147 Companies May Control 40% of World Assets - Financial Companies Dominate

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In 2012, a study by the Swiss Federal Institute of Technology in Zurich, used a massive database comprised of 37 million individual investors and corporations to discern how much overlap and interconnectivity existed between the entities in the database. The studies' findings were unanticipated by the researchers, that a core group of 1,318 transnational corporations(TNCs) and global financial institutions, held control over more than 80% of global assets.

When the data sets were studied further, the concentrations of control over global assets, was shown to be held by an even smaller group of corporations. Through interlocking ownership structures and overlapping members of boards of directors, there has been shown, that a small group of TNCs, 147 companies, now hold control over 40% of world assets. Expand this number to a total of 737 companies and they control an estimated 80% of global assets.

In a Forbes article, the author argues that this conglomeration of 1,318 interconnected corporations are controlled by an even smaller subset of four companies who own the bulk of indexing funds, stock and commodity markets and the notable ratings agencies.

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To give a visual perspective of what this "super entity" of 147 companies would look like the term "Bow-Tie Effect" was coined. The small knot in the middle of the tie is the super entity and the periphery is the rest of the population in the study. The knot being the concentration of power where control flows to.

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"The core is also very densely connected, with members having, on average, ties to 20 other members. As a result, about 3/4 of the ownership of firms in the core remains in the hands of firms of the core itself. In other words, this is a tightly-knit group of corporations that cumulatively hold the majority share of each other"

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To borrow a concept from Phd. Statastician, Jim Willie, the largest financial institutions have rafted themselves together by lashing their institutions to one another, through derivitaves, overnight lending agreements and mutual ownership. The core of the core that form the knot, in the bow tie, are financial institutions. Banks, holding companies and brokerage firms. The interconnected ownership, agreements and boards of directors allow the banks to appear quite healthy and efficient in good times, while at the same time this arrangement sets them up for systemic risk in downturns.

2008 is a great example of the systemic risk that this interconnectivity creates in times of strife. A downturn in the housing market paired with enormous exposure to mortgage backed securities put the entire banking sector at risk of failure. Without the interventions of governments worldwide the system would have collapsed. Nevertheless, Lehman Brothers was dismantled and Merrill Lynch was forced to sell itself to Bank of America at fire sale prices.

The interwoven nature of this super entity brings the potential for collusion in markets and hard to detect criminal behavior. The LIBOR(London Interbank Offered Rate) Scandal illustrates the danger of collusion. This benchmark rate is issued daily through a consensus of large banks, taking the average of their submitted estimates. Interest rates worldwide are based off the LIBOR benchmark, impacting trillions of dollars worth of transactions on a daily basis.

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Six banks were indicted for their roles in colluding to fix the LIBOR rate during the 2008 financial crisis. Bank of America, UBS, Barclays, JP Morgan, Citi and Royal Bank of Scotland. They used their influence to pervert the benchmark to benefit their own trade books, while at the same time affecting interest rates globally.

The penalties for these banks were merely fines and probationary periods. Banking licenses were not stripped and executives were not prosecuted. This brings into question who is regulating the super entity and why they can act in criminal collusion with impunity.

Culminating in 2012, HSBC, England's largest bank was essentially let off the hook in the U.S. after a lengthy investigation into it's money laundering activities. It was apparent enough that HSBC was laundering international drug trafficking money for the bank to enter into a plea deal and pay a $1.9 Billion fine, just a fraction of what their criminal activities netted them. When asked why the bank was not brought to trial, here was then AG Eric Holder's response:

Holder declares the banks too big to prosecute. His assistant AG, Lanny Breuer, who was in charge of the prosecution of HSBC, stated in his press conference about the agreed upon fine, that it would be detrimental to the people to fully prosecute a systemically important bank.

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"Announcing the record fine at a press conference in New York, assistant attorney general Lanny Breuer said that despite HSBC"s 'blatant failure' to implement anti-money laundering controls and its wilful flouting of US sanctions, the consequences of a criminal prosecution would have been dire. Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US, the future of the institution would have been under threat and the entire banking system would have been destabilised. HSBC, Britain's biggest bank, said it was 'profoundly sorry' for what it called 'past mistakes' that allowed terrorists and narcotics traffickers to move billions around the financial system and circumvent US banking laws"

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It should come as no surprise that former FBI Director James Comey was on the board of directors at HSBC when he was tapped for the top spot at the FBI. It should also come as no surprise that when Eric Holder left the Justice department, he had a corner office waiting for him at Covington & Burling, a top end, white collar crime, law firm. He brought with him his Chief of Staff Margaret Richardson.

At Covington & Burling, the two were reunited with none other than Lanny Breuer, the assistant AG that failed to prosecute HSBC. Breuer, now vice-chairman of the firm, was in charge of financial prosecutions for Justice, failed to bring a single criminal case against the big banks during his tenure. While there was a tremendous amount of evidence of criminality from the 2008 housing crisis.

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Conclusion

Through the study conducted at the Swiss Federal Institute of Technology it is shown that a very small group of interconnected financial institutes hold sway over enormous amounts of assets. These financial institutions are not only Too Big To Fail, they are also Too Big To Jail.

The concentration of these corporations, through interconnected boards of directors and mutual ownership have created a super entity that dominates international finance, ratings agencies and assets under management across the globe. Those placed into regulatory and enforcement positions are shuffled between private and public sector positions like a revolving door.

The global status quo would appear firmly cemented into place with current structural behemoths of financial institutions dominating other industries via their unique, interlocked nature at the heart of global financial system.

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Thanks to @steemtruth for inspiring me to write this article.

https://bootheglobalperspectives.com/article/1373929623WBG353475497/145-companies-may-control-40-of-worlds-assets
http://www.nytimes.com/2008/09/15/business/15lehman.html
https://www.theguardian.com/business/2017/jan/18/libor-scandal-the-bankers-who-fixed-the-worlds-most-important-number
http://www.businessinsider.com/libor-rigging-criminal-charges-and-fines-2015-5
https://www.theguardian.com/commentisfree/2012/dec/12/hsbc-prosecution-fine-money-laundering
http://www.huffingtonpost.com/2013/03/06/eric-holder-banks-too-big_n_2821741.html
https://news.vice.com/article/how-eric-holders-corporate-law-firm-is-turning-into-shadow-justice-department