Banks Rigged Bids Claims in San Jose

Downtown San Jose

As if the Bay Area residents don’t have enough reasons not to trust the banks, the City of San Jose recently filed a federal antitrust complaint that several banks have victimized the city with “a far-reaching, industry-wide conspiracy” in which municipal derivative providers and brokers rigged bids, allocated markets, submitted bogus “courtesy bids on transactions they had no intention or desire to win in order to give transactions an artificial veneer of fairness,” paid and received kickbacks, and otherwise depressed the city’s earnings to fatten their own. Does this sound like Chicago back in Capone days?  Isn’t San Jose having its coffers raided sufficiently with the copious amounts of REOs and even more short sales?

What is the heck is a derivative product anyway? Derivative products are financial instruments whose value comes from or is “derived” from other assets or based on the level of an interest rate index. One example would be the value of a stock option is derived from the value of the underlying share of common stock.

Confused? That’s okay, we’re not exactly experts in this field but we think that tossing the info out there only makes people aware of that the banks aren’t being anyone’s friend despite what their fancy PR campaigns say or how many new ATMs they add to their system. The complaint list reads like the usual suspects in terms of bad loans and bad press  with Bank of America, Merrill Lynch, UBS, Citibank, Citigroup, Morgan Stanley, Goldman Sachs, on the rap sheet. If you find that your bank is creating committing fraud against your city than you might consider moving your finds to a credit union, a regional bank, or perhaps a fluffy mattress.

Photo courtesy of Tim Wilson

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Filed under California, San Jose

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