The recent $14 billion – yes $14 billion fine of the German-based Deutsche Bank, reveals how unethical behaviour eventually ends in pain, not only for innocent people but those to commit the unethical acts. Buts let’s see some recent cases of unethical bankers.
Unethical bankers in Deutsche Bank allegedly packaged together bunches of sub-prime mortgages (which would have little chance of being repaid) and sold them to others. At the same bank, unethical bankers were allegedly involved in mirror trades, where clients bought shares in Russia and simultaneously sold similar shares abroad in foreign currency. This could have skirted international sanctions against Russia by turning Roubles into dollars held outside the country.
Unethical bankers connived together to manipulate the Libor (London Interbank Offered Rate) rate, which is the interest rate banks use to lend to each other and upon which almost all other loans to businesses are based. One trader’s messages from indicated that for each basis point (0.01%) that Libor was moved, those involved could net, “about a couple of million dollars.” About 20 banks have been named in these scandals.
Unethical bankers manipulate the price of precious metals. When the Big Banks manipulate gold/silver to artificially low levels, they hope to create panic selling so that they can cover their shorts as low as possible. They do his with high frequency trading. The big banks are able to stack the bid with spoof orders because of their size and privilege. They are able to place the trades in large size because of their already super-concentrated short and long positions. The bid lasts long enough to trigger automatic selling by speculative funds t through computer selling) into and down goes the price. The big banks are ready and willing to buy. And they clean up. The reverse happens on the way up.
Unethical bankers instead of suggesting the financial products that are best for their customers, push those that give them the best commission. Often there are loans with lower rates of interest but they don’t tell the customers.
Individual unethical bankers gamble on the movement on prices of shares and commodities BUT way beyond the limits set by their organisations.
As always we wonder, why do people do this. Probably greed but perhaps also the sense of achieving something … a record or even fear of losing one’s job if a target is not met. However, as we also know, unethical bankers, individually or as a group will eend up bunkrupting their organisations and even ending up in jail.