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LIBOR scapes: Charles Schwab unleashes RICO on US colleagues | Banking Insight

RICO: Racketeer Influenced and Corrupt Organisations Act, used to prosecute the Mafia and last Major League Baseball and Mike Milken

Thanks to Charles Schwab, US banks under the LIBOR probe have been slapped the mafia statutes, for violating RICO and Conspiring to violate RICO. RICO applies if any 2 of 27 counts of Federal Fraud and criminal activity and 8 state counts are applied to possible defendants.

The Charles Schwab suits specify the banks, namely Citi, BofA and JP Morgan had substantial finacial incentive to manipulate LIBOR with billions of dollars in exposure to movements in interest rates and that the three banks booked disproportionate income from interest rate swaps in Net Interest revenues in the first quarter of 2009 when LIBOR fell dramatically.  These banks collectively earned billions in net interest revenues during the Relevant Period. Underreporting the banks’ costs of borrowing also had the benefit of disguising the true risks to their solvency and liquidity during a time of economic crisis and intense political pressure.

Knowledge and facilitation of the acts is sufficient to find an entity guilty of conspiracy under RICO.

Charles Schwab also sold its $3 bln Private Wealth Unit US Trust in 2007 and its Partner Cards unit was added to the BofA survival kit in 2007 still makes borderline profits in the brokerage business, the $4.7 bln brokerage earnings down from 20 cents to 15 cents in 2011 last quarter, a 72 cent score for the year and out of the entire enchilada of litigation expenses and provisions and restructuring charges in 2011 December.


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