Wednesday, June 20, 2018
Business

In title for most 'boneheaded' bank, it's a close contest among many

Mirror, mirror on the wall, who's the most boneheaded bank of all?

Right now, that dubious title is hotly contested by some of the world's biggest banks. Other contenders are right behind them.

Why do we care? Because trust in big banks already stinks. Because many of these huge banks are embedded in the Tampa Bay economy as lenders and investors. Their bungling — be it corruption, greed or bad management — undermines our ability to grow and attract business.

Let's look at the contenders.

Britain's Barclays Bank was most recently caught manipulating a key interest rate known as "Libor" — an international interest rate banks use when borrowing from one another.

Is that serious? Well, Barclays agreed last week to pay nearly half a billion dollars to settle an investigation by U.S. and British regulators into allegations that traders manipulated those interbank lending rates for profit at the expense of customers. The bank's chairman has resigned.

Barclays may be the tip of the iceberg. Bloomberg News reports New York's Citigroup, Royal Bank of Scotland Group, Britain's Lloyds Banking Group and Germany's Deutsche Bank AG are among the banks regulators are also investigating. Asks Bloomberg: Did traders collude "to rig" interest rates? Did banks "bolster their perceived stability by hiding their true borrowing costs in 2008?"

A more familiar tale of bungling is growing bigger at JPMorgan Chase, where CEO Jamie Dimon in April pooh-poohed as a "tempest in a teapot" a newly found trading loss at its London office. At the banking company's annual shareholders meeting in May, which happened to be in Tampa, Dimon continued to stress that the trading loss —then pegged at $2.3 billion — was completely manageable. That loss now is nearly four times bigger and could hit $9 billion.

Finally, there is Bank of America, a bank whose reputation has been in free fall for years. The bank's too-clever purchase in 2008 of Countrywide Mortgage for $4 billion has imploded, producing a $40 billion expense to the bank in real estate losses, legal expenses and settlements with state and federal agencies. Shame on Countrywide's sloppy lending, and B of A's failure to do its homework.

"We believe this is the right decision for our shareholders, customers and employees," Angelo Mozilo, Countrywide CEO, stated when the B of A buyout of his firm was done.

And now, what do experts say of this transaction?

"It is the worst deal in the history of American finance," Tony Plath, a banking and finance professor at the University of North Carolina at Charlotte, told the Wall Street Journal. "Hands down."

Other banks made a run for most boneheaded, but their stumbles thus far put them behind.

Federal prosecutors, for instance, filed fraud charges last year against Bank of New York Mellon Corp. for manipulating the cost of millions of dollars in currency trades. The feds allege the bank overcharged pension funds — including some in Florida — and investment managers for certain foreign currency trades, and misled them about practices that generated $1.5 billion in revenues.

Who knew "most boneheaded bank" would prove such a competitive title?

Contact Robert Trigaux at [email protected]

Comments
What historically high lumber prices mean for Florida home buyers

What historically high lumber prices mean for Florida home buyers

Blame a lack of rail cars in Canada or not enough semi trucks in the United States. Forest fires didn’t help. Tariffs played a big role, too. Even the buoyant economy takes part of the rap for frothy lumber prices, which hit all-time highs las...
Updated: 1 hour ago
Citizens considers hiking homeowners insurance rates about 8 percent

Citizens considers hiking homeowners insurance rates about 8 percent

For the second year in a row, Citizens Property Insurance Corp. is asking state regulators to approve hefty rate hikes because of an abundance of non-weather claims that end up in court. If approved, the average rates for homeowners covered by Citize...
Updated: 1 hour ago
What historically high lumber prices mean for Florida home buyers

What historically high lumber prices mean for Florida home buyers

Blame a lack of rail cars in Canada or not enough semi trucks in the United States. Forest fires didn’t help. Tariffs played a big role, too. Even the buoyant economy takes part of the rap for frothy lumber prices, which hit all-time highs las...
Updated: 1 hour ago
A valet at this South Tampa Publix will park your car as you shop

A valet at this South Tampa Publix will park your car as you shop

TAMPA — Publix shoppers in South Tampa who hate circling the lot for parking can now toss their keys to a valet.The Publix at Dale Mabry and Neptune started testing a free valet service last week that could expand to more stores. Spokesman Brian West...
Updated: 2 hours ago
As Tesla races to meet Model 3 deadline, factory pressures and suspicions grow

As Tesla races to meet Model 3 deadline, factory pressures and suspicions grow

Tesla chief Elon Musk said last week that the company’s layoffs of 9 percent of its workforce wouldn’t affect production as the all-electric automaker races to build thousands of new Model 3 sedans a week.But documents the company filed days later wi...
Updated: 10 hours ago
Tech Data sending a record 700 employees to march in Pride Parade

Tech Data sending a record 700 employees to march in Pride Parade

Among the marching bands and twirlers at Saturday’s St. Pete Pride Parade, one major sponsor, Tech Data, is sending by far a record number of employees — more than 700 at last count — to march in Florida’s largest gay pride parade.The parade, which d...
Published: 06/19/18
Sign to report employees not speaking English at doughnut shop creates a stir

Sign to report employees not speaking English at doughnut shop creates a stir

A sign asking customers at a Dunkin’ Donuts store in Baltimore to report employees who were heard not speaking English has set off a controversy.The sign, according tothe Baltimore Sun, would offer coupons to customers who reported workers at a dough...
Published: 06/19/18
Florida Bankers Association recognizes Bill Klich with award

Florida Bankers Association recognizes Bill Klich with award

Former Tampa Bay banking executive Bill Klich was presented the Lifetime Achievement Award from the Florida Bankers Association last week at an annual meeting in Palm Coast.Klich, 73, has a strong reputation with more than four decades of commercial ...
Published: 06/19/18
Jeff Vinik-backed construction material firm headed to Port Tampa Bay

Jeff Vinik-backed construction material firm headed to Port Tampa Bay

TAMPA — With $3 billion in construction on the boards, Water Street Tampa will need a lot of concrete, so a company whose largest investor is Jeff Vinik is moving to Port Tampa Bay to begin importing fly ash, a component of concrete.Spartan Materials...
Published: 06/19/18
Drugs at your doorstep: CVS will deliver prescriptions to your home

Drugs at your doorstep: CVS will deliver prescriptions to your home

CVS Health will make prescription deliveries nationwide to accommodate the heightened expectations of convenience from consumers. The nation’s second-largest drugstore chain says it also will make home deliveries of other items, like allergy medicine...
Published: 06/19/18