U.S. Banker Incompetence or Fraud

Here you will find the all the exciting details of how to do business in America. This isn’t boring theory or textbook learning. All of the examples are from current, real-world events. Learn from the greatest American business institutions and people how to operate in the U.S.

U.S. bankers often sell products to their customers that are detrimental to their customer’s financial well being. Remember that bankers care more about earning high fees and commissions than your financial goals.

Here is a real world example. In August of 2008, several banks agree to buy back auction rate securities from retail investors and pay fines. Many times the banks told their customers that auction rate securities were as safe as money market investments. They weren’t. Maybe the banks actually believed the auction rate securities were safe as money market investments. In that case, the banks were incompetent. Maybe the banks knew the auction rate securities were not very safe and sold them to their customers anyway. In that case, the banks committed fraud. I expect fraud. None of the bankers went to jail.

Here is deal the banks accepted in August of 2008.
JP Morgan Chase agreed to buy back $3.0 billion of auction rate securities from retail customers and pay a fine of $25 million.

Morgan Stanley agreed to buy back $4.5 billion of auction rate securities from retail customers and pay a fine of $35 million.

Citigroup, Inc. agreed to buy back $7.0 billion of auction rate securities from retail customers and pay a fine of $100 million.

UBS AG agreed to buy back $20.0 billion of auction rate securities from retail customers. I did not find documentation as to the fine paid.

You think this is bad. Wait until you hear how the banks screwed their corporate customers by marketing auction rate securities.

What does this mean to you? Remember that bankers care more about earning high fees and commissions than your piddling financial goals. Bankers only want to maximize fee and commissions. Banks don’t care if you go bankrupt due to their advice. In fact, they laugh about how they screw over their customers. They think it is hilarious. This is how business is now done in America.