07 January 2006

Headline: French Banks Manipulate Foreign Exchange Rates By Hoarding Euros

Have you ever been to Port Newark? Neither have I but I have seen photos of the massive cranes that load and unload containers on ocean-going ships. Those ships are a highly efficient way to move large quantities of goods, be it cars, coal, or calamine lotion. (I'm told they use lots of that stuff in Bora Bora.) But money? Who but a drug dealer would move money by freighter (I'm guessing 10-12 days from Newark to St. Barths) when you can do it via wire transaction in 10-12 seconds?

But if you are the receiving bank, all this electronic transfer stuff has its disadvantages. Because as soon as the bank receives the wire, it must then credit the amount of the transfer to the customer's account specified in the wire. In other words, the bank sort of has to give the money away to its customer as soon as it gets its hands on it. Of course, if its a French bank it gets a fee for receiving the wire, a fee for crediting your account, a fee for giving you the privilege of having an account there in the first place, and there is a schedule of 27 other things that trigger a debit to your account and a credit to the bank's own account. But let's get back to the wire.

Now I guess if the bank were to receive the wire in St. Barth, collect the money, but then send the wire to Newark, put it on board one those freighters, and then ship the wire to St. Barth, it might arguably play with money itself for some couple of weeks till the ship unloaded the wire at Port Gustavia, at which point the bank would need to give the customer access to his money. Couple of weeks free money ain't bad.

Nah, no bank would do such a thing, you say. You are probably correct.

Certainly Banque Des Antilles Francais ( yup, my bank) would never do anything so crude as that. Especially because it has a much more efficient system for holding on to other people's money received by wire. It simply receives the money and fails to credit the customer's account. Neat, huh? How do they get away with it? Well, they don't have to keep it forever to make a profit y'know. If you are persistent, you can get the money at the end of the chase, but in the interim, as one my lawyer friends is wont to say, "The apples are on THEIR pushcart"

I am reminded of the IB protaganist in Bonfire of the Vanities, who, when asked by his child to please explain what he does for a living and how he makes his money, says, " Well think of slicing up a loaf of bread. When you are finished, you've got a lot of bread slices, and some crumbs left on the table. We keep the crumbs."

Back to my tale. Yesterday, I asked my house manager to give me a check for 12,200 euros so I could pick up my new car today. She said, " Well, Marty darling, I am reluctant to do so cause you got 4,272 euros in your account. You haven't deposited any money since June." Me: " What about the 25,000 euros I wired to the account in the beginning of December?" Ahh, but I already knew the answer. The December 5 euro transfer was a transaction unique to this French outpost: a unilateral wire, a/k/a demi-wire. Here's how it works: You have Citibank buy euros (debiting your New York checking account) and wire the euros to the credit of your account in the the French Bank. This half of the transaction works flawlessly. It's the second half that gives me some pause: the French bank receives the money... and le transaction est finis, i.e., the French bank simply keeps the money and fails to credit its customers account. Neat, huh?.

When I learned I was out 25,000 euros, and couldn't buy my car, I reacted with calm reason: I made eleven calls to New York to find and acquire a paper copy of the Citibank wire so I could roll it up and, in lawyerly fashion, insert it in the manager of my bank here in St. Barth.

Between calls, I did visit BDAF in Gustavia and confronted the Bank Manager: Our conversation went something like this:

Me: " M. Arron, this is the FOURTH time you have failed to credit my account when I wired euros."

M. Arron: "Yes, that is true."

Me: "Where are my 25,000 euros?"

M. Arron: (Gallic shrug.)

Me: "How can you run a bank this way? Doesn't anybody count the money? No one notice some 25,000 extra euros lying around at the end of the month?"

M. Arron: "We need a better system."

Me: (Thinking back on the last Larry David show with Dustin Hoffman playing an angel) "'System', M. Arron? I see no evidence of a 'system'. You consistently lose my money, and find it only after I complain and then laboriously find and produce the documents that prove you had the money all the time. That is not a 'system' ".

M. Arron: (Evincing no evidence he recognized I was stealing lines from "Curb") "Yes, we have made some changes."

Me: "But the 'changes' have accomplished nothing. You still consistently lose my money."

M. Arron: "Ah, yes, that is true."

Bottom line: I negotiated a successful resolution of the conflict: I will write and deliver the 12,200 euro check to the auto dealer. M. Arron promises the bank will honor the check based on my oral representation I wired the money last month. But if it turns out Citibank did NOT send the 25,000 euro wire, he will foreclose on my mortgage.

Don' worry, be hoppy, by the end of the day I had a copy of the Citibank wire, which shows clearly the transfer of funds, at my order, to be credited to my account at BDAF, on December 7, 2005. So Pinks and M. Franck will continue to have a roof over their heads for while. (Frank, btw, now has been promoted to his own air conditioned room during the day. He sleeps in the guest room when it is empty. When we have guests, he is their guest) .

Not that I would change places with any of you northerners. I would much rather wrestle with M. Arron, (who is actually a very pleasant guy who will ultimately find the money and credit my account) than have to look at Pat Robertson's picture in the New York Times. Y'think Rev. Robertson would say my money was lost cause the Isreali's gave up Gaza? Hmm.

A bientot.

Me: "Mr. Arron, I am very upset. This the FOURTH time a wire to my account has gone astray.

Mr. Arron: "Yes."

Me: " Where is the money"

Mr. Arron: Blank stare accompanied by oh-so-traditional Gallic shrug, and then "Hmm."

Me: I have spent the entire day on the phone to NY trying to get a copy of the wire. I have driven citibank and my secretary crazy with my calls and emails. You have embarrassed me with the auto dealer whom I now cannot pay, how can you treat a customer this way, and how can you run a bank this way? Don't you balance the books at the end of the month? At the end of the year? Doesn't someone notice there's been an extra 25,000 euros lying around for 30 days? Isn't there a system for crediting the account mentioned in the wire? Is there anybody here or in Paris that actually counts the money going in and out?

Bank manager: "Yes, very interesting. When you get a copy of the wire, I'll try to find the money. "

Mr. Arron: Shrug, smile

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