Banking Sector Blight

 

banking, financial industry, scandals, pyramid scam, scams, London Whale, Libor Scandal, missold PPIThe following is a guest post. Enjoy! 
Banking Sector Blight
Every time you turn on the television, it seems that there is another scandal or lawsuit plaguing the banking sector.  From the Libor banking scandal, to the ‘London Whale’, to various Ponzi-schemes that haven’t seemed to get any less common since the Bernie Madoff scandal.
In this article, we look at three recent cases that exemplify the seemingly rotten state of our financial services industry.

The Libor Scandal

The biggest item in the news the past few weeks is the LIBOR banking scandal, where it is believed that Barclays sent in false data to alter the LIBOR interest rate calculation, thereby possibly altering the interest rates charged on trillions of dollars in loans.  This scandal has already cost the bank $450 million in fines, and it may cost billions more as different instruments linked to the LIBOR start suing because of the belief the rates could be wrong.  This scandal continues to add to the distrust of banks.

The London Whale

Another story making news has been the London Whale, where a London-based trader for JP Morgan lost over $4 billion in bad trades.  This story keeps getting worse for JP Morgan, who initially downplayed the loss significantly.  Lately, the bank has been talking about how it is reforming and clawing back pay from this trader, but it once again goes on to show that banks are running wild when it comes to trading.

More Fraud and Scams

Finally, there are still all types of fraud and scams taking place in the banking sector.  For example, there has been an uproar lately about missold PPI, or Payment Protection Insurance.  This is where credit card companies or other lenders sold additional insurance.  The problem isn’t with the Payment Protection Insurance itself, but in the way in which it was sold. In many cases, it was incorrectly presented as a mandatory product, or it was sold to people who would never have qualified to make a claim anyway.
There seems to be an almost endless series of scandals plaguing the banking sector at the moment, and financial institutions around the world have a great deal of work to do to repair their battered reputations and restore consumer trust.  Hopefully, we will start to see some regulatory reforms, and as a result, banks will start behaving more responsibly.
How about you all? Do you know of any other scams/scandals that have affected the banking sector recently?

Have you felt any effects from these scandals to your personal finances?

Share your experiences by commenting below! 

***Photo courtesy of http://www.flickr.com/photos/jepoirrier/2046188221/

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