With the NY Fed already warning of "significant operational risk," and former Fed officials proclaiming Deutsche Bank is "horribly under-capitalized," along with Barclays 'dark pool' and gold manipulations, it is perhaps not a total surprise that, as WSJ reports, New York's banking regulator is pushing to install government monitors inside the U.S. offices of Deutsche Bank and Barclays as part of an intensifying investigation into possible manipulation in the foreign-exchange market. These two banks were selected because they had the 'greatest potential problems' based on a preliminary investigation.
New York's banking regulator is pushing to install government monitors inside the U.S. offices of Deutsche Bank and Barclays as part of an intensifying investigation into possible manipulation in the foreign-exchange market, according to people familiar with the probe.
The state's Department of Financial Services notified lawyers for the two European banks earlier this month that it wanted to install a monitor inside each firm, based on preliminary findings in the agency's six-month currencies-market probe, these people said. Negotiations are continuing over the details of the monitors' appointments, but New York investigators expect to reach an agreement soon.
The regulatory agency has selected Deutsche Bank and Barclays for extra scrutiny partly because the records it has collected so far from more than a dozen banks under its supervision point to the greatest potential problems at those two banks, the people said. Plus, Deutsche Bank and Barclays are among the dominant players in the vast foreign-exchange market, so investigators hope a close-up view into their businesses will help them observe other players and trading patterns, the people said.
A Barclays spokesman declined to comment; the U.K. bank previously has said it is cooperating with authorities. A Deutsche Bank spokesman said it is cooperating with investigators "and will take disciplinary action with regards to individuals if merited."
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Deutsche Bank and Barclays are among more than 10 banks that have fired or suspended dozens of senior executives, traders and others staff in connection with civil and criminal foreign-exchange probes in the U.S., U.K. and elsewhere.
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The New York regulator envisions wide-ranging investigative roles for its monitors inside Deutsche Bank and Barclays, according to the people close to the probe. The monitors' powers will include interviewing bank employees, clients and business partners, observing trading practices and compliance, and reviewing more records beyond what the banks already have supplied.
We are sure they will greeted on the floor with open arms...
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And don't forget the elephant in the room...
And Barclays headache...
