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Bank Crimes Pay: Under the Thumb of the Global Financial Mafiocracy

Bank Crimes Pay: Under the Thumb of the Global Financial Mafiocracy

By: Andrew Gavin Marshall

27 November 2015

Originally posted at Occupy.com

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On Nov. 13, the United Kingdom’s Serious Fraud Office (SFO) announced it was charging 10 individual bankers, working for two separate banks, Deutsche Bank and Barclays, with fraud over their rigging of the Euribor rates. The latest announcement shines the spotlight once again on the scandals and criminal behavior that have come to define the world of global banking.

To date, only a handful of the world’s largest banks have been repeatedly investigated, charged, fined or settled in relation to a succession of large financial scams, starting with mortgage fraud and the Libor scandal in 2012, the Euribor scandal and the Forex (foreign exchange) rate rigging. At the heart of these scandals, which involve the manipulation of interest rates on trillions of dollars in transactions, lie a handful of banks that collectively form a cartel in control of global financial markets – and the source of worldwide economic and financial crises.

Banks such as HSBC, JPMorgan Chase, Barclays, Bank of America, Citigroup, Deutsche Bank, Royal Bank of Scotland and UBS anchor the global financial power we have come to recognize as fraud. The two, after all, are not mutually exclusive. In more explicit terms, this cartel of banks functions as a type of global financial Mafia, manipulating markets and defrauding investors, consumers and countries while demanding their pound of flesh in the form of interest payments. The banks force nations to impose austerity measures and structural reforms under the threat of cutting off funding; meanwhile they launder drug money for other cartels and organized crime syndicates.

Call them the global Mafiocracy.

In May, six major global banks were fined nearly $6 billion for manipulation of the foreign exchange market, which handles over $5 trillion in daily transactions. Four of the six banks pleaded guilty to charges of “conspiring to manipulate the price of U.S. dollars and euros exchanged.” Those banks were Citigroup, JPMorgan Chase, Barclays and Royal Bank of Scotland, while two additional banks, UBS and Bank of America, were fined but did not plead guilty to the specific charges. Forex traders at Citigroup, JPMorgan Chase and other banks conspired to manipulate currency prices through chat room groups they established, where they arrogantly used names like “The Mafia” and “The Cartel.”

The FBI said the investigations and charges against the big banks revealed criminal behavior “on a massive scale.” The British bank Barclays paid the largest individual fine at around $2.3 billion. But as one trader at the bank wrote in a chat room conversation back in 2010, “If you aint cheating, you aint trying.” The total fines, while numerically large, were but a small fraction of the overall market capitalization of each bank – though the fine on Barclays amounted to some 3.4% of the bank’s market capitalization, the highest percentage by far among the group.

Despite the criminal conspiracy charges covering the years 2007 through 2013, the banks and their top officials continue to lay the blame squarely at the feet of individual traders. Axel Weber, the former president of the German Bundesbank (the central bank of Germany), who is now chairman of Switzerland’s largest bank, UBS, commented that “the conduct of a small number of employees was unacceptable and we have taken appropriate disciplinary actions.”

Looking at the larger scale of bank fines and fraud in the roughly eight years since the global financial crisis, the numbers increase substantially. In addition to a 2012 settlement for mortgage-related fraud in the U.S. housing market, which amounted to some $25 billion, several large banks paid individual fines related to mortgage and foreclosure fraud – including a $16 billion fine for Bank of America, and $13 billion for JPMorgan Chase. Added to these are fines related to the rigging of the Libor rate (the interest rate at which banks lend to each other) and the Forex rigging, as well as money laundering, violating sanctions, manipulating the price of gold, manipulating the U.S. electricity market and assisting tax evasion, among other crimes.

According to a research paper published in June, the total cost of litigation (fines, penalties, settlements, etc.) paid by 16 major global banks since 2010 has reached more than $300 billion. Bank of America paid the most, amounting to more than $66 billion, followed by JPMorgan Chase, Lloyds, Citigroup, Barclays, RBS, Deutsche Bank, HSBC, BNP Paribas, Santander, Goldman Sachs, Credit Suisse, UBS, National Australia Bank, Standard Chartered and Société Générale.

Virtually all of these banks also appear on a list of data, compiled through 2007, revealing them to be among the most interconnected and powerful financial institutions in the world. This core group of corporations forms part of a network of 147 financial institutions that Swiss scientists refer to as the “super-entity,” which, through their various shareholdings, collectively controland own each other and roughly 40% of the world’s 43,000 largest transnational corporations.

In other words, the big banks – along with large insurance companies and asset management firms – do not simply act as a cartel in terms of engaging in criminal activities, but they form a functionally interdependent network of global financial and corporate control. Further, the banks work together in various industry associations and lobbying groups where they officially represent their collective interests.

The largest European banks and financial institutions are represented by the European Financial Services Round Table (EFR), whose membership consists of the CEOs or Chairmen of roughly 25 of the top financial institutions on the continent, including Deutsche Bank, AXA, HSBC, Allianz, RBS, ING, Barclays, BNP Paribas, UBS, and Credit Suisse, among others.

In the United States, the Financial Services Forum (FSF) represents the largest American along with some European banks and financial institutions. The Forum’s membership consists of less than 20 executives, including the CEOs or Chairmen of such firms as Bank of America, Morgan Stanley, JPMorgan Chase, Goldman Sachs, Citigroup, UBS, HSBC, AIG, Bank of New York Mellon, State Street Corporation, Deutsche Bank and Wells Fargo, among others.

And on a truly global scale, there is the Institute of International Finance (IIF), the premier global association representing the financial industry, with a membership of nearly 500 different institutions from more than 70 countries around the world, including banks, insurance companies, asset management firms, sovereign wealth funds, central banks, credit ratings agencies, hedge funds and development banks.

In addition to these various groups and associations, many of the same large banks and their top executives also serve as members, leaders or participants in much more secretive groups and forums – for example, the International Monetary Conference (IMC), a yearly meeting of hundreds of the world’s top bankers hosted by the American Bankers Association, which invites selected politicians, central bankers and finance ministers to attend their off-the-record discussions. In addition, there is the Institut International d’Etudes Bancaires (International Institute of Banking Studies), or IIEB, which brings together the top officials from dozens of Europe’s major financial institutions for discussions with central bankers, presidents and prime ministers in “closed sessions” with virtually no coverage in the media.

These financial institutions are major owners of government debt, which gives them even greater leverage over the policies and priorities of governments. Exercising this power, they typically demand the same thing: austerity measures and “structural reforms” designed to advance a neoliberal market economy that ultimately benefits those same banks and corporations. The banks in turn create the very crises that require governments to bail them out, racking up large debts that banks turn into further crises, pressuring economic reforms in return for further loans. The cycle of crisis and control continues, and all the while, the big banks and financial institutions engage in criminal conspiracies, fraud, manipulation and money-laundering on a massive scale, including acting as the financial services arm of the world’s largest drug cartels and terrorists organizations.

Welcome to the world governed by the global financial Mafiocracy – because if you’re not concerned, you’re not paying attention.

When the IMF Meets: Here’s What Happened At the Global Plutocracy’s Pow Wow in Peru

When the IMF Meets: Here’s What Happened At the Global Plutocracy’s Pow Wow in Peru

By: Andrew Gavin Marshall

26 October 2015

Originally posted at Occupy.com

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On October 6, the finance ministers, central bankers and development ministers from 188 countries convened for the Annual Meeting of the World Bank and International Monetary Fund in Lima, Peru. The yearly gathering is one of the top scheduled events on the calendar of economic diplomats, bringing them together for private discussions, seminars and press conferences with journalists. And of course it’s a big deal for the thousands of private bankers and financiers who are there to cut deals with the chief financial policymakers in those 188 IMF-member nations.

It was ironic that this year’s meeting took place in Peru at a time when emerging market economies are experiencing increased economic problems: the result of a combined slow-down in economic growth in China, a collapse in commodity prices, and threats by the U.S. Federal Reserve to hike interest rates in the near future. Indeed, talk of China, interest rate hikes and emerging market crisis was plentiful in Peru. Central bankers, unsurprisingly, came out generally in favor of raising rates, with top monetary officials from emerging markets saying they more feared the uncertainty about when rates would rise than the rise itself, and urged the Fed to simply get on with it.

Global Pow Wow

The annual meetings bring together the Board of Governors of the IMF, made up of the central bankers or finance ministers from the Fund’s 188 member nations. But the Governors are given their marching orders from the 24-member International Monetary and Financial Committee (IMFC), made up of ministers and central bank governors from the 24 major constituencies represented on the IMF’s Executive Board, and whose membership largely reflects that of the Group of Twenty (G20).

The IMFC held their meeting in Lima on Oct. 9, presided over by the committee’s chairman, Agustin Carstens, the Governor of the Central Bank of Mexico, and the IMF Managing Director Christine Lagarde. In attendance were the finance ministers of Japan (Taro Aso), India (Arun Jaitley), Argentina (Axel Kicillof), Brazil (Joaquim Levy), France (Michel Sapin), Italy (Pier Carlo Padoan), Germany (Wolfgang Schauble), Singapore (Tharman Shanmugaratnam), Great Britain (George Osborne) and the United States (Jack Lew), along with top-level central bankers from Saudi Arabia, Nigeria, Norway, Algeria, Colombia, Belgium and China.

Also participating in the IMFC meeting were Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board (FSB); Jaime Caruana, General Manager of the Bank for International Settlements (BIS); Valdis Dombrovskis, Vice President of the European Commission; Angel Gurria, Secretary-General of the Organization for Economic Cooperation and Development; Mario Draghi, President of the European Central Bank (ECB), and other top representatives from OPEC, the World Bank and the World Trade Organization (WTO).

These various financial diplomats met and made prepared statements, but the real work and decision-making took place in the IMFC’s off-the-record discussions. These discussions also included, as usual, a joint meeting between the IMFC and the G20, after which the G20 held a press conference discussing recent agreements made by the world’s top economic diplomats collectively representing roughly 85% of global GDP.

The meetings followed the consistent hierarchy of operations among the world’s most powerful economies, starting with a private gathering of the finance ministers and central bankers from the Group of Seven (G7) nations, including the U.S., Germany, Japan, UK, France, Italy and Canada. This was followed by a gathering of ministers and monetary chiefs from the G20 nations (consisting of the G7 plus China, Brazil, Russia, India, South Africa, Argentina, Australia, Turkey, Saudi Arabia, Mexico, South Korea, Indonesia and the European Union). The heads of the world’s major international organizations also attended these meetings, functioning effectively as a steering committee for the global economy. The G20 then held a joint session with the IMFC, which functions as the steering committee of the IMF.

The IMFC’s communiqué following its meeting warned that global economic growth was “modest and uneven” with increased “uncertainty and financial market volatility.” Risks to the global economy “have increased,” it noted, in particular for emerging markets.

Apart from the IMFC and G20, a number of other important meetings took place on the sidelines of the annual gathering, many of which prominently featured bankers. One of the most important gatherings of global financiers was the Annual Membership Meeting of the Institute of International Finance (IIF), a consortium of roughly 500 global financial institutions including banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks, credit ratings agencies and development banks.

From Oct. 9-10, the world’s top bankers and financiers then held luncheons and private meetings with the world’s top economic policy-makers, who were also invited to attend or speak at the conference proceedings. The IIF’s opening ceremony was addressed by Peru’s President Ollanta Humala Tasso, and included guest speakers like the finance minister of Indonesia and central bankers from Thailand and Malaysia, as well as the top Swedish central banker, Stefan Ingves, who serves as chairman of the Basel Committee on Banking Supervision (BCBS) which is responsible for shaping and implementing global banking regulations known as Basel III.

On the second day of the IIF’s meeting, guest speakers included top officials from Brazil’s finance ministry, the World Bank, and a keynote address was delivered by the governor of Canada’s central bank, Stephen S. Poloz. The rest of the day included talks by finance ministers and central bankers from Colombia, Chile and Peru; a top official from the central bank of France; and an official from the Financial Stability Board (FSB), which is a group of global central banks, finance ministries and regulators responsible for managing stability of financial markets.

Another important gathering in Lima was the Group of Thirty (G30), presided over by its Chairman Jean-Claude Trichet, the former President of the European Central Bank. The G30 was established in 1978 as a nonprofit group of roughly 30 sitting and former central bankers, finance ministers, economists and private bankers, with the aim “to deepen understanding of international economic and financial issues” and “to examine the choices available to market practitioners and policymakers.”

Among the G30’s current members are former Federal Reserve Chair Paul Volcker; Mark Carney of the Bank of England and Financial Stability Board; Jaime Caruana of the BIS; Mario Draghi of the ECB; William C. Dudley of the Federal Reserve Bank of New York; former U.S. Treasury Secretary Timothy Geithner; former Bank of England Governor Mervyn King; economist Paul Krugman; Bank of Japan Governor Haruhiko Kuroda; Bank of France Governor and BIS Chairman Christian Noyer; Reserve Bank of India Governor Raghuram Rajan; Tharman Shanmugaratnam of Singapore; former U.S. Treasury Secretary Lawrence Summers; Chinese central banker Zhou Xiaochuan; and top bankers from UBS, JPMorgan Chase, BlackRock and Goldman Sachs.

This year, the G30 held its annual International Banking Seminar in Peru, “an invitation-only, off-the-record forum that allows for frank discussion and debate of the thorniest issues confronting the central banking community,” bringing together “over fifty percent of the world’s central bank governors, the Chairmen and CEOs of the financial sector, and a select few academics to debate financial and systemic issues of global import.”

The meeting included a short speech by Federal Reserve Vice Chairman Stanley Fischer, who told the audience that the Fed’s interest rate rise was “an expectation, not a commitment.” Fischer acknowledged that “shifting expectations concerning U.S. interest rates could lead to more volatility in financial markets and the value of the dollar, intensifying spillovers to other economies, including emerging market economies.” He reassured his audience, however, that the Fed will “remain committed to communicating our intentions as clearly as possible… to assist market participants, be they in the private or the public sector, in understanding our intentions as they make their investment decisions.”

Behind Closed Doors

But the true importance of the annual IMF meetings is not what happens in formal proceedings and seminars, but the various secret meetings of finance ministers, central bankers and private financiers that take place on the sidelines of the official conference. In these closed-door events, a select group of government and monetary officials, primarily those from the G7 and G20 nations, were invited to wine and dine with bankers at decadent dinners and lavish parties, and speak to private gatherings of the world’s top investors and money managers. It’s here, in these various meetings, where the world’s chief financial diplomats were able to meet, greet and receive praise or criticism from their true constituents: the global financial elite.

As usual, the annual pow wow of the global plutocracy came and went with little comment outside the financial press. But as always, the annual IMF meetings – and the more secretive, simultaneous gatherings of global economic diplomats and financiers on the sidelines – represented the core of global economic governance, manifest in the various ad-hoc committees that in essence rule the world.

These individuals’ main interactions were not with the populations in their home nations – the people who suffer under austerity, who have to “adjust” to the restructuring of their societies into “market economies” – but rather with those from whom they have the most to gain: bankers, billionaires and financiers. And rest assured, when the officials retire from their central bank and finance ministry positions, they will be stepping out of their membership in the G7, G20 and IMFC, and into the boardrooms of JPMorgan Chase, Goldman Sachs, BlackRock, Barclays and Deutsche Bank. They will be well rewarded, with large salaries and bonuses for a job well done while in public office. And the revolving door of global economic governance will keep turning.

Global Power Project: Bilderberg and the Global Financial Mafia

Global Power Project: Bilderberg and the Global Financial Mafia

By: Andrew Gavin Marshall

11 December 2014

Originally posted at Occupy.com

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This is the fourth installment in a series that examines the activities and individuals driving the Bilderberg Group. Read the first partsecond part and third part.

In the previous Bilderberg article, I wrote that financial markets were “a type of global parasite with unprecedented power capable of determining the fate of nations and peoples.” In truth, the “super-entity” known as financial market power functions like a cartel, or an organized criminal network: a Mafia. This installment examines some of the members of the global financial mafia who are present at Bilderberg meetings and thus are given unparalleled access to political leaders behind closed doors.

At Bilderberg meetings, participants frequently include leading officials and advisers to banks like JPMorgan Chase, Goldman Sachs, Barclays, Deutsche Bank, HSBC and AXA, among others. The participation of leaders and advisers to these and other large financial institutions provides world leaders with direct, “private” access to some of the leading voices at the core of global financial markets. The interests and actions of financial markets can thus be articulated to the leaders of powerful political, media, military, intelligence and technocratic institutions. The “invisible hand” may voice where and when it might smack.

Through Bilderberg, leaders in financial markets are given an inside look at, and access to, those who shape and wield foreign and economic policy in the world’s most powerful nations. Their interests become a part of that process, just as geopolitical interests are integrated into the actions of financial markets. While financial markets command no armies, they determine the flow and functions of money upon which all armies are dependent, and to which nations are obedient. Bilderberg brings these institutions and individuals together for an off-the-record, private chat about global affairs and policy.

Martin Feldstein, who serves on the International Council of JPMorgan Chase, attended all but one Bilderberg meeting between 2010 and 2014. Feldstein is one of the most influential American economists over the past several decades, serving as a professor at Harvard, a member of the Group of Thirty, the Trilateral Commission, the International Advisory Board of the National Bank of Kuwait, and the Council on Foreign Relations. He advised President George W. Bush as a member of the Foreign Intelligence Advisory Board between 2007 and 2009, a position in which he was given access to top-secret intelligence information. He had previously served as one of Ronald Reagan’s chief economic advisers, and President Obama appointed him in 2009 to serve on the Economic Recovery Advisory Board, advising on how to manage the “recovery” following the financial crisis.

Feldstein’s views are well known. Relating to Europe’s debt crisis, for which Bilderberg meetings hold a great deal of significance, Feldstein wrote in the Financial Times in July of 2013 that governments that bowed to “popular political pressure” to lessen the brutal austerity measures widely seen as the cause of mass unemployment, poverty and social unrest, were at risk of facing rising interest rates and “a new fiscal crisis.”

In other words, if governments bend to the will of the people, financial markets will seek to bend them back. A “fiscal crisis” only takes place when creditors (financial markets) decide to stop funding the government. In Europe, nations are largely dependent upon banks to provide them with credit to function. Thus, if the heads of financial markets don’t like the policies of nations, they can cut off their funding, creating a major crisis and even collapsing the government. This leverage forces nations to follow policies favored by financial markets, such as austerity and various other “structural reforms.” Meanwhile, the policies combine to impoverish the population, enrich the elite, allow for mass exploitation of resources and labor, and consolidate control of the economy into the hands of relatively few, large global banks and corporations.

Another key Bilderberg member and leading figure in financial markets is Josef Ackermann, whom I have written about previously. Ackermann has been one of Europe’s most powerful bankers over the past decade, as the CEO of Deutsche Bank and a major power player throughout the debt crisis holding key leadership positions in large industry associations such as the Institute for International Finance (IIF).

The current chairman of the Bilderberg Group, Henri de Castries, is chairman and CEO of the French insurance giant, AXA, one of the top companies on the Swiss study’s list of the “super-entity” of banks and insurance giants. De Castries is also a member of the European Financial Services Round Table (EFR), a lobby group made up of the chairmen and CEOs of Europe’s largest financial institutions.

In 2012, the Financial Times referred to Henri de Castries as one of France’s “best known captains of industry,” having served as an unofficial adviser to former French President Nicolas Sarkozy, and been school classmates with the current President Francois Hollande. De Castries is considered “as establishment as you can get in France.”

In the wake of the European debt crisis, Henri de Castries supported the policies of austerity and structural reform, warning in 2012 that the crisis would continue for some time. He suggested that governments needed to learn how to “spend less” and the only way to “win back our competitiveness” was “through business investment and not by public spending,” adding: “What we need is a profound cultural change.”

Marcus Agius, a member of Bilderberg’s steering committee, is the chairman of PA Consulting, having previously served as the chairman of Barclays, the bank listed in the number one spot on the list compiled by the Swiss study. As chair of Barclays between 2007 and 2012, Agius also served as chairman of the British Bankers Association, was a director of the BBC from 2006 to 2013, and served as a Business Ambassador of the Trade and Investment Ministry of the British government. Agius also married the daughter of Edmund de Rothschild, bringing him into the family of one of the most prestigious and influential financial dynasties in the world.

Agius resigned from Barclays in 2012 as a result of the massive global financial fraud revealed by the Libor rate scandal, whereby some of the world’s largest banks – including Barclays – formed a cartel at the British Bankers Association to manipulate the interest rate at which banks lend to each other, influencing prices throughout the global economy. Despite the resulting scandal for Agius and others, which forced resignations in 2012, he stayed on the bank’s payroll as an adviser until March of 2014, a full 20 months following his official resignation.

Douglas J. Flint, who is chairman of HSBC, has attended every Bilderberg meeting since 2011. He is also chairman of the Institute of International Finance (IIF), and is a member of the European Financial Services Round Table (EFR), the Financial Services Forum, the International Monetary Conference (IMC), and serves on advisory boards to the Mayors of Shanghai and Beijing.

W. Edmund Clark, the chair of one of Canada’s largest banks, TD Bank, has attended every Bilderberg meeting since 2010.

Peter Sutherland has been a long-time Bilderberg participant, and serves as the chairman of Goldman Sachs International.

Robert Zoellick, former World Bank president and Bilderberg participant at every meeting between 2010 and 2014, now serves as the chairman of the Board of International Advisers of Goldman Sachs.

Peter R. Orszag, a Vice Chairman at Citigroup, attended Bilderberg meetings between 2010 and 2012.

The Vice Chairman of Goldman Sachs, J. Michael Evans, attended Bilderberg meetings in 2012 and 2013.

This is but a small sampling of some of the names of the leaders of financial institutions represented at Bilderberg meetings over the past few years. Apart from leading individual banks and financial institutions, many of the financiers who attend Bilderberg meetings simultaneously hold leadership positions within other large banking lobby groups, industry associations, and major international conferences.

For example, Bilderberg members and participants frequently hold simultaneous leadership positions at the Institute of International Finance (IIF), the International Monetary Conference (IMC), and the Group of Thirty (G30), all of which have been the focus of previous installments of the Global Power Project, as they have been profoundly influential organizations in their own right. The fact that so many leading figures in those organizations are leaders and participants in Bilderberg meetings lends extra weight to the importance of the meetings.

Roger Altman, a Bilderberg steering committee member and head of a large investment bank, wrote in a May 2013 article in the Financial Times that financial markets in the 21st century were “much more powerful than any government leader,” noting that the spread of austerity across Europe was not driven by Angela Merkel of Germany or other political leaders, but rather, by “private lenders… who declined to finance further borrowing by those countries,” and thus, “markets triggered the Eurozone crisis, not politicians.”

The views and the desires of bankers and financiers are important – and influential – precisely because if these individuals don’t get what they want, they wield the power in numbers on screens that can force the hands of even the most powerful governments and politicians. As such, the favored policies of bankers frequently become the implemented policies of states.

Andrew Gavin Marshall is a freelance writer and researcher based in Montreal, Canada. 

When Fat Cats Meet In Munich: Welcoming the International Monetary Conference

When Fat Cats Meet In Munich: Welcoming the International Monetary Conference

By: Andrew Gavin Marshall

Originally posted at Occupy.com

2 June 2014

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In Part 1 of this series, I examined the history and early evolution of the annual meeting that takes place among world bankers and financial and monetary officials at the International Monetary Conference. Part 2 looked at the role of the IMC in the lead-up to the 1980s debt crisis.Part 3 examined the influence of the IMC throughout that decade’s debt crisis. This last installment – published just as the IMC prepares for its June 1-3 meeting at Hotel Bayerischer Hof in Munich, Germany – looks at what the IMC has done since the 1990s to maintain its status among the world’s most highly influential bodies in economic, financial and monetary affairs. Included is a rundown of bankers who run the IMC along with leaked documents from the 2013 meeting in Shanghai.

At the 1992 International Monetary Conference in Toronto, there was a general consensus among private bankers and public officials that, as a result of enormous over-lending to Latin America and developing countries throughout the previous debt-crisis decade, the task of financing “the transformation of the former Soviet Union to a market economy” could not be left to bank loans alone. Hilmar Kopper, the CEO of Deutsche Bank, told the conference attendees that commercial banks would only engage in large-scale financing if there were “government-guaranteed credits” and “an agreement on the old debt,” implying that the banks would essentially need the guarantee of a government bailout scheme if things got bad. Japan’s former vice minister of finance, Toyoo Gyohten, told the attendees that “public-sector agencies must cooperate with private banks, with the willingness to share the unavoidable risk.”

Canada’s finance minister, Don Mazankowski, told the bankers that “we are prepared to help” the former Soviet bloc countries so long as “they help themselves and get on the path to economic growth and prosperity.” His words implied that the Soviet countries must undertake similar austerity and structural adjustment packages imposed upon other countries through the 1980s debt crisis. The bankers stressed the same point, noting that “it would be difficult for governments to be generous with Russia until it established an economic recovery program approved by the International Monetary Fund.”

Throughout the 1990s, the IMC continued to be a significant forum for discussion among bankers and finance officials. Remarks made by Federal Reserve chairman Alan Greenspan and Hans Tietmeyer, the president of Germany’s Bundesbank (the Central Bank of Germany), at the 1995 meeting of the IMC led to a strengthening of the U.S. dollar and a weakening of the German mark in international currency markets.

IMC Influence in More Recent Years

In the early 21st century, the International Monetary Conference has remained relevant, as admitted during a 2001 press conference with the president of the European Central Bank, Willem F. Duisenberg. Duisenberg had been criticized by European media for not attending a recent Eurogroup meeting of finance ministers and central bankers from euro-currency countries, which had gathered in Brussels.

Duisenberg commented:

“I would like to point out that it has been a tradition since 1954 that the highlight of the annual International Monetary Conference, which is held in a different place every year, is the so-called Central Bankers’ Panel in which the central banks, or central bankers, of the three main currencies in the world participate. And I did so. It would have drawn more attention had I not been there, than had I been in Brussels… I can tell you that the next meeting of the International Monetary Conference will be … in Montreal [in 2002], and the year after it will be … in Berlin. On both occasions you can be sure, if it happens to coincide with the meeting of the Eurogroup, that the ECB will be represented in the Eurogroup by the Vice-President.

Indeed, as recently as the IMC’s 2013 meeting in Shanghai, we can see that the importance and relevance of the annual meeting has not diminished. Though the IMC has no publicly-accessible website, I managed to compile a rough list of leading officials and board members of the International Monetary Conference, drawing information from references on their official CVs and publicly-available biographies, as well as from leaked documents including a program overview of the 2013 conference.

Names to Know

The president and chairman of the International Monetary Conference is Baudouin Prot. Formerly CEO of BNP Paribas, one of France’s largest global banks, Prot is currently chairman of that bank as well as a current board member of Kering, Veolia Environment, Lafarge, Erbé SA and Pargesa Holding SA. He is a member of the International Advisory panel to the Monetary Authority of Singapore, the International Business Leaders’ Advisory Council to the Major of Shanghai, the European Financial Services Round Table, and is chairman of the European Banking Group.

The executive vice president of the IMC is Frank Keating, President and CEO of the American Bankers Association and former president and CEO of the American Council of Life Insurers (2003-2011). Keating is also the former governor of Oklahoma (1995-2003), a former official in the U.S. Department of Housing and Urban Development, and a former Assistant Secretary of the Treasury. Additionally he is a member of the board of directors of the National Archives Foundation, the Bipartisan Policy Center, the Jamestown Foundation, and he was a member of the Bipartisan Policy Center’s Debt Reduction Task Force in 2010.

Confirmed board members of the International Monetary Conference include: Gordon Nixon, President and CEO of Royal Bank of Canada; William Downe, CEO of BMO Financial Group; Axel Weber, Chairman of UBS; Francisco Gonzalez, Chairman and CEO of BBVA; Robert E. Setubal, President and CEO of Itau Unibanco Banco SA; Richard Waugh, President and CEO of Scotiabank; Chanda Kochhar, Managing Director and CEO of ICICI Bank; Jacko Maree, senior banker at Standard Chartered; Andreas Triechl, Chairman and CEO of Erste Group Bank; and Walter B. Kielholz, the Chairman of Swiss Re.

Interestingly, there are no major American banks or bankers listed as current board members of the IMC, which is dominated by European and Canadian bankers. Further, there were three bankers whose CVs listed them as “members” of the IMC, but when I attempted to contact the IMC and the American Bankers Association to confirm whether they were board members – the IMC has roughly 15 board members, and I had only confirmed 12 of them – neither the ABA nor IMC replied to my multiple inquiries. The three bankers who were listed as “members” – and possible, though unconfirmed, board members – are Federico Ghizzoni, the CEO of UniCredit; Douglas Flint, the Chairman of HSBC (also chairman of the Institute of International Finance), and Ibrahim S. Dabdoub, the CEO of the National Bank of Kuwait.

Compiling the CVs of the 12 confirmed board members of the International Monetary Conference, we can see what other institutions are most represented among the membership:

Four members of the IMC board are also members of the Institute of International Finance, the leading global banking lobby group; four IMC board members are also members of the International Business Council of the World Economic Forum and the European Financial Services Round Table (EFR), a group of leading European bankers. And three IMC board members are also represented in the European Banking Group, created to advise the European Union on financial market “regulations,” as well as the Canadian Council of Chief Executives (CCCE), the leading corporate interest group in Canada.

Other organizations sharing leadership with two members of the IMC board are the International Advisory Panel of the Monetary Authority of Singapore, the International Business Leaders’ Advisory Council to the Major of Shanghai, and the International Advisory Committee of the Federal Reserve Bank of New York.

If we include the three bankers whose CVs listed them as “members” of the IMC, the cross-over representation of leadership in these institutions increases: the European Financial Services Round Table increases representation from four to six members of the IMC board, the European Banking Group from three to five members, the Institute of International Finance from four to five, and the International Business Leaders’ Advisory Council to the Mayor of Shanghai increases from two to three.

Leaked Details from Shanghai

Leaked documents from the 2013 IMC meeting in Shanghai show the planned program for the four-day conference held at the Four Seasons Hotel Shanghai in early June of 2013. Welcoming remarks were presented by the President and CEO of the American Bankers Association, Frank Keating, followed by opening remarks from the BNP Paribas chairman and president of the IMC, Baudouin Prot.

On Monday, June 3, speakers at the IMC included Han Zheng, a member of the Political Bureau of the CPC (Communist Party of China) Central Committee; Mario Draghi, President of the European Central Bank; Douglas Flint, Chairman of HSBC and Chairman of the Institute of International Finance (unconfirmed board member of the IMC); Jaime Caruana, General Manager of the Bank for International Settlements (BIS); Lord Adair Turner, former chairman of the Financial Services Authority in the UK and a Senior Fellow of the Institute for New Economic Thinking; and Janet Yellen, Vice Chair and Governor (now current Chair) of the Federal Reserve Board.

Other speakers at the 2013 International Monetary Conference included Axel A. Weber, Chairman of UBS; Niall Ferguson, the Lawrence A. Tisch Professor of History at Harvard University; Jacob A. Frenkel, Chairman of JPMorgan Chase International and Chairman of the Board of Trustees of the Group of Thirty (G30); Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance in the Government of Singapore; Zhou Xiaochuan, Governor of the People’s Bank of China (China’s Central Bank); Jamie Dimon, Chairman and CEO of JPMorgan Chase; Jurgen Fitschen, co-Chairman of Deutsche Bank; John G. Strumpf, Chairman, President and CEO of Wells Fargo; Francisco Gonzalez, Chairman and CEO of BBVA; Sir Martin Sorrell, CEO of WPP; and Victor Yuan, Chairman and President of Horizon Research Consultancy Group.

Additional speakers at the conference included Jiang Jianqing, Chairman of the Industrial and Commercial Bank of China (ICBC); Stephen Bird, CEO for Asia Pacific at Citibank in Hong Kong; Michael Pettis, Professor of International Finance at the Guanghua School of Management at Peking University in Beijing; Peter Sands, Chief Executive of Standard Chartered; Shang Fulin, Chairman of the China Banking Regulatory Commission; Tian Guoli, Chairman of the Bank of China; and Andrew Sheng, President of the Fung Global Institute in Hong Kong.

The fact alone that this group of global financiers met with China’s leading bankers and top government officials within China points to the continuing relevance of the International Monetary Conference. What’s more, Janet Yellen, then a contender for the position of Chair of the Federal Reserve Board, attended the IMC meeting while sitting as Vice Chair of the Federal Reserve, and outlined her views on “what more should be done” to “make the global financial system more resilient.”

One of the key issues Yellen discussed in her speech to hundreds of global bankers assembled at the 2013 IMC was the concept of “too-big-to-fail” banks, what the regulatory agencies (and, notably, central banks) refer to as “systemically-important financial institutions,” or SIFIs. Yellen noted that there have been proposals for a “sweeping restructuring of the banking system,” including the possibility of the “resurrection of Glass-Steagall-style separation of commercial banking from investment banking and imposition of bank size limits.” However, Yellen reassured the financiers, “I am not persuaded that such blunt approaches would be the most efficient ways to address the too-big-to-fail problem.”

Indeed, systemic problems of the global monetary, financial and economic system will likely remain unresolved so long as forums like the International Monetary Conference are permitted to take place outside public scrutiny. Such meetings, where central bankers, regulators and leading financial policy makers meet in private with the world’s most influential bankers, only encourage consensus, closer cooperation and, ultimately, collusion between our so-called public officials and the bankers who profited off the financial and economic destruction which they themselves caused.

Andrew Gavin Marshall is a researcher and writer based in Montreal, Canada. He is project manager of The People’s Book Project, chair of the geopolitics division of The Hampton Institute, research director for Occupy.com’s Global Power Project and the World of Resistance (WoR) Report, and hosts a weekly podcast show with BoilingFrogsPost.

Global Power Project: Central Bankers and the Institute of International Finance, Part 3

Global Power Project: Central Bankers and the Institute of International Finance, Part 3

By: Andrew Gavin Marshall

Originally posted at Occupy.com

Left to right: Then-Managing Director of the IIF Charles Dallara, then-President of the European Central Bank Jean-Claude Trichet, then-Governor of the Bank of Canada and Chairman of the Financial Stability Board Mark Carney, then-CEO of Deutsche Bank and Chairman of the IIF Josef Ackermann

Left to right: Then-Managing Director of the IIF Charles Dallara, then-President of the European Central Bank Jean-Claude Trichet, then-Governor of the Bank of Canada and Chairman of the Financial Stability Board Mark Carney, then-CEO of Deutsche Bank and Chairman of the IIF Josef Ackermann

In Part 1 of the Global Power Project exposé on the Institute of International Finance, I examined the origins and evolution of an organization representing the interests of global banks. In Part 2, I looked at the role played by the IIF and its leadership during the European debt crisis. In this third and final part in the series, I examine the relationship between the IIF and global central bankers.

Since the early 1990s, the IIF has been heavily involved working with central bankers, particularly through the Bank for International Settlements (BIS) in Basel, Switzerland, where private bankers have been granted a powerful position determining their own regulations in international financial markets. The IIF has been central throughout the reform of Basel I and the entire process of both Basel II and Basel III – collectively known as the Basel Accords – which were officially organized through the Basel Committee on Banking Supervision (BCBS), run out of the BIS.

From 1999 to 2004, the Basel Committee organized to impose a new set of global banking regulations, called Basel II. The head of the Basel Committee at the time was William McDonough, then the president of the Federal Reserve Bank of New York and a former Vice Chairman at the First National Bank of Chicago. He was also a founding member of the IIF at the 1982 Ditchley Conference, and remained a member on the board of the IIF from 1984 until 1990.

McDonough later explained: “Without the IIF it would have been far more difficult for regulators, such as the Basel Committee, to fully understand the critical issues that confronted the banks. The meetings with the IIF were an excellent sounding board – we trusted them (the banks) and they trusted us (the regulators).”

At the start of the Basel II process in 1999, the IIF created a special group, the Steering Committee on Regulatory Capital, which was to engage with the Basel Committee on behalf of the global banking industry. The papers put forward by the Steering Committee were ultimately accepted and implemented by the Basel Committee in the final accord, Basel II, essentially allowing the banks to regulate themselves.

The Chair of the Steering Committee, Daniel Bouton, who was also chairman and CEO of the French bank, Société Générale, later commented that, “It was of the utmost importance to try to have a coordinated view of the global banking industry in order to be able to discuss with the Basel Committee the most important questions. In fact, the IIF has been the single platform to forge a consensus between global banks about the key principles. And so it has played a very important part in discussions with the Basel Committee.”

But the relationship between the IIF and central bankers goes beyond the timid attempts at “regulation” on the part of global central banks. In fact, central bankers traverse through the revolving door of financial markets: from the mega-banks into the central banks.

At the mega-banks, the bankers’ job is to maximize profits through financial markets. At central banks, their job is to protect the banks through management of financial markets. It is a relationship of mutual interest, each side in need of the other, and together, with unprecedented power, central bankers and the “too-big-to-fail” mega-banks have become financial institutions that dominate the global economy.

Indeed, the Institute of International Finance has a number of boards which meet regularly that include several central bank chiefs. Notably, there is the IIF’s Group of Trustees of the Principles, with four co-chairs. One of the co-chairs is Agustin Guillermo Carstens, the Governor of the Bank of Mexico, who also sits on the board of directors of the Bank for International Settlements. In addition he is a member of the Steering Committee of the G20 Financial Stability Board (FSB), a group of central bank chiefs and finance ministers from the G20 nations who meet alongside leaders of the BIS, European Central Bank, European Commission, IMF, World Bank and the OECD to determine the world’s response to the recent global financial and economic crises.

The other co-chairs of the IIF’s Group of Trustees include: Christian Noyer, the Governor of the Bank of France (from 2003 to the present) and chairman of the Bank for International Settlements (from 2010 to the present); Zhour Xiaochuan, the Governor of the People’s Bank of China (2002 to the present) and a member of the board of directors of the BIS, as well as chairman of the Chinese Monetary Policy Committee and Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC); and Toshihiko Fukui, former Governor of the Bank of Japan from 2003 to 2008, current president of the Canon Institute for Global Studies, and a former member of the board of the BIS.

Another notable member of the Group of Trustees is Jaime Caruana, the General Manager of the BIS (from 2009 to the present), former Governor of the Bank of Spain, former member of the Governing Council of the European Central Bank (ECB), former Chairman of the Basel Committee, and current member of the G20 Financial Stability Board (FSB). Caruana is also a member of the Group of Thirty, a major think tank bringing together finance chiefs, central bankers and private bankers.

Also on the list is Jean-Claude Trichet, the former President of the European Central Bank from 2003-2011, current chairman of the Group of Thirty, European Chairman of the Trilateral Commission, Chairman of the board of directors of the European think tank BRUEGEL, member of the board of directors of EADS, former president of the Global Economy Meeting of Central Bank Governors at the BIS, former member of the board at the BIS, and current member on the board of the Peter G. Peterson Institute for International Economics, as well as a member of the Steering Committee of the Bilderberg Group.

Left to right: IMF Managing Director Christine Lagarde, then-President of the European Central Bank Jean-Claude Trichet, then-CEO of Deutsche Bank and Chairman of the IIF Josef Ackermann

Left to right: IMF Managing Director Christine Lagarde, then-President of the European Central Bank Jean-Claude Trichet, then-CEO of Deutsche Bank and Chairman of the IIF Josef Ackermann

Other members of the Group of Trustees include current or former top officials from the Bank of Canada, the Italian Ministry of Economy and Finance, the Bank of Italy, the Spanish Ministry of Finance, the IMF, Bank of France, Bank of Brazil, Bank of Chile, Bank of Iceland, German Finance Ministry, the European Central Bank, the World Bank, Federal Reserve Bank of New York, the Saudi Arabian Monetary Authority (SAMA), South African Ministry of Finance, Nigerian Ministry of Finance, and the Turkish Ministry of Finance, among many others.

The Group of Trustees doesn’t merely consist of so-called “public officials,” but also many private bankers and other prominent global power players including top officials from Deutsche Bank, JPMorgan Chase, Credit Suisse, Commerzbank, Citigroup and others.

Another noteworthy member of the Group of Trustees of the IIF is Paul Volcker, the former Chairman of the Board of Governors of the Federal Reserve System from 1979 to 1987, who was previously a chief economist at Chase Manhattan Bank (then under the leadership of David Rockefeller) as well as a former Treasury official and former president of the Federal Reserve Bank of New York. Volcker has since been Chairman of President Obama’s Economic Recovery Advisory Board from 2009 to 2011, a member of the board of directors of the Peterson Institute for International Economics, a member of the Executive Committee of the Trilateral Commission, Chairman Emeritus of the Group of Thirty, and a participant at Bilderberg Meetings.

Not only are central bankers, finance ministers and other “public officials” members of various boards at the IIF, but they also attend regular meetings hosted by the IIF, bringing them into consistent, close contact with the leading figures of the world’s largest financial institutions (aka: their real constituents). With the emerging financial crisis in 2007, the IIF hosted a meeting in Washington, DC, over the course of a weekend that they spent “lavishing central bankers and policymakers with praise, awards and banquets,” and as the Financial Times reported, “a genuine warmth appears to have developed between many senior bankers and policymakers.”

At the 2010 annual meeting of the IIF, in the midst of the exploding European debt crisis, notable invited guest speakers included the Greek Finance Minister as well as Olli Rehn, the European Commissioner for Economic and Monetary Affairs. In his speech, Rehn made clear that his objective, and that of the European Commission, was to enforce austerity measures and “bold structural reforms,” particularly in “labor and product markets.”

At the 2011 annual meeting of the IIF, guest speakers included the German Finance Minister Wolfgang Schauble alongside the Greek Finance Minister Evangelos Venizelos, who spoke of the “political and social cost” of the austerity measures in Greece, enforced under the pressure of financial markets, which he claimed were “an important step that will… convince the markets that the Euro Area can indeed protect itself and its member states.”

Also in attendance at the same IIF meeting was Mark Carney, then the Governor of the Bank of Canada, a board member at the BIS, Chairman of the Committee on the Global Financial System at the BIS, incoming Chairman of the Financial Stability Board (FSB), and now also Governor of the Bank of England. While Carney is often praised for being unafraid to confront bankers, he told the annual meeting that “financial institutions and markets should play critical and complimentary roles in supporting long-term economic prosperity,” even while acknowledging that the latest Basel III banking “regulations” (which he was pivotal in forming) would have little effect in making financial markets safer.

At the 2011 meeting, a special tribute was paid to the outgoing president of the European Central Bank, Jean-Claude Trichet, who had done so much to protect financial markets and banks at the expense of the living standards of the EU general population. Special remarks and presentations in honor of Trichet were delivered by Deutsche Bank CEO Josef Ackermann, IIF Managing Director Charles Dallara, Paul Volcker and Mark Carney. Trichet was commended for two “resolutions,” one of which was signed by the finance ministers and central bank governors of the G20 nations, as well as the leaders of the World Bank and IMF (with IMF Managing Director Christine Lagarde present at the IIF meeting as well), who praised Trichet for his “steadfast leadership in encouraging the governments of Europe to strengthen economic governance and fiscal discipline in the Euro Area,” as well as for “his leading role among global central bank governors in Basel” at the Bank for International Settlements.

Another “resolution” delivered in honor of Trichet was signed by the board of directors of the IIF who praised him “for his many contributions over the past decades to the stability and soundness of the international financial system and the global economy” – which, if anything, Europe’s crisis in 2011 stood as a profound testament against – and they also thanked Trichet for his “laudable improvements to global financial markets” and for being “a tremendous force behind the development of market-based approaches to debt crisis prevention and resolution.”

It is cause for concern when the world’s biggest bankers sit on the same boards and invite the major regulators, central bank chiefs and finance ministers to their meetings, gathering up awards and praise while keeping those parties firmly entrenched within their sphere of influence. The relationship between private banks and central banks is a complex one that is mired in overlap, mutual interests and mutual benefits: a system in which more profit and power is continually bestowed on ever fewer global banking chiefs and technocrats who are unelected, unaccountable and unapproachable – except, of course, to other members of the Institute of International Finance.

Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.

Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis

Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis

By: Andrew Gavin Marshall

Originally posted at Occupy.com

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In Part 1 of a Global Power Project exposé on the Institute of International Finance (IIF), I examined the founding the institute as a response by leading world banks to organize and manage their interests in relation to the 1980s debt crisis. When the European debt crisis hit headlines in 2010, the IIF was again on the scene and playing a major part. At the center was the CEO of Deutsche Bank, Josef Ackermann.

Josef Ackermann served as CEO of Deutsche Bank from 2002 to 2012, and over the same period served as Chairman of the IIF. Ackermann was also, and still remains, a member of the Steering Committee of the Bilderberg Group and continues to serve on the IIF’s Group of Trustees, a board which includes a number of prominent central bankers including Christian Noyer, the Governor of the Bank of France and Chairman of the Bank for International Settlements (BIS); Jamie Caruana, the General Manager of the BIS; and Jean-Claude Trichet, who was the president of the European Central Bank from 2003 to 2011.

During the early stages of the financial crisis, Ackermann served as an “unofficial adviser” to German Chancellor Angela Merkel and her then-Finance Minister Peer Steinbrueck. In December of 2009, Ackermann was speaking at a summit in Berlin attended by Chancellor Merkel and several other German cabinet ministers, corporate CEOs and others, where he explained that while the financial crisis had largely been “abated,” many “time bombs” remained — in particular, Greece, which he referred to as the “problem child” of Europe. Ackermann blamed the debt crisis on people having “lived beyond their means for years, if not decades,” warning that pensions and health care systems would “compound the problem” in the future.

The Financial Times has referred to Ackermann as a “reluctant power broker” who “has the ear of Angela Merkel, Europe’s most powerful politician.” Ackermann not only became one of the most influential bankers in the world, but a major political figure as well. As he himself explained: “Financial markets now are very political – political considerations have to play an important role.” In 2011, Ackermann warned that in terms of Europe’s crisis, “I don’t see a quick economic recovery, so we will have a longer time of somewhat lower growth – certainly three to five years.”

In October of 2011, Ackermann delivered a speech in which he said that Europe had “now entered a period of deleveraging” which “will inevitably entail a long period of austerity as governments, households and firms raise their savings.” At an economic forum in December of 2011, Josef Ackermann stated that Europe had to get its debt under control, “even at the cost of national sovereignty,” suggesting that neither “the pressure of financial markets” nor austerity measures “threaten democracy.” The real threat to democracy, according to Ackermann, was the “excessive debt” of European states.

In 2011, France and Germany agreed to negotiate directly with the “private sector” in the next planned Greek bailout agreement. The lead negotiator for the banks was the Institute of International Finance, which was brought in to discuss the potential for the banks to take a slight loss on their holdings of Greek debt. Ackermann was to be one of the lead negotiators for the IIF (also representing Deutsche Bank,a major private holder of Greek debt).

The Institute of International Finance under Ackermann’s chairmanship in turn became directly involved in major European summits, providing key input and suggestions that led to the Greek bailout. In July of 2011, the IIF warned the Eurozone countries that they would have to conclude a bailout agreement for Greece in order to avoid financial markets “spinning out of control.” The IIF delivered these warnings in a report delivered directly to European finance ministers, stating: “It is essential that euro area member states and the IMF act in the coming days to avoid market developments spinning out of control and risk contagion accelerating.”

The IIF undertook talks with Greek political leaders as well as EU officials, the European Central Bank and the IMF, with the organization noting that its managing director Charles Dallara and an IFF team “had extensive meetings with very senior European government officials over several weeks.” The three main IFF officials involved in discussions and negotiations were Charles Dallara (managing director from 1993-2013), Ackermann and Baudouin Prot, the Chairman of BNP Paribas.

According to one report, Ackermann even attended a meeting of the European Council during the EU summit to discuss the Greek bailout. Dallara was reported to have engaged in a conference call with top EU officials, including the Eurogroup chair Jean-Claude Juncker and the European Commissioner for Economic and Monetary Affairs, Olli Rehn. Dallara also reportedly met with European Council President Herman van Rompuy, then-French President Nicolas Sarkozy and Angela Merkel.

Discussions continued over the following months with little resolution. In an October meeting, EU officials reportedly hit a wall, at which point they summoned Dallara as the representative of the banks to the meeting in order “to break the deadlock.” Dallara met with Sarkozy and Merkel and other leading EU officials. While a general agreement was reached with the banks, negotiations over the technicalities continued into 2012, taking place between the Greek government, the EU, IMF and the IIF.

Ackermann explained that the banks were being “extremely generous” and then warned that failure to agree on a new program would open“a new Pandora’s box” for the debt crisis. Ackermann spoke at the World Economic Forum where he said that any agreement would have to force Greece to adhere to “harsh new austerity measures,” including cuts to wages and pensions, as well as making “the labor market more flexible.”

The final agreement had the banks holding Greek debt to take a 50% “loss” of their holdings of that debt, which would be done through a “bond swap” where they were to exchange their current junk status Greek debt for long-term Greek government bonds (debt) with a higher rating. In other words, the much-touted “write off,” or “loss,” for banks holding Greek debt amounted to a fancy financial method of kicking the can down the road.

After leaving his position as Chairman and CEO of Deutsche Bank as well as Chairman of the IIF, Ackermann spoke at the Atlantic Council, a U.S. think tank where he stated that elections in Greece were “not necessary” and “a big mistake.” What was necessary, he said, was “to make the funding of the banking system more certain,” and claimed it would require between 1 and 2 trillion euros. The European Stability Mechanism’s (ESM) ability to provide banks with $1 trillion was, according to Ackermann, “sufficient,” but he added, “we have to do more” and “we should maintain the pressure on the countries to do the necessary structural reforms and the necessary financial reforms to reduce the debt burden.” However, he noted, “if it comes to the worst,” in terms of a potential collapse of the Eurozone, “everything will be done to bail the Eurozone out.”

When Ackermann was asked why Germany did not simply come out and say that it would guarantee bank debts in the Eurozone, he explained that “it would be very difficult to get parliamentary approval for such behavior or attitude. People would not support it at all.” Further, if Germany did publicly state that it would guarantee bailouts for banks, many countries in the Eurozone would then ask, “Well, why then go on with our austerity programs? Why go on with our reforms? We have what we need.” Thus, Germany was not saying so publicly, based on what Ackermann called “political tactical consideration,” adding: “I think to keep the pressure up until the last minute is probably… not a bad political solution.”

Ackermann has never lacked as a source for controversy. He has been referred to as “a global banker and political power broker” by one financial analyst, and Simon Johnson, former Chief Economist at the IMF, referred to him as “one of the most dangerous bank managers” in the world whose advice not just to Germany and Greece but also to Belgium and Switzerland “shaped talks to bail out German lenders [banks], reduce Greece’s debt, leverage the euro-area’s rescue fund and influence regulation.” Ackermann himself stated, “Financial markets have become highly political over the past years… Politics and finance will become even more intertwined in the future. Accordingly, bankers have to think and act more politically as well.” One financial analyst stated: “He’s the most influential banker in the euro zone.” A German economics professor noted, “Deutsche Bank and its CEO are the target of all the people who feel our social or economic system is unfair or wrong.”

In 2011, Ackermann was targeted by an Italian anarchist group that claimed responsibility for sending a letter bomb to the Deutsche Bank CEO, though it was intercepted by police. When confronted by Occupy protesters during a speech he gave in November of 2011, Ackermann touted his “environmental” credentials, explaining that the UN Secretary General had referred to him as a “visionary.”

When Ackermann left Deutsche Bank and the IIF, he did not leave the world of financial and political power. He continued holding positions as a member of the Steering Committee of the Bilderberg Group; Vice Chairman of the Foundation Board of the World Economic Forum; and as a member of the Group of Trustees of the Principles for the Institute of International Finance. On top of that, he became a board member of Investor AB, Siemens AG, and Royal Dutch Shell, as well as being appointed Chairman of Zurich Insurance Group. Ackermann also sits on the international advisory boards of the China Banking Regulatory Commission, the National Bank of Kuwait, and Akbank, Turkey’s largest bank, as well as sitting on the boards of a number of other corporate and financial institutions.

When Ackermann left his position as CEO of Deutsche Bank and Chairman of the IIF, he was replaced at the IIF by Douglas Flint, the chairman of HSBC Holdings, who also sits on the board of the IIF. Flint is a member of the Mayor of Beijing’s International Business Leaders’ Advisory Council, a member of the Mayor of Shanghai’s International Business Leaders’ Advisory Council, a member of the International Advisory Board of the China Europe International Business School, a former director of BP (from 2005-2011), a participant in Bilderberg meetings (including for the years 2011-2013), a member of the European Financial Services Round Table (a group of CEOs and chairmen from Europe’s top banks), a member of the Financial Services Forum, a member of the European Banking Group (a group of over ten top European bank leaders formed to directly lobby the EU on “regulation” of the financial industry), and a member of the International Monetary Conference (IMC), an annual conference of private bankers formed to “compliment” the annual IMF meetings.

Whether through the leadership of Josef Ackermann, or now under the chairmanship of Douglas Flint, the IIF has been and will remain a major global player within the debt crisis and future financial crises, representing the organized interests of the financial markets. It’s no surprise, then, that even the Financial Times noted in 2010 that, three years after the financial crisis began, “the markets (and the bankers) still rule.”

Or as former Deputy Treasury Secretary Roger Altman noted, in 2011, that financial markets had become “a global supra-government” that “oust entrenched regimes… force austerity, banking bail-outs and other major policy changes,” whose “influence dwarfs multilateral institutions such as the International Monetary Fund” as “they have become the most powerful force on earth.”

We need look no further than the Institute of International Finance to see just how “the most powerful force on earth” is organized.

zurich-insurance-chairman-resigns-over-the-suicide-of-its-cfo

Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.

Global Power Project: Exposing the Institute of International Finance, Part 1

 Global Power Project: Exposing the Institute of International Finance, Part 1

By: Andrew Gavin Marshall

Originally posted at Occupy.com

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This is the first of a series of exposés focusing on the Institute of International Finance (IIF), the very “visible hand” of financial markets. It is a continuation of the Global Power Project produced by Occupy.com. Part 1 examines the origins of the IIF.

Founded in 1983, the Institute of International Finance (IIF) describes itself as “the world’s only global association of financial institutions” with a membership that includes “most of the world’s largest commercial banks and investment banks,” along with sovereign wealth funds, asset managers, hedge funds, insurance companies, law firms, multinational corporations, development banks, multilateral agencies, credit ratings agencies and an assortment of other global financial and economic organizations. In short, the Institute of International Finance is the very visible hand of the global financial markets.

As the IIF notes on its website, its “main activities” include providing so-called “impartial analysis and research” to its members in order to “shape regulatory, financial, and economic policy issues….influence the public debate on particular policy proposals….[and work] with policymakers, regulators, and multilateral organizations… with an emphasis on voluntary market-based approaches to crisis prevention and management.”

It is also there to “provide a network for members to exchange views and offer opportunities for effective dialogue among policymakers, regulators, and private sector financial institutions.” The IIF proclaims it “is committed to being the most influential global association of financial institutions,” seeking to “sustain and enhance…. our extensive relationships with policymakers and regulators.”

The Institute of International Finance was formed at the beginning of the debt crisis of the 1980s, designed to establish a formal organization and representation for the interests of the world’s major banks and financial institutions. A meeting at Ditchley Park, England, was hosted by the National Planning Association (NPA) in May of 1982, which brought together senior representatives from major commercial banks in the industrialized Organization for Economic Co-Operation and Development (OECD) countries, as well as the Managing Director of the International Monetary Fund (IMF), Jacques de Larosiere; other top IMF and World Bank officials; the Comptroller of the Currency of the U.S., C.T. Conover; and the Head of Banking Supervision at the Bank of England, Peter Cooke, among many others. [1]

The meeting was designed to discuss the general international financial situation at the time. One of the main conclusions of the meeting was that banks needed access to more up-to-date and accurate information regarding the financial standing of debtor nations, for which it was felt that “an institution within the banking community might be created.” The information would be provided by major banks along with multilateral agencies such as the IMF, World Bank, and the BIS, which all “exhibited a willingness to assist in the efforts of the commercial banks… and to make as much data as possible available to the new institution.” [2]

The participants at the Ditchley meeting became known as the “Ditchley Group.” But their suggestions for a new banking institution did not stop at creating a mechanism for making better information available to banks. The group also envisaged a role for the new institution to undertake meetings directly between debtor nations and private banks, and to send teams of officials to nations to meet with senior government representatives to conduct economic and financial “reviews” of various countries around the world.

The Ditchley Group agreed to invite other banking institutions from the OECD countries to meet and discuss the possibility of creating such an organization, and a second meeting – “Ditchley II” – was held in New York in October of 1982, with the participation of 31 major banks from the U.S., Japan, UK, France, Canada, the Netherlands, West Germany and Switzerland, along with officials from the World Bank, IMF, Bank of England and the BIS. [3]

The meeting resulted in an agreement to establish such an institution, termed a “nonprofit corporation,” to be based in Washington, D.C., which could “suggest independence” from the large Wall Street banks and also “because it would provide proximity to the headquarters of the IMF and the World Bank.”

The organization would have a small and expert staff, overseen by a board of directors made up of individuals from many of the banks with the largest exposure to international loans, and that membership would also be granted to other institutions with significant international exposure. On January 11, 1983, the Institute of International Finance was incorporated in Washington, D.C., with the participation of senior officers from 37 major banks from Europe, Japan, and North and South America. [4]

Among the original participating banks were: (from Canada) the Bank of Nova Scotia, Canadian Imperial Bank of Commerce, the Royal Bank of Canada, and the Bank of Montreal; (from France) Banque Nationale de Paris and Credit Lyonnais; (from Germany) Dresdner Bank, Commerzbank and Westdeutsche Landesbank; (from Japan) Bank of Tokyo and Mitsubishi Bank; (from Switzerland) Credit Suisse and Union Bank; (from U.K.) Barclays, Lloyds and Midland Bank; (from the United States) Bank of America, Bankers Trust, Chemical Bank, Citibank, Manufacturers Hanover Trust, Mellon Bank, Morgan Guaranty Trust, Chase Manhattan and the First National bank of Chicago. [5]

By the mid-1980s, the IIF had a membership of 189 banks from 39 countries, representing more than 80% of the total international bank exposure to the “Third World.” And all this following the Institute’s “ultimate aim” to “improve the process of international lending” in the midst of the 1980s debt crisis. [6]

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While commercial banks established the Institute in order to “coordinate their activities” in the international arena, the banks and the powerful industrial nations and international organizations had worked to prevent such coordination from taking place among debtor nations of the Third World. The Group of 77 – a counterpart to the G7 which represents the majority of the word’s population – held a summit in 1983, where the debt crisis was of major concern.

The Latin American debtor nations, in particular, “were under considerable pressure from the U.S., the European Economic Community (EEC) and the IMF/World Bank not to entertain any idea of a “‘debtor’s cartel,’ or even to exchange and coordinate information.” So while the world’s major banks established a formal organization which essentially functions as an institutional banking cartel, the world’s debtor nations were pressured to avoid even sharing information with one another regarding the debt crisis. [7]

Thirty years after it was founded, the IIF today boasts a membership of more than 450 institutions in over 70 countries around the world. The IIF hosts a series of meetings every year, the most prominent being its semi-annual full membership meetings, taking place over the course of two days with presentations by private bankers and public officials and including roughly 800 members and guests.

The speakers at these events, according to the IIF report “The First 25 Years,” constitute “a Who’s Who of international financial policymakers and leaders of the global financial industry.” William R. Rhodes of Citigroup (and a former top IIF official) referred to the meetings as ensuring that the IIF became “the leadership organization of its kind.” [8]

The Managing Director of the Institute of International Finance from 1993 until 2013 was Charles Dallara, who had previously served as a managing director at JPMorgan & Co. from 1991 until 1993. Prior to his banking career, Dallars was the U.S. Executive Director of the IMF from 1984 until 1989, and held senior positions in the U.S. Treasury Department between 1983 and 1989. Today, Dallara is a member of the Council on Foreign Relations, the Executive Vice Chairman of the Board of Directors of Partners Group, a member of the boards of the Bertelsmann Foundation and the National Bureau of Economic Research, the Vice Chair of the Board of Overseers of the Fletcher School of Law and Diplomacy at Tufts University, and is a member of the International Advisory Board of the Instituto de Empresa.

The current president and CEO of the IIF is Timothy D. Adams, the former managing director of The Lindsey Group and former Under Secretary of the Treasury for International Affairs from 2005 until 2007, prior to which he served as the Chief of Staff to the U.S. Treasury Secretary from 2001 to 2003. Adams is concurrently a member of the board of the Atlantic Council, a member of the Atlantic Council’s Business and Economics Advisors Group, a Senior Advisor at the Center for Strategic and International Studies, a director of the Center for Global Development, a delegate at the China Development Forum, a member of the Council on Foreign Relations, and a member of the Business 20 (B20), a counterpart conference to the G20 meetings designed to provide the input of the world’s business community to the leaders, finance ministers and central bank governors of the world’s leading twenty nations.

The Institute of International Finance (IIF) represents the very “visible hand” of financial markets, wielding immense influence and boasting unparalleled access to central bankers and top policymakers from around the world. Look for the next parts in this series on the IIF as part of Occupy.com’s Global Power Project.

Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.

References:

[1] Walter Sterling Surrey and Peri N. Nash, “Bankers Look Beyond the Debt Crisis: The Institute of International Finance, Inc.,” Columbia Journal of Transnational Law (Vol. 23, 1985-1985), pages 111-113. [2] Ibid. [3] Ibid, pages 113-114. [4] Ibid, pages 114-115. [5] Ibid, page 115. [6] Ibid, pages 117-118. [7] Robert E. Wood, “The Debt Crisis and North-South Relations,” Third World Quarterly (Vol. 6, No. 3, July 1984), page 714. [8] IIF, The First 25 Years: 1982-2007 (Institute of International Finance, 2007), page 26.