On the Bankers Trust’s Rip off factor, having shares in the most corrupt bank in the world and Goldman Sach’s Muppets or why John Key should have no place in NZ politics

This week John Key opened the Bathurst Resources’ office and the Green party called it inappropriate for John Key to do so but is it?

In order to understand why opening the Bathurst Resources office is totally appropriate for John Key you have to understand whose interests John Key is serving and here is a hint: It ain’t yours.

In fact it’s not even New Zealand’s. And before you say there she goes again with her theories lets explore John Key’s history for a few moments shall we?

First of all in the late eighties John Key worked for the Bankers trust. At the Bankers trust he learned something which held him in good stead later in his career. He learned about a financial instrument called Derivatives.

Derivatives can be used for legitimate business purposes as hedges against risks. For example a farmer can insure a fair price in advance with a trader who insures the availability of wheat in the future etc. etc.

But that is not what John Key learned. He learned about the other purpose of derivatives. That of swindling large amounts of money out of people looking for safe investments. How do I know this you ask?

Well he tells us so in his own words.

First of all you need to understand that the Bankers Trust was the first bank to explore the newly deregulated derivatives trade and according to their Wikipedia page they found themselves forced by the lack of the boardroom contacts of its larger rivals, notably J. P. Morgan, they attempted to make a virtue of necessity by specializing in trading and in product innovation.

The thing was they didn’t quite get the honesty thing and used the fact that the “over the counter” Derivatives were so complex to defraud some pretty powerful clients of large amounts of money. This would have gone unnoticed had those clients most notably Proctor and Gamble not sued the bank causing it’s collapse in 1995.

The reason they could sue successfully was the fact that they had some 6.500 recorded calls from Bankers trust employees. It turns out that the Bankers trust boys and girls were well aware of what they were doing and even had a word for their ill gotten gains. They called it the Rip off factor or ROF. 

Now you might ask if this was not limited to just a bad apple here and there but 6.500 recorded calls and the fact that Bankers trust pleaded guilty to institutional fraud should give you some indication of how pervasive the fraud culture was at Bankers trust.

When the whole thing collapsed John Key in the unauthorised biography published in July 2008 stated: “and than all hell broke loose and I said right I’m out of here.”

I might point out here that he didn’t say right I’m out of here when the bank was sued in 1993 but when the bank collapsed as the result of the total implosion of confidence in the bank as the fraudulent culture was exposed in media outlets such as Business week.

Luckily for John Key Merrill Lynch was looking for guy just like him and he started to work for Merrill Lynch in 1995. His job? To help set up a brand spanking new Derivatives department. It’s speciality? Over the counter Derivatives.

It also pays to know that according to the Bankers Trust Wiki page:

Concerns motivated by the particular Bankers Trust case eventually extended to the OTC derivatives market in general. The US CFTC embarked on a failed attempt to take over part of the bank regulators’ role in regulating the OTC derivatives market in the late 1990s. The thesis of a October 20, 2009, broadcast of the PBS television magazine Frontline, Early Warnings of the Economic Meltdown, was that the failure of Congress to allow CFTC a role in regulating derivatives was a key element eventually leading to the Financial crisis of 2007–2010.

John Key went about his merry way with Derivatives for the next five years and Merrill Lynch became a powerhouse in that particular trade but in 2008 had to be bought by Bank of America in an attempt to stabilise the financial world.

If you want to know how much John Key’s efforts netted Merrill Lynch or rather how much it is going to cost the American tax payers in October 2011 Bank of America transferred $ 75 Trillion in derivatives to an insured branch of the bank from it’s investment or uninsured part that part being the bank formerly known as Merrill Lynch.

John Key has said in interviews that the products now causing the financial collapse were developed after he left banking but I hope that the information above clearly shows that not only were the products now causing the financial collapse not only developed when John Key was in the banking business but that he himself was a pioneer in a pioneering bank who when the bank collapsed due to the fraud committed with these newfangled products he helped another bank set up a department to do exactly the same as his previous bank.

When John Key left banking to become the Prime minister of New Zealand he left with an estimated fortune of some $ 50 million. He left with most of his money in long term investments and shares in Merrill Lynch.

These shares were converted into shares in Bank of America shares when Merrill Lynch went bankrupt and was bought by BofA. We know he has them because unlike his other investments they are mentioned separate and not as part of his two trusts on the government site responsible for giving this information to the public.

We don’t know how much these shares are worth but we do know that he has a considerable interest in a bank which is by many considered the most corrupt bank on the face of the earth. In fact Matt Taibbi, a journalist specialising in bank fraud calls BofA a giant raging hurricane of theft and fraud.

Whether John Key has a $1 million or a $25 million interest in the Bank of America doesn’t matter. What matters is that his shares represent a huge conflict of interest with is role as the Prime minister of New Zealand in which we should be secure in knowing he has our best interest at heart.

Almost two weeks ago a banker for Goldman Sachs left the bank because he no longer wants to be part of a banking culture which calls its customers Muppets and who’s only interest is making money without any regards for its customers and whose money making scams in fact often turn fraudulent and against the very costumers they pretend to serve.

In fact hundreds of bankers are leaving the trade as the knowledge about these scamming businesses is beginning to spread around the world.

Now to get back to opening of the Bathurst resource office and the reason why it is completely opportune for John Key to open it consider the following:

  • John Key promised to give his pay for being the Prime Minister of New Zealand away to a good cause and while by many Kiwi’s this was seen as an act of kindness and generosity it is also a rejection of the way the New Zealand population sees fit to pay for its elected officials.
  • A significant share holder of the Bathurst group is none other than the Giant Raging Hurricane of Theft and Fraud also known as the Bank of America in which John Key holds a part of his wealth.
  • John Key made about five million over the past four years and if he did not earn this money with wages paid by the New Zealand population he must have made them with investments and while we don’t know with which he made that money. part of it could well be dividends paid out to shareholders of BofA. It could be argued that this means he got paid by the very bank having a majority vote in the Bathurst group now opening its offices in New Zealand.
  • The chairman and third member of the board of the PR company used by John Key was a man called Robert Champion de Crespigny, AC. who is one of Australia’s mining head honchos. Do you really think John Key did not get advised on how to go about the whole hot potato of mining before and during the election campaign as well as now?
  • If John Key did not receive wages from the New Zealand electorate but did receive money from his investments in amongst others BofA they must feel pretty damn sure of themselves to allow John Key to come out as working for the mining interests currently waging their attack on New Zealand instead of you the NZ population. You see from their point of view it is most appropriate for their prize asset to open one of their basesoffices in New Zealand.Basically their sticking their fingers up at you, the New Zealand muppets electorate.

26 thoughts on “On the Bankers Trust’s Rip off factor, having shares in the most corrupt bank in the world and Goldman Sach’s Muppets or why John Key should have no place in NZ politics

  1. @Peter Walker
    You claim the root cause of the GFC was mortgage forclosures… Whats the definition of root cause? You also state there was a lot of money and confidence in the financial system. I understand this was due to the Fed keeping wholesale interest rates artificially low after 9/11 generating a wave of cheap money that flooded the world. Money overflow lead to the banks looking the other way when giving out ‘liars loans’ to ‘greedy’ mortgagees. Im not an economist, but it seems a little self serving to ignore who blew the bubble in the first place…

  2. Over many years i have often heard it said, by many and wise older folk that “Bankers are responsible for most of the misery on this earth”
    Jonkey shills pretty quick here to come too his aid and pick holes in travellerev’s story. Who are you really and whats your agenda??
    Defending white collar criminals that are morally berreft and lower than a snakes arse.

  3. Idiotic story, so many holes, misunderstandings, things taken out of context. For example Merrill Lynch investors lost 61% of the value of their investments in the sale to Bank of America and you think that John Key helped organise it, actually he was a victim of it.

    • Sean,

      If you accuse me of being slack in my research you will have to do better than this. Links and solid rebuttal please!

  4. Credit Default Swaps caused the GFC, not derivatives, these were created after JK left the banking industry.
    Do you have any proof that John Key was involved in any illegal activity while at Bankers trust?
    You are also stretching the truth with your claim of 6,500 phone calls, that is simply how many recordings they had, as far you know 6,499 could have been completely innocent and implying that they were all dodgy so John Key must have know about them is disingenuous at best.
    The vast majority of John Key wealth is held in a blind trust, if you uare suggesting that he is breaking trust law and has knowledge of the trading actictivities then perhaps you state that clearly and provide some evidence.

    • Thank you for putting my nose to the grindstone on CDS’s Peter. I could kiss you on the head for that one.

      Here is a link to the Wiki page. Turns out CDS’s were in existence from as early as 1990 or thereabouts. IT was used by “Niche” bankers at the time. Guess who was one of those banks. Ching, ching BANKERS TRUST. They were specifically mentioned on the page as one of the earliest traders in CDS’s!!!!!

      Guess Johnny boy was well ahead of the pack eh?

      Oh and the only shares not in a trust fund were the BofA shares (Check the government site on which politicos have to declare their financial interests). Why not? I think it might be because he doesn’t want anybody to know their exact value. Maybe because it’s his umbilical cord to the bankster Mafia.

      • Bankers Trust made its early fortune by helping large financial manage their exposure to risk, academics to this day wax lyrical about the models they developed in 70’s and 80’s. When JP Morgan got on board with default swaps in the mid nineties (after Key had left Bankers trust) a separate market was set up to trade them. This all worked fine and help all of the big boys maange their risk while providing money to organisations looking to raise capital. The real problems started when all of the debt obligations that these things where covering started going belly up. An important part of the picture which most Chardonnay Economists seem to gloss over it the why these things all went belly up and left the 1% holding on to several trillion dollars worth of crap. There was two groups in the western economy, one on each side of the retail finance fence. The first group were the retail lending institutions, Building Societies, Finance Companies and Retail Banks, not Wall Street Investment banks, but retail banks. The other party, we’ll call the 99%. Now the 99% signed up for great big house and personal loans with small initial payments and much larger on-going payments which they had no hope of being able to afford. This wasn’t a problem though because they would simply be able to sell their houses, pay off the loans and all would be well and good. Now, many people have been calling the big banks greedy, but the people who were borrowing the money were greedy and stupid.
        Nice work with Wikisearch, maybe you should try and scratch a little deeper next time or stick to something you know about.

          • I will Peter, in due time but you may want to start with this image:

            A beautiful model for Fraud

            In fact I already did. Here is my open letter to Eugene Bingham on John Key and the subprime crisis which unsurprisingly did not start after John Key left but slapbam at the height of his career when he was hobnobbbing with the Federal Reserve of New York.

            And here is the Wiki timeline for the subprime crisis

            Have a nice day reading up on your scummy hero and t
            he world he lived in and will live in again after he’s destroyed this beautiful country.

      • The Global Financial crisis, the US housing bubble, the death of New Zealand, we really need to find out where John Key was on November 22 1963. Perhaps if you could put your jealousy of his success aside and take an impartial look at what you have been writing you might be able to see what th rest of us see when we read it. You search out all of these tenuous, unplausable “facts” and then use them to support your pre-existing view. There is no point in trying to correct you, goodbye.

        • Before I go, ching ching, your process flow diagram that describes the path to the global financial crisis starts with the greedy home buyers lying to get into hosues they can’t afford.

          • I got to say …
            1) I’m not an economist .
            2) Peter your often linked to diagram seems to prove nothing !
            3)”greedy home buyers” ,explain “greedy” ,the “home buyer” has to pay outrageous FLOATING interest for the full term of the loan even thou the profits all go to the lender .

            To me it looks like the banks relaxed the lending criteria (inspired by greed),dropping the “greedy home buyers” deposit to zero in some cases and 5% generally. Therefore if the value of the house the “greedy home buyers” purchased dropped in value by more than 5% the “greedy home buyers” was screwed ! The only thing I need explained is how is the fault the “greedy home buyers” when we have the banks showing RECORD profits in a economic down turn ,while some “greedy home buyers” are living under bridges (if their luck enough to find one)!

            Key clearly places “business” before the will of the people so please show us examples of the benefits to New Zealand that have so far resulted from this Corporate model.

        • Mick, 1) I am an economist, 2) it’s Penny Brights diagram and not mine and I’ll explain 3).
          The first thing you have to understand is that the root cause of the Global Financial Crisis was American mortgage defaults, in 2007 there were 1.3 million more foreclosures than there were in 2006. Some American morgages are stuctueId very differently to NZ mortgages, these are called adjustable rates mortgages (ARM) and essentially, they come with a very low introductory rate (0-1%) with no principal payments and then after 2 or 3 years they get fixed at the prevailing rates for the remainder of the term. In the early 2000’s there was a lot of confidence and money in the market in the market and millions of Americans signed up for these products with little or no deposit. While this was happening the banks were packaging up mortages and selling to investment banks who then on-sold them as bonds.When the variable term finished their mortgage payments went through the roof, instead of paying, for example $180 interest a month on a 200k loan they ended up having to pay $2000 interest a month plus principal payments of another $1000. This flooded the market with houses for sale, the bottom fell out of the market and people started defaulted all over the place. This then meant that all of the securitsed products (CDO’s, Credit Defaults etc) all ended up being worht nothing, precipitating a worldwide crisis. Some of the practices of the investment banks who are no longer with us were despicable and particularly the actions of one man, John Paulson, who made $3.5 Billion US in 2007 by selecting sub-prime mortgages, packaging them up for Goldman Sachs and then betting that they would go bust. Everybody was greedy, from Pulson down but my poit is that nobody ever points the finger at the millions of home buyers who were committing to massive debts that they never had any chance of paying back. It’s always the fault of the nasty big banks and not the shonky mortgage brokers and home buyers who were less than scrupulous with their loan application. Our residential market never had the same issues as America because rates never got that low and our banks were more cautious.

  5. “Just last year, they were in a very delicate situation where a number of their counterparties and creditors were concerned about the massive flow of derivatives that were on Merrill Lynch’s books. They convinced Bank of America to move that stuff onto its own depository side so it would be federally insured. So now we’re all on the hook for all this stuff. And that’s another thing that—another way that they’ve used the government to get out of their private problems.”


  6. In his new article, “Bank of America: Too Crooked to Fail,” Rolling Stone reporter Matt Taibbi chronicles the remarkable history of the rise of Bank of America, an institution he says has defrauded “everyone from investors and insurers to homeowners and the unemployed.” Taibbi describes how the Bush and Obama administrations have repeatedly propped up the financial institution, which received a $45 billion taxpayer bailout in 2008. Bank of America has also received billions in what could be described as shadow bailouts. The bank now owns more than 12 percent of the nation’s bank deposits and 17 percent of all home mortgages. Taibbi also recounts how fraudulent practices by Bank of America and other companies ravaged pension funds. “Most people think of [the mortgage crisis] as some airy abstraction — you know, bankers ripping off bankers,” Taibbi says. “That’s not what it is. It’s bankers stealing from old ladies and retirees.”


  7. ?That dialogue was automatically picked up by a Bankers Trust recording system–similar to those at other financial institutions–that routinely tapes conversations involving transactions, mainly to settle disputes over trades”

    wow wouldn’t you like to get those tapes ! wonder whats on the Key/Krieger tapes ?

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