’s government. Mr. Green’s office did not reply to a request for comment on Thursday.

HSBC braced for huge U.S. penalty

By Sharlene Goff, Financial Times

July 12, 2012

HSBC is to apologise to US lawmakers for failing to have appropriate controls in place to ensure it did not facilitate the financing of terrorism and other criminal activities, transgressions that analysts estimate may cost it up to $1bn in fines.

…

Mr Gulliver warned that HSBC was likely to face further action from other US authorities in coming months.

HSBC said in its 2011 annual report that fines relating to money laundering issues could be “significant”. There has been speculation among analysts that the bank could be hit with a higher charge than the $619m ING, the Dutch bank, agreed to pay to settle accusations it violated US sanctions by helping Iranian and Cuban companies move billions of dollars through the US financial system. Some have suggested it could be as much as $1bn.

HSBC chief admits bank failed to control money laundering

Dominic Rushe, The Guardian

Wednesday 11 July 2012

In the memo, first reported by Bloomberg News, Gulliver said the hearing would “reveal that in the past we fell well short of the standards that our regulators, customers and investors expect”. He said: “It is right that we be held accountable and that we take responsibility for fixing what went wrong.”

…

Last month ING, the Dutch bank, paid $619m to settle accusations it helped Iranian and Cuban companies move billions of dollars through the US financial system in violation of US sanctions. Some analysts have suggested HSBC’s fine could be far higher.

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William Black, professor of economics and law at University of Missouri Kansas City, said: “There is a theme developing in Washington that the City of London is evil, that it has a corrupt culture.”

He said that while the view might not be fair, the JP Morgan scandal, Libor and now HSBC meant it was a theme that was likely to be developed. “We like to blame someone else,” he said.