Credit Suisse CEO Brady Dougan is appearing before the U.S. Senate Permanent Subcommittee today, just one day after said committee released a report accusing the Swiss bank of helping “American customers hide as much as $10 billion in assets from the Internal Revenue Service, more than double the amount previously known.” But Credit Suisse isn’t the only problem: the report also accused the Justice Department of incompetency. Of the estimated 20,000 U.S.
taxpayers taxevaders clients of Credit Suisse, Justice has acquired 238 account names. Last August, however, the Justice Department offered amnesty to any Swiss banks willing to rat out their wealthiest American accounts; also, banks have been offered “credit against their fines for any customers who have entered the IRS’ Offshore Voluntary Disclosure Program…so far, according to up-to-date numbers in the subcommittee report, over 43,000 taxpayers have entered the program and paid more than $6 billion in back taxes and penalties.” Also, according to two high ranking Justice officials, Justice will be targeting “banks in other countries that continue to hold themselves out as potential tax havens” (read: Cayman Islands). Here’s a gem: “A former customer recounted to subcommittee investigators how his Credit Suisse banker met with him at the Mandarin Oriental Hotel and, over breakfast, handed him his bank statements hidden in a copy of Sports Illustrated.” So Credit Suisse is like, really good at tax evasion. But guess what? That’s not all! Turns out they’re pretty handy at income statement loss evasion too: the report accuses Credit Suisse of using a client’s $9 billion trade as a means to bolster “net new assets” (“new” is the real problem word here) under management. “The figure is a key metric used to judge the health of the bank, showing the ability to earn income from managing clients assets.” The Senate subcommittee cites an email from the former chief operating officer saying the reclassification of funds “would be a great favor for our (private banking) division.”
Stifel’s Got All The Ostriches; Beware The Bulls
“Some U.S. brokerages are grappling with unexpectedly weak stock trading by retail clients this year, eroding commission revenue and clipping the flow of new money into fee-based accounts…Asked to explain the comparatively heavy client trading volume being reported this year at TD Ameritrade, E*Trade Financial and Charles Schwab Corp., [Stifel CEO Ron Kruszewski] said the firms tend to attract more active traders than Stifel.” Meanwhile, here’s a look at the biggest, baddest bull markets since 1928 and how the current bull stacks up. Barry Ritholtz wisely points out the “relatively normal by comparison” problem you get by comparing the current bull market with the top 10 strongest/longest of the 20th century but c’mon Barry…that’s no fun. Also, a new paper from a guy at Morningstar and some finance profs “looks at the issue of time diversification, defined as ‘the anomaly where equities become less risky [over] longer investment periods.” (I don’t understand the “anomaly” here; this isn’t really new information?) Here’s some better advice: be an ostrich (i.e. keep your head underground, i.e. don’t even think about mentioning the words “Jim Cramer” to your advisor).
Would You Rather: A) Get Your Degree, B) Live In Your Own Home, or C) Retire Someday?
“America has always invented its own status symbols. A lifetime ago, status was being a two-car family, or having air conditioning. A decade ago it was huge houses with three-car garages. There was a time only the rich went on cruises, a status symbol whose cachet is long gone…But there’s one luxury that only a few are still able to afford…that luxury is Retirement.” Meanwhile, “Redfin surveyed 1912 home-buying clients, of which 965 were buying a home for the first time. Among the first-timers, 15.9 percent said that student debt had previously kept them from buying a home.”
White House Budget = End Of United States Power, More Terrorists In The World etc. (Anticipated Fox News Headline)
Yesterday, White House economist Jason Furman (of wonkiest wonk wonk fame) “laid out six longer-run initiatives the White House will be pushing on the economic front in the forthcoming 2015 budget” and I would spell them out here but they’re rather vague. Meanwhile, the proposed budget allocates $496bn to the Pentagon, which would shrink the United States military to “Pre-World War II Levels” (NYTimes) or “Pre-9/11 Levels” (Bloomberg) depending on your spin. Either way, Hagel’s recommendations “favor a smaller and more capable force — putting a premium on rapidly deployable, self-sustaining platforms that can defeat more technologically advanced adversaries.”
This is rock bottom, America: “I’m homeless, I’m on fixed income, and now I’ve got thousands of dollars in phone bills when there’s no way I can pay for anything. I’m screwed as far as my credit report goes.”