Goldman Sach's is supposedly coughing up a $5.1 billion headline figure for its role in mis-selling dodgy Mortgage Backed Securities in the 2005-2007 run up to the financial crisis LINK1. It is great that such mis-selling is now resulting in settlements that clearly penalize the organizations involved. I don't mind the odd rip-off here and there in life, but we are talking about investors in pension funds, shareholders in other banks being ripped off by being mis-sold securities supposedly worth billions that were being sold as investment grade when they clearly were not ! However, in reality Goldman will be paying much less as the following article makes clear LINK2. I normally subscribe to the rule "caveat emptor" which means buyer beware when it comes to the world of finance but with all these settlements we clearly have a case that "caveat venditor," that is, seller beware is part and parcel of the modern world of finance. These settlements must be hurting these investment bankers - think of all the bonuses they must be foregoing when making such settlements. Still since their stock price has been doing nothing for a decade one could reasonably question whether any bonuses should have been paid during this entire period.
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I have studied the process of European integration in some detail at the College of Europe in Bruges where I also became a teaching assistant for a year. I also had the pleasure of doing my PhD thesis at the European University Institute in Florence. So it is probably no surprise that I would have a European Union bias. But let me state 12 simple reasons why I want the UK to remain as part of the European Union.
I am just like most people I pay my tax and to be honest I don't mind paying what I owe as we get schools and education, healthcare, roads and social security for those that need it. I have, however, for a long time sort of realised that this is not an even playing field. I know that some of the wealthy manage to avoid paying what they owe through dodgy offshore companies and operations. This is why the release over 11 million papers from the law firm Mossack Fonseca is great news LINK1. The papers appear to include emails, bank records and client information dating back around 40 years. As well as many wealthy they seem to implicate many politicians and their associates from across the world. Some are not surprising Putin - Russia, Asad-Syria, Gaddafi-Libya, Mubarak - Egypt but there will be many more as well.
It seems that Mossack Fonseca has been working with many major banks in helping to set up dodgy offshore companies that enable some of the super wealthy to avoid tax and for dodgy money laundering to happen. This is certainly a huge scandal and I hope many of those involved lose lots of sleep and eventually get their comeuppance. It could also mean big problems for Panama which is one of the last big tax havens. I expect this story it is going to run for quite some time and hopefully many will end up having to cough up big fines and in some cases long jail sentences. The international consortium for investigative journalism has set up an excellent guide to the panama papers here is the LINK2 the Fusion.net website has nice coverage of this story LINK3 |
AuthorThe author of this blog is Keith Pilbeam who is currently Professor of International Economics and Finance at City, University of London. Archives
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