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Pictured: Unsuspecting multi-millionaire Ben Goldsmith smiles alongside the US rapper who ‘had an affair with his Rothschild heiress wife’

Close: This instagram photo taken around seven months ago shows Ben Goldsmith’s close relationship with rapper Jay Electronica

Daily Mail | Jun 3, 2012

By Sam Greenhill and John Stevens

All seems good with the world in this picture of a happy-looking Ben Goldsmith as he enjoys a spot of hunting with the American musician Jay Electronica.

But the image of the smiling pair, which is believed to have been taken seven months ago, may come to haunt the millionaire after his wife Kate had an alleged affair with the rapper.

The tinted instagram picture emerged today and shows Mr Goldsmith and Electronica standing shoulder to shoulder – Mr Goldsmith seemingly oblivious to any issues in his relationship.

Mr Goldsmith’s spat with his wife over the alleged fling took an even uglier turn yesterday as he took to Twitter to publicly accuse her of fretting more about her image than their ‘devastated children’.

He took to Twitter to broadcast his anguish about the end of their nine-year marriage amid reports the heiress has been having an affair with a US rapper.

Mr Goldsmith ridiculed the 29-year-old for hiring a PR firm to ‘fix her reputation’. He told his 6,000 followers: ‘A bit late surely? How about focusing on her devastated children?’

Heiress Kate, 29, a scion of the Rothschild banking dynasty, has three young children with Mr Goldsmith, son of the late billionaire Sir James Goldsmith.

Enjoying the high life: Kate Goldsmith takes to the sky in a helicopter to travel between a Jay Z and Kanye West concert

Mr Goldsmith’s comments came as pictures emerged of the opulent interior of their family home in Kensington, West London, which went on the market for £20million just before the couple had their final separation.

The ‘unique’ detached property, built in 1860, has more than 5,600sg/ft of living space across four floors, complete with solid oak flooring, a summer house and spacious garden in one of the capital’s most desirable districts.

Mr Goldsmith is said to have confronted his wife after discovering explicit text and email messages from hip hop star Jay Electronica.

Matters came to a head last Wednesday in a fierce bust-up at the couple’s home, in which he is said to have slapped Kate and kicked a child’s toy at her in fury.

His wife called police who arrested Mr Goldsmith, 31, on suspicion of actual bodily harm. He later accepted a police caution.

The Eton-educated financier also posted a Tweet yesterday which said: ‘Ps, in case you missed it’, and pointed his followers to an article in the Daily Mail about his wife’s alleged infidelity.

However, by late afternoon it appeared Mr Goldsmith had had a change of heart about airing his marriage troubles in public.

Both the Tweet about the Mail article, and the earlier one about his wife hiring a PR company, were deleted without explanation.

The PR company Mrs Goldsmith retained is Project Associates Ltd, a Mayfair-based reputation and crisis management firm.

A spokesman at the firm said Mrs Goldsmith was concerned that ‘inaccurate information’ was being given to the media designed to ‘deflect from the gravity of last week’s incident involving the police’.

He added: ‘Kate is devastated, she has had a very frightening time since she and her husband initially split five months ago, and this is just another sad development.

‘Her main concern now is for her children who will remain with her at the family home.

‘Kate has no further comment at this time. In the meantime she is seeking legal advice on a number of matters.

‘Her family wish to add that they are completely supportive and they remain very much on speaking terms.’

Mr Goldsmith has moved out of the family home and is staying in Italy with his mother Lady Annabel, and will now file for divorce.

At the weekend he told the Mail on Sunday: ‘I’m pretty shell-shocked by everything. All I am thinking about now is my children.’

The couple are from two of the country’s wealthiest families. Mr Goldsmith inherited an estimated £300million after the death of his father, who built up a £1.2billion fortune.

Kate inherited an £18million fortune after the suicide of her banker father Amschel Rothschild, and is related to the Guinness brewery family on her mother’s side.

The couple have known each other since they were teenagers and were regulars in society publications such as Tatler before marrying young in September 2003 at a wedding attended by 600 guests.

In 2010 Mrs Goldsmith set up a record company called Roundtable Records, which led to her spending time at gigs and clubs in London as well as travelling to Los Angeles.

She got to know the 35-year-old rapper – real name Timothy Elpadaro Thedford – last autumn.

Yesterday Jay Electronica posted a bizarre message on his Twitter page which read simply: ‘#LoveIsOnTheWay’.

Last week, the union between the son of the late financier Sir James Goldsmith and his wife, a scion of the Rothschild banking dynasty, collapsed in the most spectacular fashion.

Mr Goldsmith apparently confronted his  29-year-old wife last Wednesday after discovering explicit texts and emails between the pair.

After initially denying the affair, Kate admitted it when her husband told her he had read the text messages.

There was a fierce row, during which Mr Goldsmith is said to have slapped Kate and kicked a child’s toy at her.

Ben then took their children to school, and by the time he had returned his wife had called the police and officers were at the house to arrest him.

The Metropolitan Police confirmed that a 31-year-old man from Kensington, West London, was arrested on suspicion of causing actual bodily harm and taken to a police station, where he accepted  a caution.

Mr Goldsmith is away on a pre-planned holiday with the couple’s three young children. But he has said he plans to sue for divorce on the grounds of adultery.

While friends of Ben’s say his wife is still ‘obsessed’ with Electronica, last night a friend of Kate’s claimed the affair happened during a five-month break from Ben, and ended after three months.

Whatever the precise truth, it is still a startling end to the marriage that marked the union of two hugely powerful dynasties.

That Kate Goldsmith has been carrying on with a rapper known for his sexually explicit lyrics is undoubtedly a scandal, even for a family that is no stranger to colourful goings-on.

Last night, one friend told the Mail that the Goldsmith family are incredibly angry and that the divorce will be nasty.

‘Ben is going to start proceedings at the earliest opportunity,’ says the friend. ‘It will be a fight. They will fight over the kettle and the teapot!

‘There is a lot of anger. Lady Annabel (Ben’s formidable mother) is especially incensed and upset.’

Both Ben and his 29-year-old wife are wealthy in their own right,  and unravelling their fortunes to reach a divorce settlement will  be complicated.

Sir James left his family a £1.2 billion fortune when he died in 1997, much of which is tied up in trust.

Kate and her family were left £18 million — considerably less, but hardly a pittance — when her father died. Amschel Rothschild, a banker, was found hanged in the Hotel Bristol in Paris in 1996, aged just 41.

Feelings are running high at the moment, and another complication is the fact that Kate’s sister, Alice Rothschild, is going out with Ben’s elder brother, Zac.

Zac’s own ten-year marriage to Sheherazade Ventura-Bentley collapsed in 2009 after he began an affair with Alice, and they now live together in a house on the Goldsmiths’ family estate in Richmond, South-West London.

Zac’s divorce is still not finalised, as lawyers continue to work out a financial settlement between him and Sheherazade.

According to one friend, Alice now finds herself in a tricky situation. ‘Alice is well-liked in the family, but the Goldsmiths are asking, how much did she know about Kate and this rapper? Alice and Kate are close. It’s very awkward.’

Indeed. So how did Kate Goldsmith come to fall for a rapper? How did the affair begin, and what will happen between them now that her husband intends to divorce her?

Kate Rothschild and Ben Goldsmith were just 21 and 23 respectively when they married in 2003. They were young — perhaps too young.

When they married, Ben was the more confident of the two, and the ‘dominant’ one in the marriage. Kate, say those who know her well, has a more vulnerable air.

‘People often say she’s rather like Princess Diana,’ says a friend. ‘Her father’s suicide had a profound effect on her, and she has this way of making people protective of her.’

But as the marriage wore on, Kate grew in confidence  and, say friends, became tired of ‘being told what to do all the time’ by her husband. They began to grow apart.

And then Kate met Electronic.

The singer’s background could not have been more different from the Rothschild girl, who was educated at Bryanston School in Dorset.

Electronica was born and raised in the Magnolia Projects in New Orleans, Louisiana, an area known for poverty and violent crime.

He rose to prominence in 2007 when a track entitled Act I: Eternal Sunshine (The Pledge) became popular on MySpace, the social networking site.

Three years later, Jay-Z, one of the world’s biggest selling rap artists, signed him to his Roc Nation stable of musicians.

Kate has her own record label, Round Table. Thirty-five-year-old Electronica has been based in London for the past couple of years. Presumably the pair met through their links with the music industry.

According to reports, but denied by Kate’s friends, the affair is believed to have begun about a year ago, with Kate besotted by the singer, whom she calls Jay Jay.

Both her family — her mother, Anita, is the daughter of merchant banker James Guinness — and the Goldsmiths are said to be aghast at the affair.

‘Ben is heartbroken, devastated and thoroughly miserable,’ a friend of the couple reportedly said.

While Kate’s friends claim the affair is over, his friends have a different view.

‘He suspected Kate was cheating on him because she has been behaving increasingly erratically for some time,’ says one.

‘She is obsessed with this chap, who is one of her clients. She is always on the phone to him, and out with him until four or five in the morning most nights. Sometimes she even stays with him.

‘Ben was paranoid about their friendship months ago, but when he confronted her about an affair earlier this year she denied it.

‘Then, last week, he found a series of texts and email messages. They were very intense messages planning sexual liaisons.’

On the face of it, it is a classic tale of a posh girl falling for a bad boy. But according to another source, it is not quite like that.

‘He has this “street” persona, but Jay Electronica is not really like that — he’s much gentler, a vegetarian and Buddhist,’ says another friend. ‘He and Kate feel they have a spiritual connection, and Kate tells friends he is the first person to really understand her.

‘And although he comes from a poor area, he has been successful, he has money, and he pays for Kate when he takes her out.’

The affair has uncanny echoes of a previous scandal involving Kate’s great aunt, born Pannonica Rothschild, who went on to become Baroness de Koenigswater.

It is a strange story. In 1948, Nica, as she was known, became bewitched by an unknown black jazz pianist, Thelonious Monk, after hearing a recording he had made of Round Midnight.

At a time when mixed-race relationships were frowned upon, she abandoned her husband and five children, moved into a hotel suite and set about finding him. She finally tracked him down in 1954 and devoted the next 28 years to him until his death.

Nica’s family disowned her. Kate can expect to be similarly shunned by the Goldsmith clan.

Friends say that the situation is difficult, too, for Jemima Khan — Ben’s older sister, who was on good terms with Kate, but will now be expected to cast her adrift.

‘It’s hard, but Lady Annabel will expect all of them to rally behind Ben,’ says the friend.

So what of the future? Electronica returned to the U.S. last week to attend his grandmother’s funeral, but is expected back in Britain soon. No one knows what will happen next between him and Kate.

As early as this week, the lawyers will get involved.

This week, Kate was still at the Kensington house, which was put up for sale two months ago. When the Mail knocked on the door yesterday, a young blonde woman came to a side door and said: ‘We don’t want to talk to you.’

But a friend told the Mail: ‘Kate is devastated. She has had a very frightening time since she and her husband initially split five months ago, and this is just another sad development. Her main concern now is for her children, who will remain with her at the family home.’

Lady Annabel, the Goldsmith family matriarch, is on holiday in Sicily and could not be contacted. But she was well aware that it was her husband Sir Jimmy’s wish that one of his children would one day marry a Rothschild.

He would never have imagined that such a union would end like this. But then no one did, least of all Kate’s husband Ben.

Lord Jacob Rothschild Confronted on Bilderberg, New World Order


Published on May 31, 2012 by

Rothschild and Rockefeller families join forces for some extra added wealth and power

The transatlantic alliance cements a five-decade acquaintance between the now ennobled Jacob Rothschild (R), 76, and David Rockefeller (L), 96, the grandson of the ruthlessly acquisitive American oilman and philanthropist John D Rockefeller.

Telegraph | May 31, 2012

By Alistair Osborne

RIT Capital Partners, which is chaired by Lord Rothschild, has taken a 37pc stake in Rockefeller Financial Services, the family’s wealth advisory and asset management wing. It has snapped up the holding from French bank Société Générale for less than £100m.

The transatlantic alliance cements a five-decade acquaintance between the now ennobled Jacob Rothschild, 76, and David Rockefeller, 96, the grandson of the ruthlessly acquisitive American oilman and philanthropist John D Rockefeller.

The two patricians now plan to capitalise on their family names to buy other asset managers or their portfolios, using their networks of top-notch contacts to ensure they get a seat at the table for any deal.

“We’ve known each other for a long time, they have a good business,” said Lord Rothschild yesterday. “We haven’t got a presence in the US and this brings together two formidable names in finance.”

He said the two firms planned to capitalise on current market conditions where banks, like SocGen in this instance, are selling non-core assets to rebuild capital ratios. “At a time when big banks are destabilised, there may well be opportunities,” he said. “We could buy an asset management company or grow one. Rockefeller already has $34bn (£21.9bn) assets under administration.”

Rothschild and Rockefellers in joint venture

Rockefeller and Rothschild Dynasties Join Forces

The Rockefellers and the Rothschilds Make a Deal

The Rockefellers and Rothschilds Hook Up

Old money alliance will attract new wealth

Rothschild buys into Rockefeller wealth business

RIT Capital Partners, Chaired By Lord Rothschild, And Rockefeller & Co. Announce Strategic Partnership

He said David Rockefeller was still “very involved” in the business, though it is run day to day by chief executive Reuben Jeffery.

The Rockefeller group goes back to 1882, set up to invest the family money made by John D Rockefeller’s Standard Oil, the forerunner for today’s Exxon Corporation, which he built with a Darwinian aggression. “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in,” he once said.

The Rothschild banking dynasty has its roots in the 18th century when Mayer Amschel Rothschild set up a business in Frankfurt.

Lord Rothschild fell out three decades ago with his cousin Sir Evelyn de Rothschild, who then ran the UK branch of the family bank NM Rothschild. That sprang to fame in 1815 when it bought government bonds in anticipation of Napoleon’s defeat at Waterloo.

Lord Rothschild’s relations with the French side of the family have been better though and he likened the Rockefeller deal to RIT’s tie-up earlier this year with the Edmond de Rothschild Group, which has €150bn (£120bn) under management.

“We think that having that span of interests in Europe and America – as well as China – will give us a better chance of finding exceptional investment opportunities,” he said.

RIT, which has net assets £1.9bn, has had a tricky few months with the shares down about 14pc in the past year. They fell 6 today to £11.25.

Lord Rothschild said: “Everyone has been marked down. We didn’t have a brilliant year on the quoted side but we did do very well on the private side,” realising investments in North Sea operator Agora Oil and Gas and credit manager Harbourmaster.


JPMorgan injects $400 million into China unit, eyes expansion

Reuters | May 28, 2012

SHANGHAI  – JPMorgan Chase & Co (JPM.N) has injected 2.5 billion yuan ($394.08 million) into its China unit, the latest foreign bank to beef up its Chinese operations.

Foreign banks, including HSBC (HSBA.L) and Singapore’s DBS Group (DBSM.SI), have either injected or are planning to pump in capital into their China units which are expected to grow rapidly over the coming years even as growth in the world’s second-biggest economy comes off the boil.

“The additional capital will better position the bank in the evolving regulatory environment and cement our commitment to clients in China,” Zili Shao, Chairman and chief executive of J.P. Morgan China, said in a statement on Monday.

“The capital will be used to expand the bank’s branch network, develop products, increase corporate lending, and recruit employees,” Shao added.

The injection brings the registered capital of the locally incorporated unit to 6.5 billion yuan.

The local unit, which conducts commercial banking businesses in China, has also received regulatory approval to open its 7th branch in China in Suzhou, west of Shanghai, the statement said.

JPMorgan has a separate investment banking joint venture in China.

HSBC (0005.HK) injected 2.8 billion yuan into its China unit last year, even as it laid off several hundred investment bankers in London, Hong Kong and elsewhere as part of its jobs cull to save billions of dollars.

DBS, Southeast Asia’s largest bank, said in April it is planning to make an injection of 2.3 billion yuan into its China unit to increase its network and staff, and upgrade infrastructure and other technology platforms.

($1 = 6.3439 Chinese yuan)

Vatican says trust in Church hurt by corruption scandal

Vatican tries to play down extent of scandal

Reuters | May 28, 2012

By Philip Pullella

VATICAN CITY, May 28, (Reuters) – The Vatican, engulfed in the worst crisis in Pope Benedict’s papacy, on Monday denied Italian media reports that cardinals were suspects in an investigation into leaks of sensitive documents that led to the arrest of the pope’s butler.

But while denying the reports, which said the butler was merely a courier in a behind-the-scenes struggle for power in the Holy See, the Vatican acknowledged that the often sordid affair would test the faith of Catholics in their Church.

The scandal exploded last week when – within a few days – the head of the Vatican’s own bank was abruptly dismissed, the butler was arrested over leaks and a book was published alleging conspiracies among cardinals, the “princes of the Church”.

Documents leaked to journalists allege corruption in the Church’s vast financial dealings with Italian business.

Vatican spokesman Father Federico Lombardi told a news conference: “This is naturally something that can hurt the Church, and put trust in it and the Holy See to the test.”

Italian newspapers, quoting other whistle blowers in the Vatican, said the arrested butler was merely a scapegoat doing the bidding of more powerful figures, punished because the Church did not dare implicate cardinals behind the leaks.

“There are leakers among the cardinals but the Secretariat of State could not say that, so they arrested the servant, Paolo, who was only delivering letters on behalf of others,” La Repubblica quoted one leaker as saying.

The Secretariat of State is run by Cardinal Tarcisio Bertone, the pope’s powerful right-hand man, and the scandal appears to involve a struggle between his allies and enemies, reminiscent of Renaissance conspiracies inside the Vatican.

It has been brewing for months, but since it burst into the open it has shaken the very heart of the Roman Catholic Church.

La Stampa daily quoted one of the alleged leakers as saying their goal was to help the pope root out corruption.

After an investigation inside the Holy See, the butler, Paolo Gabriele, 46, was charged on Saturday with stealing confidential papal documents. Leakers quoted by La Stampa, La Repubblica and other media said the leaking plot went much wider and higher.

Lombardi denied that any cardinal was being investigated for leaks. “I categorically deny that any cardinal, Italian or otherwise, is a suspect,” Lombardi said.

The pope was being kept fully informed of the case, Lombardi said: “He continues on his path of serenity, his position of faith and morals that is above the fray.”


One of Gabriele’s two lawyers, Carlo Fusco, said his client, who is being held inside a Vatican police station, would cooperate fully with investigators who are trying to track down other suspects.

He said Gabriele, who attended mass on Monday morning and was visited by his wife, was “very serene and tranquil.”

Critics of the pope say a lack of strong leadership has opened the door to infighting among his powerful aides – and potentially to the corruption alleged in the leaked documents.

Many Vatican insiders believe the butler, who had access to the pope’s private apartment, could not have acted alone. He is being held in a “safe room” in the Vatican police station and has been charged with aggravated theft.

Now known in Vatican statements as “the defendant” – he was until Wednesday night the quiet man who served the pope’s meals, helped him dress and held his umbrella on rainy days.

“I think this is a very serious moment it is a grave crisis because it has to do with the breach of trust in the inner circle of the Vatican,” said Robert Moynihan,” editor of the magazine Inside the Vatican.

“The pope cannot be sure that a document at his own desk isn’t going to be taken and photocopied. It seems that the person taking those documents has been discovered but there is a general feeling that this represents more than that, that there is someone else behind it,” Moynihan told Reuters television.

But Gianluigi Nuzzi, the Italian journalist who has received many of the documents over recent months and last week published his book “His Holiness”, criticised the focus on rounding up leakers, rather than rooting out the corruption they expose.

“Surely, arresting someone and rounding up people and treating them like delinquents to stop them from passing on true information to newspapers would cause an uproar in other countries,” he said. “There would be a petition to free them.”


While news of the butler’s arrest has filled newspapers in Italy and beyond, the Vatican’s own newspaper, L’Osservatore Romano, has ignored the story. Some say this may be because the paper itself has been an instrument in the power struggle between Bertone’s allies and foes.

The Vatican’s announcement of the arrest of the butler came a day after the president of the Vatican bank, Italian Ettore Gotti Tedeschi, was fired after a no confidence vote by its board of external financial experts, who come from Germany, Spain, the United States and Italy.

Gotti Tedeschi’s ousting was a blow to Bertone, who as secretary of state was instrumental in bringing him in from Spain’s Banco Santander to run the Vatican bank in 2009.

The Vatican bank, officially known as the Institute for the Works of Religion (IOR), was set up during World War II to manage the accounts of Vatican agencies, church organisations, bishops and religious orders.

It has been involved in financial scandals – most notably in 1982 when its then-president, Archbishop Paul Marcinkus, was indicted over the collapse of what was then Italy’s largest private bank, Banco Ambrosiano, with more than a billion dollars in debts. Banco Ambrosiano’s chairman Roberto Calvi was found hanged under London’s Blackfriar’s Bridge in 1984.

In September 2010, Italian investigators froze millions of euros in funds in Italian banks after opening a probe into money laundering involving IOR accounts, which the bank denies.

The Vatican is trying to make the IOR more transparent and join an international “white list” of countries that comply with international safeguards against money laundering and fraud. A decision is expected within months.

Documents leaked over the last few months included letters by an archbishop who was transferred to Washington by Bertone after blowing the whistle on what he saw as a web of corruption in a memo that put a number of cardinals in a bad light. Other documents alleged internal conflicts over the Vatican bank.

“I feel very sad for the pope. This whole thing is such a disservice to the Church,” said Carl Anderson, head of the Knights of Columbus charity group and a member of the board of the Vatican bank who voted to fire Gotti Tedeschi.

Anderson told Reuters Gotti Tedeschi was sacked because of “a fundamental failure to perform his basic responsibilities”. Gotti Tedeschi has said he was ousted because he wanted the bank to be more transparent, but Anderson rejected that assertion.

“Categorically, this action by the board had nothing to do with his promotion of transparency,” Anderson said. “In fact, he was becoming an obstacle to greater transparency by his inability to work with senior management.” (Reporting By Philip Pullella; Editing by Barry Moody and Peter Graff)

Vatican scandal could expose more corruption

CBS | May 28, 2012

By Charlie D’Agata

Few believe the pope’s butler, Paolo Gabriele, is the sole source of leaks about the inner workings of the Catholic Church. (CBS News)

(CBS News) LONDON – A scandal that has rocked Vatican City threatened to expand Monday. So far, the only person under arrest is Pope Benedict XVI’s butler. But few believe that he is the sole source of the leaks that have exposed corruption and double-dealing inside the leadership of the Catholic Church.

At the center of the holy whodunit is Paolo Gabriele, the pope’s personal butler. Since he was arrested last week on suspicion of stealing confidential documents, rumors have swirled that he must have had some high-ranking help — perhaps as high as the so-called ‘princes of the Church,’ the cardinals.

Marco Tosatti covers the Vatican for one of Italy’s biggest newspapers. “If Paolo Gabriele acted as he did,” he said, “well, probably there was somebody very important who convinced him to do it.”

On Monday, the Vatican denied that any cardinal was under investigation.

But the scandal shows no sign of slowing. The butler pledged that he’d cooperate fully with investigators, raising the specter that he would name others.

Gabriele — a father of three — has worked for the Pope since 2006, and is one of the few layman to have access to the Pope’s private apartment.

He’s accused of leaking letters and memos to Italian journalists that allegedly show corruption in the Church’s financial dealings with Italian businesses, including money laundering and kickbacks.

The revelations are part of a number of embarrassing leaks that show the Church and its inner workings in disarray.

For the moment Paolo Gabriele is the lone arrest. If found guilty, he could face up to 30 years in prison.

Mystery deepens around Vatican scandals

Globe and Mail | May 28, 2012


ROME — The rapid-fire ouster of the chief of the Vatican bank and the arrest of the Pope’s butler have plunged the Vatican into yet another crisis. Were the two events connected?

Ettore Gotti Tedeschi, president of the Vatican bank, formally known as the Institute for Works of Religion, was fired last Thursday for a variety of alleged sins, including “progressively erratic behaviour,” by the bank’s board of superintendence. Two days later, Paolo Gabriele, Pope Benedict’s butler since 2006, was arrested for the unauthorized possession of sensitive Vatican documents.

The firing and the arrest have, at least on the surface, plunged the Vatican into one of its worst crises since Benedict became pontiff in 2005, only to find himself scrambling to clean up the church’s sexual-abuse mess.

But sources close to the Vatican say that while last week’s events were embarrassing to Benedict, they are evidence that he is working hard to clean up the Vatican bank and other nooks and crannies within the church’s Rome headquarters.

“Transparency is the issue,” said a Vatican source, who did not want to be named. “He wants the bank to be clean.”

The Vatican’s media office insists there is no link between the firing of Mr. Tedeschi, who is a former executive of Santander, Spain’s most successful bank, and Mr. Gabriele. But both men are accused of at least one similar offence – leaking documents.

Mr. Gabriele was formally charged with stealing confidential papal documents and passing them to the news media. Some of the documents obtained by the Italian press in the so-called “Vatileaks” scandal reportedly related to the Vatican bank’s halting efforts to comply with international standards to fight money laundering and terrorist financing.

Many of the documents found their way to Italian journalist Gianluigi Nuzzi whose book, Your Holiness: The Secret Papers of Benedict XVI, was published shortly before the ouster of Mr. Tedeschi.

Among the nine allegations made in support of Mr. Tedeschi’s firing was his “failure to provide any formal explanation for the dissemination of documents last know to be in the President’s possession,” according to the two-page, no-confidence resolution written by Carl Anderson, a member of the bank’s board of superintendence, and obtained by The Globe and Mail.

The Vatican is investigating the leaks that created turmoil within the its ranks since last year. The Italian news media have suggested that the leaks are part of a power struggle designed to discredit Cardinal Tarcisio Bertone, Benedict’s right-hand man and head of the Vatican’s Secretariat of State.

The Vatican source suggested that Italian banks might be exploiting the leaks related to the Vatican bank itself. He noted that the banks would love to pick up some of the Vatican bank’s activities, should scandal force it to shrink. “Italian banks might be trying to discredit [the Vatican bank] in order to get its business,” he said.

The Vatican bank has its roots in the 1800s and came into its present form in 1942, under Pope Pius II. The secretive bank manages billions of euros in assets, including the Vatican’s vast portfolio of real estate and other investments. At times, it has been run by a professional chief executive plucked from the banking industry, and reports to a committee of cardinals who in turn report to the pope.

The bank is no stranger to scandal or political controversy. John Cornwell, one of the leading authorities on Benedict’s predecessor, John Paul II, wrote in his book The Pontiff In Winter, that there are “indications” the Vatican bank funnelled $50-million (U.S.) to Lech Walesa’s Solidarity movement in Poland in the early 1980s. Mr. Cornwell cited rumours that the delivery man was Roberto Calvi, the Banco Ambrosiano chairman who was found hanged under London’s Blackfriars Bridge in 1982.

Mr. Calvi was called “God’s Banker” because of his close association with the Vatican bank and its boss, Archbishop Paul Marcinkus, who was known as the “Pope’s Gorilla” for his tough mannerisms. The Vatican was implicated in Ambrosiano’s fraudulent bankruptcy in 1982. Without admitting any wrongdoing, the Vatican paid $240-million to compensate Ambrosiano’s account holders.

Mr. Tedeschi was hired in 2009 to modernize the Vatican bank and make it transparent to the point it would comply with international banking standards. The bank’s goal was to make the “white list” of states that comply with the transparency requirements set out by the Organization for Economic Development and Co-operation. They are designed to fight tax evasion, money laundering and financing of terrorism.

The need to clean up the bank was highlighted in 2010, when Italian prosecutors, on suspicion of money-laundering violations, seized €23-million ($29-million U.S.) from a Rome bank account registered to the Vatican bank.

In an interview with Reuters, Mr. Anderson, the Vatican bank board member, said Mr. Tedeschi was ousted because he “was becoming an obstacle to greater transparency by his inability to work with senior management.”

On Monday, the Vatican denied Italian media reports that a cardinal was among suspects in the leaked documents’ scandals. The Vatican source, however, said that more arrests in the Vatileaks affair might be coming.

U.S. ‘too-big-to-fail’ banks bigger than ever before – now holding $8.5 trillion in assets

Five banks — JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held US$8.5-trillion in assets at the end of 2011, equal to 56% of the U.S. economy, according to central bankers at the Federal Reserve. David Paul Morris/Bloomberg

Bloomberg News | Apr 16, 2012

by David J. Lynch

Two years after U.S. President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the nation’s credit markets seized up and required unprecedented bailouts by the government.

Five banks — JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., and Goldman Sachs Group Inc. — held US$8.5-trillion in assets at the end of 2011, equal to 56% of the U.S. economy, according to central bankers at the Federal Reserve.

Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43% of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did in 2007 with the Fed-assisted rescue of Bear Stearns Cos. by JPMorgan and in 2008 with Citigroup and Bank of America after the Lehman Brothers bankruptcy, the largest in U.S. history.

“Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

US banks are back and bigger than ever

From ‘too big to fail’ to even bigger in just four years

Banks grow despite Obama’s bid to end too-big-to-fail idea

As weaker firms collapsed or were acquired, a handful of financial giants emerged from the crisis. Since then, JPMorgan, Goldman Sachs and Wells Fargo have continued to grow internally and through acquisitions from European banks, reeling from government austerity measures related to the rising cost of public debt in Greece, Spain, Portugal, Ireland and Italy.

‘Few Massive Firms’

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

Simon Johnson, a former chief economist of the International Monetary Fund, blames a “lack of leadership at Treasury and the White House” for the failure to fulfill that promise. “It’d be safer to break them up,” he said.

The Obama administration rejects the criticism, citing new safeguards to head off further turmoil in the banking system. Treasury Secretary Timothy Geithner said in a February 2 speech that the U.S. “financial system is significantly stronger than it was before the crisis.” He credits new regulations, including tougher capital and liquidity requirements that limit risk-taking by the biggest banks, authority to take over failing big institutions and prohibitions on the largest banks acquiring competitors.

Angering Taxpayers

The government’s financial system rescue, beginning with the 2008 Troubled Asset Relief Program, angered millions of taxpayers and helped give rise to the Tea Party movement. Banks and bailouts remain unpopular: By a margin of 52% to 39%, respondents in a February Pew Research Center poll called the bailouts “wrong” and 68% said banks have a mostly negative impact on the country.

Banks Cite Changes

The banks say they have increased their capital backstops in response to regulators’ demands, making them better able to ride out unexpected turbulence. JPMorgan, whose chief executive officer, Jamie Dimon, acknowledged public “hostility” toward bankers in a March 30 letter to shareholders, boasted April 13 of a “fortress balance sheet.” Bank of America, which was about 50% larger at the end of 2011 than five years earlier, says it has boosted capital and liquidity while increasing to 29 months the amount of time the bank could operate without external funding.

“We’re a much stronger company than we were heading into the crisis,” said Jerry Dubrowski, a Bank of America spokesman. The bank says it plans to shrink by year-end to US$1.75-trillion in risk-weighted assets, a measure regulators use to calculate how much capital individual banks must hold.

Still, the banking industry has become increasingly concentrated since the 1980s. Today’s 6,291 commercial banks are less than half the number that existed in 1984, according to the Federal Deposit Insurance Corp. The trend intensified during the crisis as JPMorgan acquired Bear Stearns and Washington Mutual; Bank of America bought Merrill Lynch; and Wells Fargo took over Wachovia in deals encouraged by the government.

“One of the bad outcomes, the adverse outcomes of the crisis, was the mergers that were of necessity undertaken when large banks were at risk,” said Donald Kohn, vice chairman of the Federal Reserve from 2006-2010. “Some of the biggest banks got a lot bigger and the market got more concentrated.”

Concerns Voiced

In recent weeks, at least four current Fed presidents — Esther George of Kansas City, Charles Plosser of Philadelphia, Jeffrey Lacker of Richmond and Richard Fisher of Dallas — have voiced similar worries about the risk of a renewed crisis.

The annual report of the Federal Reserve Bank of Dallas was devoted to an essay by Harvey Rosenblum, head of the bank’s research department, “Why We Must End Too Big to Fail — Now.”

A 40-year Fed veteran, Rosenblum wrote in the report released last month: “TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy.”


The alarms come almost two years after Obama signed into law the Dodd-Frank financial-regulation act. The law required the largest banks to draft contingency plans or “living wills” detailing how they would be unwound in a crisis. It also created a financial-stability council headed by the Treasury secretary, charged with monitoring the system for excessive risk-taking.

The new protections represent an effort to avoid a repeat of the crisis and subsequent recession in which almost 9 million workers lost their jobs and the U.S. government committed US$245-billion to save the financial system from collapse.

The goal of policy makers is to ensure that if one of the largest financial institutions fails in the next crisis, shareholders and creditors will pay the tab, not taxpayers.

“Two or three years from now, Goldman Sachs should be like MF Global,” said Dennis Kelleher, president of the nonprofit group Better Markets, who doubts the government would allow a company such as Goldman to repeat MF Global Holdings Ltd.’s Oct. 31 collapse.

New Regulations

Dodd-Frank, the most comprehensive rewriting of financial regulation since the 1930s, subjected the largest banks to higher capital requirements and closer scrutiny. The law also barred federal officials from providing specific types of assistance that were used to prevent such firms from failing in 2008. Instead, the Fed will work with the FDIC to put major banks and other large institutions through the equivalent of bankruptcy.

“If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy,” Obama said before signing the act on July 21, 2010. “And there will be new rules to make clear that no firm is somehow protected because it is too big to fail.”

‘Completely Unrealistic’

Officials at the Treasury Department, the Fed and other agencies have spent the past two years drafting detailed regulations to make that vision a reality.

Yet the big banks stayed big or, in some cases, grew larger. JPMorgan, which held US$2-trillion in total assets when Dodd-Frank was signed, reached US$2.3-trillion by the end of 2011, according to Federal Reserve data.

For Lacker, the banks’ living wills are the key to placing the financial system on sounder footing. Done right, they may require institutions to restructure to make their orderly resolution during a crisis easier to accomplish, he said.

Neil Barofsky, Treasury’s former special inspector general for the Troubled Asset Relief Program, calls the idea of winding down institutions with more than US$2-trillion in assets “completely unrealistic.”

It’s likely that more than one bank would face potential failure during any crisis, he said, which would further complicate efforts to gracefully collapse a giant bank. “We’ve made almost no progress on ending too big to fail,” he said.

Bankers’ Responses

Dimon dismisses such concerns as “chatter” and says U.S. banks need heft to meet the needs of their globally active clients. Since 2007, the bank has added more than 80,000 workers, equal to the current combined payrolls of Nike Inc. and Colgate Palmolive Co.

In his annual letter to shareholders, Dimon said JPMorgan will spend almost US$3-billion “over the next few years” and devote 3,000 full-time employees to complying with regulations that arose from the crisis.

That regulatory burden could promote further industry consolidation, according to Wilbur Ross, chairman of WL Ross & Co., a private-equity firm.

“We think the little tiny banks, the 90-odd percent of banks that are under US$1.5-billion in deposits, are pretty much an obsolete phenomenon,” he told Bloomberg Television on March 14. “We think they’ll all have to merge with each other, be acquired by bigger banks or something.”

Implicit Guarantee

Jake Siewert, a spokesman for Goldman Sachs, and Mary Eshet, a spokeswoman for Wells Fargo, declined to comment. Spokesmen for JPMorgan and Citigroup didn’t respond to e-mailed requests for comment.

Even with policy makers’ claims that the next crisis will be handled differently, investors still regard the largest banks as protected by an implicit government guarantee. One sign of that attitude is that investors continue to demand from the biggest banks lower interest payments in return for deposits.

That gives larger banks a funding advantage over their smaller rivals. In 2011, funding costs for banks with more than US$10-billion in assets were about one-third less than for the smallest banks, according to the FDIC. That gap was only slightly narrower than the 37% advantage the largest banks enjoyed when Dodd-Frank was signed.

US$250-Billion Boost

For 28 global banks in 2009, that benefit translated into a cumulative US$250-billion, according to Andrew Haldane, the Bank of England’s executive director for financial stability.

“Markets have come to believe that what the government did in 2008 and 2009 isn’t a one-time deal, that the government will somehow come to the rescue of these big financial firms,” Kevin Warsh, a former member of the Fed’s Board of Governors, said on the March 28 “Charlie Rose” TV show.

Credit-rating companies Standard & Poor’s and Moody’s say they anticipate the U.S. government would rescue large banks in a future crisis. Both cut the major banks’ debt ratings by one level late last year, while retaining them as investment grade credits.

Last month, 15 of the 19 largest U.S. financial institutions passed a Fed “stress test” designed to measure their ability to withstand a deep recession.

Richard Spillenkothen, the Fed’s director of banking supervision and regulation from 1991 to 2006, said regulators are moving in the right direction.

“We’ve made progress. I don’t think we’ve totally resolved it,” said Spillenkothen. “The proof will be in the next crisis.”

Bank Of America Sues Itself In Unusual Foreclosure Case | Apr 10, 2012

WASHINGTON — Bank of America is suing itself for foreclosure.

“It’s crazy,” housing data analyst Michael Olenick told HuffPost. “They shouldn’t be suing themselves.”

Over the past two years, the nation’s largest banks and the Obama administration have repeatedly vowed to clean up the foreclosure fraud mess. In February, banks agreed to pay $25 billion and overhaul their foreclosure processes as part of a 50-state investigation into bank wrongdoing, resulting from practices that included robo-signing.

Foreclosure Frenzy: Bank Of America Sues Bank Of America

But in Florida’s Palm Beach County alone, Bank of America has sued itself for foreclosure 11 times since late March, according to foreclosure fraud activist Lynn Szymoniak, who forwarded one such foreclosure filing, dated March 29, 2012, to The Huffington Post. (A white-collar crime expert, Szymoniak was recently awarded $18 million for her work helping the government recover $95 million as a result of bank foreclosure problems in North Carolina.)

In the March 29 filing, Bank of America is seeking to foreclose on a condominium and names the condo owner and Bank of America as defendants in the suit. The company is literally seeking damages from itself in order to foreclose on the condo owner.

“We are servicing the first mortgage on behalf of an investor and we own the second mortgage,” Bank of America spokeswoman Jumana Bauwens told HuffPost. “Naming the second-lien holder in the suit is necessary to eliminate the junior interest,” Bauwens said.

“This just strikes me as classic robo foreclosure,” Professor Alan White of Valparaiso University Law School told HuffPost. White, a predatory lending expert who tracks and analyzes data on loan modifications and foreclosures, said that lawyers for the bank likely performed an electronic title search to see if any other liens on the property existed and simply wrote down the name of whatever bank came up in the search. Lawyers and paralegals who perform these tasks typically fill out dozens of such forms a day, White told HuffPost.

“I’m sure the paralegal who did this did 100 others that day,” he said.

Banks have been caught suing themselves before. In 2009, Dow Jones columnist Al Lewis uncovered a case in which Wells Fargo had sued itself in connection with a foreclosure in Florida’s Hillsborough County. The bank owned both the first and second liens on the property and ended up hiring two separate attorneys to deal with the snafu — one to bring the lawsuit and another to defend itself.

The Bank of America self-suits seems to have emerged from a scenario that investors have complained about for years involving home equity loans. Big banks like Bank of America service mortgages on behalf of other investors. Bank of America processes payments, negotiates with borrowers and operates the foreclosure process but does not actually own the loan. Many properties from the housing bubble had an additional home equity loan, or second lien. Banks could charge higher interest rates on these second liens because they were riskier loans — the second lien is supposed to eat losses before anything happens to the first lien.

When a bank brings a foreclosure case in court, it has to notify whoever owns the second lien that it is taking action. In this case, Bank of America owns the second lien.

But meticulous attorneys would not ordinarily let their clients sue themselves. “It is a little bit mindless on the part of the lawyer,” White said. “They don’t need to sue themselves.”

An ugly foreclosure story, starring Bank of America

After homeowner Dirma Rodriguez fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold her house at a foreclosure auction last September. (Associated Press)

Dirma Rodriguez wonders how a house she’d been paying on for years, and which is specially modified for her severely disabled daughter, could be taken from her.

You might wonder why Bank of America found it smarter to sell at a loss than to work out reasonable terms with Rodriguez, who made mortgage payments for more than 20 years without incident.

Los Angeles Times | Apr 13, 2012

by Gale Holland

Dirma Rodriguez had five minutes to gather her things and vacate the West Adams house she and her severely disabled daughter had lived in for more than 25 years.

As a property manager changed the locks, Rodriguez fluttered back and forth from the yard — where a pile of stuff lay by the kitchen stove — to her car, where her daughter, Ingrid Ortiz, sat screaming and crying.

How Rodriguez and Ortiz ended up in this predicament is a long, messy story that resounds with a misery all too common in this age of foreclosure.

Rodriguez took out a loan to retrofit her house for her special-needs daughter. After she fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold the house at a foreclosure auction last September. The new owner, a house flipper from El Segundo called West Ridge Rentals, moved to evict the family.

I came upon Rodriguez’s story through Occupy Fights Foreclosure, the latest offshoot of the 99% movement. Occupy interceded to stop her eviction March 26, and it just may have saved her home for good. Bank of America said last week it is considering a loan modification that would return the home to Rodriguez and her family.

But how did it come to this? Bank of America took a $45-billion bailout from taxpayers when it got into financial trouble. Why couldn’t the bank have shown Rodriguez — a widow whose life was already a trial — the same courtesy when she got squeezed?

“I would pray to God the executives from Bank of America would come over here and see what I have to deal with,” Rodriguez said through a Spanish-speaking Occupier last week.

Ortiz, now 27, has cerebral palsy and does not speak. Her vision is poor, and she can walk with leg braces, but she generally finds it easier to slide around the house on her knees. She often cries and wails loudly.

The stucco house on South Rimpau Boulevard, which Rodriguez keeps immaculate, is custom-conditioned for Ortiz, with gleaming floor tiles to ease her movements and a wheelchair ramp. In the summer, Rodriguez spreads a blanket on the lawn so Ingrid can enjoy the sun and gaze at the dozens of unblemished rose bushes her mother planted in honor of her quinceañera.

Given the circumstances, it’s hard to picture Rodriguez spending her loan money on a cruise. Or finding another place where Ortiz could live comfortably.

“I built all this house so she could have a castle,” Rodriguez said through a translator last week. Two portraits of a smiling Ortiz in a white quinceañera dress with rosebud trim hung nearby. “This is the only world she knows,” her mother said.

Bank of America inherited Rodriguez’s loan from Countrywide. After her payment jumped, and she fell behind, the bank placed her in a trial loan modification. She made her payments faithfully for 13 months and was awaiting a permanent modification package when the bank sold her home out from under her, she says.

How and why this came to pass is in dispute. Rodriguez says the bank began returning her payments, then put her into foreclosure without notice. Bank of America spokesman Rick Simon said she received ample notification, and the foreclosure was aboveboard.

Getting at the truth is complicated by “advocates” that Rodriguez brought in to try to save her home. One of them, G & G Financial of Los Angeles, earned a grade of “F” from the Better Business Bureau for allegedly charging homeowners advance fees to work on loan modifications, which is illegal in California. A man who answered the phone at G & G hung up on me when I tried to ask about Rodriguez’s case.

Another company, Golden Global Investments of Van Nuys, said through an employee that it helped Rodriguez fight eviction. But West Ridge lawyer Alan Dettelbach says no one was in court for Rodriguez when the eviction proceeding was heard.

Bank of America’s assertion that the foreclosure was proper might be more persuasive if it and four other banks hadn’t just signed a $25-billion settlement with the federal government and state attorneys general over shoddy, and possibly illegal, foreclosure practices. Or if it had established more of a record of helping longtime homeowners hang on to their properties.

Bank of America was the only lender that joined a 2009, $1.1-million city pilot program to help homeowners in the North San Fernando Valley obtain loan modifications. But as of February, the bank could find no “eligible borrowers,” city staff reported to the City Council.

Really? REALLY? There’s not a single Bank of America borrower in North Hollywood or Sun Valley deserving of a break?

Rodriguez owed $457,000 on the house; West Ridge picked it up for $300,100. You might wonder why Bank of America found it smarter to sell at a loss than to work out reasonable terms with Rodriguez, who made mortgage payments for more than 20 years without incident.

Basically, the bulk of the loss falls not on Bank of America, the loan servicer, but on the loan’s owner — in Rodriguez’s case, Freddie Mac.

Dettelbach, the attorney, said West Ridge is willing to walk away if the bank repays its money plus costs. Simon, the spokesman, said the bank has to be certain Rodriguez can afford the payments before they agree to a modification.

“We are certainly sympathetic to the situation involving her daughter and the renovations that have been done to the home,” Simon said in an email.

“I don’t want a free house. I just want to make my payments,” Rodriguez said.