banking | John Mecklin, writer/editor

If you are lucky enough to have enough money to have hired a financial adviser, you ought to read this Felix Salmon post, which nicely explains the many little bites of your money that an FA can take, almost imperceptibly. (Actually, if you’re interested in finance, you ought to read Felix all the time; you can call what he writes a blog, but it’s a blog based on a breathtaking amount of reportage and activity. Sometimes I wonder whether he’s cloned himself, perhaps more than once.) At the end of the day, a financial adviser ought to make you enough money that the fees he charges are an afterthought. But that’s seldom, seldom the case, this writer wrote, remembering with something less than fondness some financial things past….

When people say they hate the media, they really mean they hate that the media focus on trivia, pop culture and political sideshows and minimize institutionalized corruption and the stranglehold that wealth has over U.S. government at, essentially, all levels. A prime example is this story, “UBS to pay $160 million to settle bid-rigging case,” which was writ very short and buried in the print newspaper I subscribe to, The Los Angeles Times, and which has this astounding lede:

Switzerland’s biggest bank, UBS AG, has agreed to pay $160 million to settle charges that it rigged the bidding process for investment contracts with cities and towns in 36 states.

The story goes on to explain that UBS folks paid kickbacks to city workers who were responsible for investing bond funds. Sometimes the kickbacks were meant to steer those funds to UBS; sometimes, apparently, UBS was supposed to be acting as an adviser to the municipalities, but used kickbacks and its expertise to steer business to other banks. Bid-rigging across the U.S. by the biggest bank in Switzerland seems, to me, to be kind of a big story. And it’s made even bigger by the story’s kicker: UBS won’t face criminal prosecution because it “admitted to the conduct and cooperated.” I’m sure this outcome — pay a tiny sum of money in the UBS scheme of things, suffer no real public humiliation and avoid criminal prosecution — will deter UBS and every other bank that interfaces with American government from ever paying a kickback again.

I’m not necessarily criticizing the prosecution decisions here; making public corruption cases is difficult, and sometimes less-than-optimum settlements are the best that can be gotten. I am criticizing the LA Times and other so-called mainstream newspapers for grossly underplaying this and other stories that illustrate the sickening power of wealth in the American political system. That tendency to minimize wrongdoing by wealth and power is bad for the country, of course — but it’s even worse for the media. It suggests to readers and viewers that media outlets are not protectors of the people but part of the country’s power structure. It says, loud and clear, that elite journalism is not part of the solution, but part of the problem.

Category Archives: banking

Felix the financial cat

A BS news decision about UBS