Tag Archives: banking

Federal Reserve Raises Interest Rate for First Time Since 2008

WASHINGTON, December 17, 2015- For the first time since the bottom of the financial crisis in 2008, the Federal Reserve raised interest rates and has signaled its intent for further increases.

“The Fed’s decision today reflects our confidence in the U.S. economy,” Chair Janet Yellen said at a news conference on Wednesday.

The move was welcomed by Wall Street as the Dow Jones Industrial average ended the Tuesday session with a 224 point gain.

“The Fed reaffirmed that the pace of rate hikes would be slow,” James Marple,TD Economics senior economist wrote in a research note. “The Fed’s expectations for rate hikes next year are set alongside a relatively cautious and entirely achievable economic outlook.”

The hike of the key rate of a quarter-point, placing it between 0.25 and 0.5 percent, ends a seven year period of near-zero borrowing rates. This increase is expected to have mild implications for the mortgage and car loan industries as these notes tend to be tied to 10-year U.S. Treasury yields, which will likely remain low as inflation remains below the Fed’s 2% target.

Rates for other forms of loans such as home equity credit lines and consumer credit cards have already begun to rise with Wells Fargo being the first to announce an increase from 3.25 percent to 3.50 percent shortly after the Fed announcement.

Yellen also stated the hike had a defensive component.

“We’ve worried about the fact that with interest rates at zero, we have less scope to respond to negative shocks,” she told the press.

The ability for the Fed to react to future challenges relies on the central bank’s ability to manipulate interest rates and thus allowing the key rate to rise provides for more long term flexibility.

The policy statement released by the Fed cited “considerable improvement” in the job market as well as confidence that inflation would begin to rise. Included in the statement, Fed officials offered predictions that the rate banks charge on overnight loans, the federal funds rate, would end 2016 just over 1 percent.

The central bank’s action was unanimously approved by a 10-0 vote, a victory for Chairwoman Yellen.

Adjustments on other rates included an increase of 0.25 percent to 0.5 percent on the interest paid by banks to hold funds at the Fed and a decrease in the discount rate it charges banks for emergency borrowing from 1 percent down to 0.75 percent.

The moves by the Fed were not seen favorably by all. Long time critic Sen. Rand Paul (R-Ky.) asked “Should the government be involved with setting prices?” and also stated that “What amazes me about the Federal Reserve setting interest rates is that almost to a person, conservative economists in our country will say, wage and price controls are a mistake.”

Austrian economist Peter Schiff told his radio audience, “When the Fed called off the rate hike last time we got a huge bounce in the stock market. The reason the Fed gave was weak global economic conditions. None of those problems have been solved and it can be argued that global economic conditions are weaker now than in August.”

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Rand Paul Co-Sponsors Bill to Allow Legal Pot Businesses to Access Banking Services

Last Thursday, US Senator and Republican presidential contender Rand Paul joined senators from Oregon, Washington, and Colorado in introducing the Marijuana Businesses Access to Banking Act of 2015, a bill that would “create protections for depository institutions that provide financial services to marijuana-related businesses.” A house version of the bill was also introduced in April of this year.

Under current anti money laundering laws, many banks fear that attempts to extend banking services to marijuana dispensaries in pot-legal states will be met with retribution by regulators. Yahoo Finance’s Meena Thiruvengadam wrote that the bill would “prohibit banking regulators from penalizing or discouraging banks from providing financial services to marijuana businesses operating in areas of the US where marijuana has been legalized.” She noted that it would also “ban regulators from terminating federal deposit insurance at banks providing services to state-sanctioned marijuana businesses” and “create a safe harbor from criminal prosecution, liability and asset forfeiture for financial institutions who provide services to marijuana businesses operating legally.

Senator Ron Wyden (D-OR) said in a statement on the bill, “By compelling Oregon business owners to operate on a cash-only basis, current federal laws are making marijuana businesses sitting ducks for violent crimes and perpetuating negative stereotypes. It is ridiculous to make any business owner carry duffle bags of cash just to pay their taxes.

Senator Cory Gardner (R-CO) said, “Ever since Colorado voters approved the legalization of recreational marijuana, conflicting federal and state marijuana laws have required banks to refuse basic financial services to marijuana-related businesses in Colorado. In turn, this has forced the industry to adopt an all-cash business model that fosters violent crime and puts all Coloradans at risk. This commonsense legislation solves a major public safety problem in my state by giving legitimate businesses acting in compliance with state laws access to the banking system.”

US Senator Rand Paul recently topped Marijuana Policy Project’s ranking of current 2016 presidential candidates in terms of their friendliness to pro-marijuana legislation and made history last month when he became the first presidential candidate to openly court donations from America’s emerging legal marijuana industry. Earlier this year, Paul reached across the aisle in co-sponsoring the bipartisan Compassionate Access, Research Expansion and Respect States Act, which would end the federal government’s prohibition on medical marijuana and scientific cannabis research.

Last September, Ben Swann released a Truth in Media episode exposing the federal government’s mixed messages on medical marijuana. Watch it in the below-embedded video player.



Obama Administration Bullies Banks To Cut Ties With Gun Dealers


It happened to a pawn shop in South Carolina. Inman Gun & Pawn was forced to close two of its checking accounts due to Operation Choke Point, which is an Obama Administration effort to hinder financial fraud.

But the Obama Administration is using a broad brush to define what constitutes fraud and is instead using executive powers through the Department of Justice to shut down businesses that Obama finds unsavory like gun sales.

“We had an excellent relationship. We had ample funds in the accounts to do anything that we needed to do,” said Morris Williams of Inman Gun & Pawn in Spartanburg County, S.C. “We thought everything was just wonderful until we received this letter.”

The letter states that due to the rules and regulations for deposit accounts, the bank, Suntrust Bank, asked Williams to close two of his accounts.

“The only thing that they will tell us is that we have been deemed a prohibited business type,” he said.

Local news reported that prohibited businesses include weapon sales, pornography, bankruptcy lawyers and psychic services.

“We asked our local branch manager and we have asked corporate and what basis did they make this decision?” He asked.

The answer he got was that businesses like his cost more to facilitate and have more risk associated with them.

Thankfully, Williams has already found a new bank. But, why should he have to? Is this another attempt by the Obama administration to implement back door gun control?

Watch the video below that explains Operation Choke Point:


Vatican Bank Scandal — JP Morgan, HSBC Cease Doing Business with Vatican

An 11-month Financial Times investigation reveals mismanagement at Vatican Bank

Many do not realize that the Vatican manages a banking empire with approximately $7 Billion in assets.

On June 28th, a Vatican cleric, along with a former Secret Service agent, and a financial broker were all arrested by Italian police and charged with fraud and corruption. The three were suspected of smuggling $24 Million by private plane across the border from Switzerland.

Prosecutors allege that the the Vatican cleric who is a former banker, was using the Institute of Religious Works (The formal name for the Vatican Bank) to transport money for Naples businessmen. In Italy, Naples is considered the base for organized crime. The arrested Vatican cleric was also the head of accounting at the Treasury of the Vatican (Administration of the Patrimony of the Holy See.)

This is another shock to Italy following upheaval of Pope Benedict XVI’s resignation in February, the first time in 700 years a pope has resigned. The scandal gave the Bank of Italy under Mario Draghi as well as BIS in Brussels the impetus it needed to start investigations and potential regulatory changes at the Vatican Bank.

Cardinals elect new pope


In July, Peter Sutherland, a non-executive chair at Goldman Sachs International, and the former Attorney General of Ireland, flew to the Vatican. He is a practicing Catholic and unpaid consultant to the Vatican’s Treasury, and was invited by reformers inside the Church to speak to the Council
of Cardinals, the most senior advisors to the Pope. He did not give a public statement, but two who were aware of the closed door proceedings indicate he advised the Council, “Transparency is necessary.”

Regulators have already been eager to get into the Vatican before the arrests. “We cannot have any more scandal. It is so shameful,” a senior member of the Vatican’s financial administration said.

Financial Times interviewed two dozen bankers, lawyers, regulators, and Vatican insiders over 11 months to understand how the Vatican Bank has unnerved bankers, regulators, and governments across Europe and the U.S. The reforms inside Vatican Bank now underway are due to pressure from banks
like Deutsche Bank, JP Morgan, HSBC, and UniCredit, all who have found themselves as targets of regulators due to their business relationship with the Holy See.


About 32 of the world’s largest financial institutions were “correspondent” banks for the Vatican. They moved about $3 Billion per year from the Vatican Bank to other banks around the globe, allowing the Church to conduct international business. The banks became so fearful of being tarnished by the Vatican that some have even closed down their accounts for the Embassies of the Vatican. HSBC did cease doing business with the Embassy of the Vatican, and other large banks are considering the same. Regulations and oversight around diplomatic bank accounts and PEP’s (politically exposed persons) has become crushing to the banks, and they no longer seek out these customers. Banks have tremendous surveillance around account owned by those who work high up in any government, especially embassy accounts. It is a large cost and risk to the banks, and they loathe doing business with these customers.

In March 2012, JP Morgan closed the bank accounts it held for the Vatican because the documentation provided was not thorough. Vatican was asking JPM to move money all around the world for it via wire transfers but the basic Know Your Customer data could not be obtained. When JPM would say, “we need to answer to the regulators on these wire transactions” the Vatican Bank would push back and say, “We answer to God,” according to a bank
manager at a large European bank.




Many bankers, lawyers, and those in business with the Vatican Bank would not speak on record but they did say the Vatican Bank operates unlike any other bank they’ve dealt with. The staff of only 12 were not versed in Due Diligence or KYC (Know Your Customer) standards. There was very little documentation on their cash flows and balances of approximately 19,000 clients. There are 33,000 accounts held
at the Vatican Bank. 50% of clients come from religious orders, 15% are from Holy See institutions, 13% are Cardinals, Bishops, and clergy, 9% are from dioceses around the world. The rest have some affiliation with the Catholic Church. The Vatican Bank doesn’t have many loans, the books contain mostly deposits, wire transfers, and investments.

Many of the deposits are donations and cash tithe. 25% of the bank’s business is done in cash. Laura Pedio, a Milan ani-Mafia prosecutor who specializes in white collar crime, was willing to speak on the record to Financial Times. In her previous cases she found a complex system of proxies, with transaction authorization given to the third parties on behalf of unidentified account holders. The proxy holders had no details
recorded at the bank. Some of the proxies could only be verbally recognized by a few people at the Vatican Bank. She said there was no way to get answers on who these people were, or who was the final beneficiary of the account.

One advisor to the Vatican says the new clampdown by regulators has caused the correspondent banks to toss aside the Vatican and stop doing business with them. “There is a no nonsense approach from the correspondent banks,” the advisor said in an interview. “We are not here to cover the ass of the Vatican.”

The most infamous story so far around the Vatican Bank was their relationship withe a large Italian bank that collapsed. The Vatican Bank was the single largest shareholder in Banco Ambrosiano. After that bank collapsed, it’s chairman was found hanged under London’s Blackfriar’s Bridge. Prosecutors in Rome conclude the bank chairman was killed by the Sicilian Mafia but no charges were brought up against an individual. There have been rumors that the Vatican is a large shareholder of Bank of America but this has not been substantiated.

Mafia victim & bank chairman: Roberto Calvi

Another question is how the Vatican may funnel money into political actions. Pope John Paul II is said to have used the Vatican Bank to channel money to Poland’s Solidarity Movement. Questions arise as to is and how the Vatican may be swaying elections or effecting political change worldwide. Regulators have been cracking down on tax cheats in offshore havens like Switzerland.


As of March 2013 their new Pope, who is a Jesuit evoking poverty and humility, set a new tone on financial correctness. The new Pope spoke out against the idolatry of money, “all-compassing corruption,” and “Tax evasion that had reached global dimensions.” The new Pope moved his personal residence away from the Apostolic Palace and the Vatican Bank.

The new Pope has issued papal decrees to help speed inspections and make changes to produce real reform in the legal and institutional framework of their banking system.