Barclays’ Ex-Chief Spreads the Blame in Rate-Rigging Scandal

It's a huge deal, because LIBOR is a world benchmark interest rate which a whole lot of banks base their interest rates on. It's also a guide for central bank action. The Taylor Rule that the Federal Reserve uses as a rough guideline often takes into account LIBOR as the "true inter-temporal private interest rate" central banks should play on.

It (along with EURIBOR---the European equivalent that Barclays is also implicated in rigging) are massive cogs in derivatives markets around the world. A LIBOR rate settling higher or lower, can be responsible for huge gains or losses in a $350 trillion market.

If it's found out that many private banks manipulated these rates systematically for their own gain, then the system is f**king broken, and criminal prosecutions should ensue en masse.

 

There is no doubt that the Chinese walls between the retail/treasury branch, and the firms' traders broke down completely at Barclays.

http://ftalphaville.ft.com/blog/2012/06/27/1062301/libor-manipulation-done-for-you-big-boy/

To those who think that prop-trading on risky and complex derivatives is fair game---and to those who sincerely have faith in the crookedest institutions in the land to do right---it's time to eat some crow again.

As if the JP Morgan "whale-CDS trade" wasn't bad enough, now JP is implicated in a power-price fixing scandal, and this. LOL.

Gee, I don't know.

The thread of thinking that will allow the banks free reign is toxic. It is one reason, actually probably THE reason, why Mitt Romney is unelectable.

 

This recession is what happens when greedy profitwhores have too much power. They just squat and take a huge dump on the rest of us.

 

I am over in London after vacationing in Ireland, Greece and Turkey. Interestingly only the Turks are not complaining about the economy.

The Barclay-LIBOR scandal is THE big story here.

Two nights shows watched an interesting debate in the House of Commons. Labor wanted to put an additional tax on banker bonuses that would raise 3 billion £ and dedicate it to creating 6 mo starter jobs for recent grads without jobs. Conservatives claimed that taking 3 billion pounds from the poor banks would stop then from making loans and then the cards would not make loans. Labor pointed out they aren't lending anyway. Sounded like D and D

 

Sigh.

What scares me is the bigger picture: were banks colluding in these alleged crimes only in the case of LIBOR?

Is there enough reason to suspect a wider behavioral problem, where the LIBOR scandal is just one illegal instance of this behavior of manipulating markets?

Sadly, if the media is painting an accurate picture of this scandal, then I can't imagine this network of individuals would reject any other illegally profitable opportunities at least during the same period.

Even more depressing is that the state owns more than 80% of RBS, who will be paying hundreds of millions in fines.

LIBOR affects most people in the world directly. For example, if I want to take out a mortgage in my country, the interest is a combination of a number of interest components, one of which is LIBOR. So literally every person with a mortgage from the banks in my country was robbed of cheaper mortgages by the individuals implicated in this issue. It's a shame that they will probably not be penalized globally for an international crime, rather they will resign with their bonuses and the companies will settle the damages probably to avoid an investigation and find more problems.

 

Note the date.

 

The Fed and other central banks are price fixing cartels. The only reason the authorities are angry about this is because Barclays acted outside of the authority of these cartels. When I hear that Barclays did this for profit, it makes me wonder how we all turn a blind eye to these cartels manufacturing economic downturns for the benefit of their influential board members with interests in every major bank in the world. But wait, its not the same -- the cartels fix prices for our benefit! Right...?

 

uh wut.

You're right that the BBA submission rules were opaque at best, and that central banks were complicit in this crisis.

I really don't know where you're going with the second part. FOMC members, for example, have huge conflict of intrest clauses pushed upon them so that they can't trade on their own desicions (obviously). Bernanke is forgoing a fulfilling career in academics---or perhaps the multi-million dollar payout that comes from being Chief Macroeconomist at JP Morgan Chase, in order to be called a traitor by people who, quite frankly, are in no place to be debating macroeconomics.

 

Living high on the hog, I see. I guess you're one of the elite rich in the US.

 

There's nothing wrong with being rich, as long as you deserve it.

Texxx, do you think Barclays executives and others caught in bed manipulating key intrest rates deserve to be rich?

 

lol you must not know much about glynch's anti-rich posts

and I'm no fan of intrest (sic) rate manipulators

 

So why would you vote for Mitt Romney, who is clearly trying to get in bed with them, and wants to loosen restrictions on prop trading? Citigroup and JP Morgan Chase are implicated. Why would you agitate for less regulatory reform?

Ça n’a vraiment pas d’allure (sic)!

 

weak attempt to 1) bait me into your faux trap 2) look smart (?) by throwing some french into your post

just focus on getting the coffee in the office brewed, brah

 

It is clear that Banks and other big businesses do not need regulations because they have the best interest of their customers at heart. So deregulations FTW!

 

Only Rice University grads brew coffee here, us people going to better schools do the paperwork.

(weak attempt to once again evade substantiative debate on this matter noted).

 

bigtexxx, could you at least admit that his support for this type of deregulation is a potential weakness of Romney's?

 

Possibly the biggest crime of the century, zero interest from regular people who are the only victims. Boggles my mind.

http://www.reuters.com/article/2012/07/10/markets-credit-barclays-idUSL3E8IA1GB20120710

 

They thought they could get away with it due to the complacency of most people and the complexity of what the crime was. When you've learned how to rob people blind, they tend to remain oblivious.

It's a shame that the narrative is one as simple as "capitalism" vs. "socialism". Those who decry regulation are completely unaware that this is what they're tacitly advocating. And it's crimes like this that make the average person feel suffocated because the exploitation in the global economy is so deeply ingrained. What can we even begin to think of doing?

 

Yeah great, except there is just one problem. The big banks you rail on also get hurt by LIBOR fixing. Since oh you know, couple trillion dollars worth of mortgage backed securities (among others) pay according to LIB1 + margin to investors and those trusts usually have swap agreements protecting against interest rate risks. This is just kinda a big deal to them too.

And on the other hand, who is asking Paul Tucker questions?

Throw the maximum punishment allowable under the law at Barclays and RBS.