«Double or Nothing: Major players in the currency speculation game» –Source: CartaCapital
Source: CartaCapital, 27-12-2015
Translation: C.B. 28-12-2015
The international scandal over exchange-rate cartels has revived a long-standing dispute here in Brazil. Under scrutiny by antitrust regulators since July of this year, 15 financial institutions have been able to rely upon the government as an ally. In closed-door deliberations and subtle public relations messages, the Brazilian central bank has acted almost like an attorney to the investigation subjects.
For example: The BC contests the right of competition agency CADE to investigate the industry, and states that it is “practically impossible” to manipulate the official dollar rate. It has also sought to convince the federal executive to produce legislation that would put an end to the cases currently under the jurisdiction of CADE.
Under study for more than two years now is the notion of authorizing the Central Bank to make deals with financial institutions caught committing irregularities.
In these deals, the company confesses its crimes, turns on its co-conspirators and, in exchange, receives lighter sentences and amnesty from paying fines.
Once such an investigation has started, discussions on leniency agreements with the Central Bank were hastily concluded in the economic area of the institution. Then, in late September, a request to publish a Provisional Measure (MP) reached the desk of the president, Dilma Rousseff.
Under the terms of the MP, only the Central Bank would be able to open and pursue administrative proceedings against agents of the financial system. This would include investigations of cartel formation, as in the case of the exchange rate cartel. If this MP is adopted, it would set off a fierce legal battle, with banks grateful for receiving a weapon from the central government against investigations by CADE and in favor of negotiations with parties who are, shall we say, more sympathetic.
In meetings with the Casa Civil to discuss the MP, spokespersons for the monetary authority rejected any and all suggestion of writing language into the bill that would enable CADE to monitor banks in partnership with the Central Bank when freedom of competition is at stake.
CADE, for its part, has proved just as inflexible. Its president, Vinicius Marques de Carvalho, threatended to resign if his agency got the worst of the deal. Faced with this impasse, the federal executive decided to table the measure, for now at least. This was a serious defeat for [Central Bank president] Alexandre Tombini
Jurisdictional disputes aside, the competition sheriff and the monetary authority are likewise not on the same frequency when it comes to whether or not an international cartel exists with consequences for Brazil — another example of why the bandits in the sites of CADE are rooting for the Central Bank.
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