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Eurointelligence Daily Morning Newsbriefing: Prosecutor launches criminal investigation against Bank of Spain (10.01.2013)
Spain's chief public prosecutor reacts to the recent report in which the Bank of Spain is criticised of condoning criminal behaviour by banks; Eduardo Torres-Dulce says he does not think the Bank of Spain committed a criminal offence, though he said the behaviour was at the very least reproachable; the Bank of Spain said it will undertake reforms of its supervisory mechanisms; reforms include a tightening of the regime of site visits; Spain will today issue its first CAC bonds, as a Spanish newspaper says retail investors will now always lose out against the banks in a CAC vote; an IMF report proposing further austerity in Portugal, has a hit a raw nerve in the country; the IMF proposed large scale layoffs and cuts in pensions, education, health, and unemployment benefits; Ireland's debt management chief says the country is very close to the normalised market funding that would make it eligible for the ECB's bond-buying programme;  the Irish government said it sold all of the €1bn in contingent convertible capital notes in Bank of Ireland; Jose Manuel Barroso and Herman van Rompuy say they are supporting a deal on promissory notes; Silvio Berlusconi makes a pre-election promise to eliminate employer social contributions for young people; Mario Monti says he only hopes that Berlusconi is not going to win the elections, but he does not yet want to be drawn into a discussion of an alliance with the PD; Pier Luigi Bersani  proposes a cut in taxes for lower income earners, funded by higher taxes for the rich; Italy's retail association says 2012 was the worst year since the Second World War; S&P says eurozone could start to overcome debt crisis in 2012; the FDP's parliamentary leader says he doubts the Bundestag would approve a Cyprus aid package; the latest polls have the CDU at 42% - and the FDP out of the Bundestag; Angela Merkel widens her polling lead over her rival; the Wall Street Journal, meanwhile, has a story about a whistleblower, who alleges that Deutsche Bank made half a billion dollars through massive libor bets, feeling safe because they were able to manipulate the market.


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Jan 10th, 2013 at 04:05:11 AM EST
[ Parent ]
an IMF report proposing further austerity in Portugal, has a hit a raw nerve in the country; the IMF proposed large scale layoffs and cuts in pensions, education, health, and unemployment benefits;

Hang on, how many IMFs are there?
Didn't the other IMF just release a paper saying austerity was counter productive?


-----
sapere aude

by Number 6 on Thu Jan 10th, 2013 at 05:29:09 AM EST
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Sometimes I think the chief economist at the IWF is some sort of court jester: Allowed to point out the truth but still irrelevant
by IM on Thu Jan 10th, 2013 at 05:50:20 AM EST
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Pretty much.
by Colman (colman at eurotrib.com) on Thu Jan 10th, 2013 at 05:59:01 AM EST
[ Parent ]
After reports of a document by Bank of Spain inspectors containing strongly worded criticism of the way the institution handled potential evidence of wrongdoing in financial institutions, Publico reports that the chief public prosecutor Eduardo Torres-Dulce will investigate whether the Bank of Spain itself broke the law, though he stated Wednesday that he believes the allegations may point to "reproachable but not criminal conduct".

Late on Tuesday, the Bank of Spain had announced that it will undertake reforms of the supervisory mechanisms to make them stricter, reported El Diario. The reforms would tighten the regime of site visits, requiring reports every six months and ensuring that the management of both the Bank of Spain and the supervised banks get a write-up of supervisors' observations or required improvements. In its communique, the Bank of Spain defend the past "independence and technical quality" of the institution, as well as its continued collaboration with the courts and prosecutors.

Starting today, Spain introduces Collective Action Clauses into its new debt

Spain will have its first debt auction of 2013 Thursday, and El Diario reports that the Spanish government intends to include a Collective Action Clause in its bond issues for the first time ever. The story is framed as the government "doing away with the safety of investing in sovereign debt" and surmises that Spain's big banks will have the majorities needed to agree to bond haircuts over the opposition of retail investors (mostly risk-averse savers). The article also draws parallels with the losses experienced by holders of preferred shares and subordinated debt of the failed Cajas. Finally, the piece speculates that the Greek "Private Sector Involvement" exercise, where a small number of holdout investors caused difficulties, may have motivated European authorities to agree with the Spanish authorities to include such an 'out' clause. On the other hand, the Spanish Treasury is putting in place a secondary market for retail debt holders, also for the first time. The paper also points out that Thursday's issue has a maturity of two years, which falls within the scope of the OMT.



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Jan 10th, 2013 at 05:30:03 AM EST
[ Parent ]
Whistleblower accuses Deutsche Bank of placing massive Libor bets and possible market manipulation

The Wall Street Journal (hat tip Naked Capitalism, which also has a very useful assessment) has the story of a whistleblower accusing Deutsche Bank of placing massive bets on, and attempting to rig,  the Libor interest rate market, and reeking in profits of half a billion dollars. The article says that Deutsche Bank made very large bets on a widening differentials between one, three and a six month dollar, euro and sterling Libor, as the financial crisis became more severe.

Here is the bullet:

"The former employee has told regulators that some employees expressed concerns about the risks of the interest-rate bets, according to documents. He also said that Deutsche Bank officials dismissed those concerns because the bank could influence the rates they were betting on."
Considering that this was a time when other banks were reducing risks, the allegation is that the bank has colluded in the manipulation of the Libor rate - and profited from it massively. The bank denies the allegations.  Naked Capitalism is sceptical that much will come of this - not because the blog defends the bank, but because such evidence is hard to pin down legally.


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Migeru (migeru at eurotrib dot com) on Thu Jan 10th, 2013 at 05:31:36 AM EST
[ Parent ]
 reeking in profits

that's about the size of it

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Thu Jan 10th, 2013 at 08:39:20 AM EST
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