BU Now » Banks

Whistleblower to turn over files to WikiLeaks

Jo Breiner — Mon, 17 Jan 2011 12:58:33 +0000

Rudolf Elmer, a former Swiss banker, is set to hand over files to WikiLeaks that show offshore bank accounts of high net worth individuals and corporations to evade tax payments. Law professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, offers the following comment:

“Rudolf Elmer has demonstrated that the ‘shadow banking system’ is not just about complex financial instruments that hide risk and the casino in which those instruments are traded. It is also about a dark corner of the banking system that hides personal and corporate wealth for a host of purposes, especially tax evasion.

As Elmer does his WikiLeaks dump in London, one issue for federal prosecutors to focus on is whether the banks and their officers filed suspicious activity reports, so-called ‘SARS’, as is required by the Bank Secrecy Act whenever an institution or its employees know or have reason to suspect illegal activity.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

The weak link in bank reform

Dick Taffe — Thu, 08 Jul 2010 18:59:37 +0000

The financial regulatory reform legislation likely to be sent soon to President Obama calls for the biggest banks and hedge funds to put up some $20 billion in fees to pay the costs of additional oversight by regulators. But even that won’t help regulators don’t quickly upgrade the training and standards of rank-and-file examiners, says Mark Williams, a former Fed examiner who now teaches finance in the School of Management. In a Boston Globe op-ed, Williams — author of “Uncontrolled Risk” about the fall of Lehman Brothers — says if bank examiner performance over the last decade is an indicator, oversight may prove grossly inadequate unless the regulators become as financial sophisticated as those they’re supposed to regulate.

“Our entire financial system is dependent on strengthening regulator oversight and closing this sophistication gap.”

Contact Mark Williams 617-358-2789, williams@bu.edu

Dealing with TBTF institutions

Dick Taffe — Wed, 27 Jan 2010 17:28:13 +0000

President Obama has proposed taxing banks that have benefited from TARP bailouts and restricting banking trading activities so depositor funds are not put at risk. In a Boston Globe op-ed, Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says it would be more effective to make too-big-to-fail institutions return every dollar of the subsidy they get by being able to borrow funds at a lower rate than less complex institutions.

“We must remind ourselves and Obama that the subsidy comes out of taxpayers’ pockets.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Protect taxpayers from TBTF firms

Dick Taffe — Mon, 25 Jan 2010 14:33:50 +0000

In the wake of the great financial crisis/bailout of 2009, it’s in the U.S. taxpayers’ interest to again separate the “financial markets industry” from the “financial services industry.” In a Reuters commentary, former deputy Comptroller of the Currency Robert Bench, now a senior fellow at the BU School of Law’s Morin Center for Banking and Financial Law, says now is the time for Congress to create an industry financed “Systemic Resolution Fund” as insurance against failures at those “too-big-to-fail” financial instutions.

Contact Robert Bench, 617-353-5428, bobbench@bu.edu

Volker’s return to influence

Dick Taffe — Fri, 22 Jan 2010 14:31:14 +0000

Paul Volker appears to be regaining influence in Washington as President Obama enbraces the former Federal Reserve chairman’s plan to keep banks from engaging in risky investment speculation. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and a former counsel to the Fed Board of Governors, says it’s about time.

“Obama’s listening to Paul Volcker is long overdue. This is a hopeful sign of sounder proposals to come from the Administration on financial and economic matters.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

Wall Street’s record compensation

Dick Taffe — Fri, 15 Jan 2010 17:06:43 +0000

Despite fury over Wall Street’s pay culture, major banks and securities firms are headed toward a record compensation total of around $145 billion for 2009 when all the numbers are out. Economics Professor Laurence Kotlikoff, a senior economist in the Reagan administration whose new book, “Jimmy Stewart is Dead,” about the banking industry, will be published next month, says the idea of taxing Wall Steet now is a “transparent joke.”

“Wall Street is continuing to play craps with the taxpayers’ chips and to lay the ground for a financial earthquake of even greater magnitude than we’ve just experienced.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

Wall Street CEOs ‘splain the crisis

Dick Taffe — Thu, 14 Jan 2010 22:01:24 +0000

CEOs of four big Wall Street Banks were summoned to Washington to explain to the new Financial Crisis Inquiry Commission what role their institutions played in the Crash of ’08. At one point, Goldman Sachs’ CEO Lloyd Blankfein got blasted for likening some of the crisis to a hurricane or similar acts of God. Law Professor Tamar Frankel, an authority on securities law and author of “Trust and Honesty: America’s Business Culture at a Crossroad,” says it all about risk.

“Goldman’s CEO noted that management ‘manages’ risk – risk to shareholders, employees, communities, and the country. It’s time management joined the risk takers and took the risk of its own actions.”

Contact Tamar Frankel, 617-353-7737, tfrankel@bu.edu

Obama proposes bank tax

Dick Taffe — Thu, 14 Jan 2010 17:18:27 +0000

To recoup taxpayer losses fom the Wall Street bailout, President Obama is proposing taxing about 50 big banks and major financial institutions for at least the next decade. Former deputy Comptroller of the Currency Robert Bench, now a senior fellow at the BU Law School’s Morin Center for Banking and Financial Law, says payback is needed, but it should be separated from Treasury funds.

“The scheme should be an industry financed process, not a tax-code process. We want to separate the taxpayer as much as possible by keeping the resolution fund separate and distinct from general Treasury monies.”

Contact Robert Bench, 617-353-5428, bobbench@bu.edu

FDIC seeks to rein in banker’s pay

Dick Taffe — Wed, 13 Jan 2010 19:10:13 +0000

Despite opposition from other banking agencies, the FDIC wants to penalize banks for compensation packages that are based on bankers taking too much risk. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says it’s too bad the FDIC is unwilling to work with other U.S. and international regulators to find a rational approach to bank-compensation practices.

“At a time of financial crisis such as we are experiencing, it is more important than ever that the regulatory agencies coordinate major policy initiatives. The FDIC apparently disagrees and would prefer to blaze its own trail.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

AIG backlash heats up

Dick Taffe — Thu, 24 Dec 2009 16:40:02 +0000

The heat continues to increase on insurance giant AIG, which got $182 billion in taxpayer bailouts yet gave out $165 million in bonuses. New York Senator Chuck Schumer says President Obama’s pay czar should be given the power to recover the “outrageous” bonuses. Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says taxpayers also must be concerned about AIG’s ability to unravel and the complex debt obligations that led to the financial meltdown.

“Refusing to pay back ’08 bonuses, and maneuvering for ’09 payouts, gives us little confidence that their efforts at unwinding the complex products they created will be done in the best interests of the company’s taxpayer-shareholders. Why should we be trusting the same AIG folks that created these products to drive the hard bargain with counterparties to AIG? Where is Elizabeth Warren and her TARP oversight white hat when needed?”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu