Libor rate fixing UK ***UPDATED*** Barclays CEO ordered the manipulation

As i'm sure many of aware, it recently came to light that Barclays bank was fixing the Libor rates on many of it's transactions

http://www.bbc.co.uk/news/business-18671255

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9377095/Libor-rigging-scandal-FSA-warned-Barclays-about-Bob-Diamond-and-senior-management.html

There's new articles everyday on this scandal, so far its just Barclays that have been outed, but many more are still under investigation and we can all bet that more banks will be exposed.

There's also a massive political mud slinging match going on in Parliament over the potential involvement of the last government and their failure to impose proper regulations. Also whether their should be a parliamentary or judicial lead inquiry. This is quite frankly disgusting to me, it should be clear cut, the Tories are really making laugh by say Labour didn't impose enough regulation, as if the Tories, the party of small government, less regulation and the rich, would have imposed more regulations. In addition whilst Labour have their owns back to cover, there is most likely some implication for them, Tories will also want to protect their buddies and paymasters in the banks, parliament should be nowhere near this except to legislate to prevent it from happening again.

So...

How deep does this scandal run?

What should be done? and what will be done?

What if anything will change in banking?

Is it right for the parties to throw political mud at each other over what should be clear cut issue?

Is there political blame to had?

How should it be dealt with?

Rage19:

How deep does this scandal run?

In terms of scale pretty much all banks are involved in this in some way. American ones more-so than EU ones (due to some American rates being pegged to LIBOR giving a large incentive to push it down while EU ones are mostly to EURIBOR) and Asian banks less so, but they have their own problems to worry about.
In terms of depth what we've heard is that Barclay's have a recording of the BOE encouraging this behavior and the implication that the BOE was only following orders from Whitehall.

What should be done? and what will be done?

What should be done: Judicial investigation into the rigging with criminal proceedings following for those involved.
What will happen: Not much. Investigation by some organisation or another that wil conclude in a few years with wrist slaps and fines.

Barclay's though is being singled out right now though due to having the simplest case. It'll be a while before you hear anything about the others and those ones are going to face much larger fines.

Nothing will change, maybe a few people will be forced to resign, and then another scandal will come up in a couple of years and the cycle will be repeated. Like the Reaper cycle, it is unbreakable.

If anyone watched Question Time, they had Johnny Rotten on last night and he actually made quite good points that all the MPs are friends with the bankers, and legislate in favour of corporations, so there's no incentive for them to change things up too much. I'd highly recommend anyone to watch it, mainly because the rest of it is absolutely hilarious.

TheGuy(wantstobe):

Rage19:

How deep does this scandal run?

In terms of scale pretty much all banks are involved in this in some way. American ones more-so than EU ones (due to some American rates being pegged to LIBOR giving a large incentive to push it down while EU ones are mostly to EURIBOR) and Asian banks less so, but they have their own problems to worry about.
In terms of depth what we've heard is that Barclay's have a recording of the BOE encouraging this behavior and the implication that the BOE was only following orders from Whitehall.

What should be done? and what will be done?

What should be done: Judicial investigation into the rigging with criminal proceedings following for those involved.
What will happen: Not much. Investigation by some organisation or another that wil conclude in a few years with wrist slaps and fines.

Barclay's though is being singled out right now though due to having the simplest case. It'll be a while before you hear anything about the others and those ones are going to face much larger fines.

Considering how egregious this all was, they may throw a sacrificial lamb under the bus just to try and trick people into believing they're doing something about it. The general populous does love sacrificial lambs.

Esotera:

If anyone watched Question Time, they had Johnny Rotten on last night and he actually made quite good points that all the MPs are friends with the bankers, and legislate in favour of corporations, so there's no incentive for them to change things up too much. I'd highly recommend anyone to watch it, mainly because the rest of it is absolutely hilarious.

I did watch that actually, out of all of them he talked the most sense and the least bollocks, and according to society he's just a vile idiot. I do agree as well, very little will happen, a few wrist slaps, maybe a 1 or 2 big names may end in jail as scapegoats, that will be it though.

If this country has any bother and decentcy left in it there will be mass protests and riots when nothing is done, it should be this governments Poll Tax, but lets wait and see.

Rage19:
How deep does this scandal run?

Likely all the major banks, the government and quangos like the FSA from current reports.

What should be done?

Nationalisation of the banks

and what will be done?

Weaksauce regulation which will likely be enacted in about a decade, in the same way the changes made in the wake of 2008 crisis have been dealt with.

What if anything will change in banking?

The Libor will be more strictly regulated for some time.

Is it right for the parties to throw political mud at each other over what should be clear cut issue?

Part of a democracy is that there is supposed to be criticism, so parties calling each other out on this shit is fine. Doing it in childish tit-for-tat ways while the media essentially just awards points and the public looking on with disinterest is the issue.

Is there political blame to had?

Yes, plenty enough for all the parties.

How should it be dealt with?

Not sure how this is different from "what should be done".

wintercoat:

Considering how egregious this all was, they may throw a sacrificial lamb under the bus just to try and trick people into believing they're doing something about it. The general populous does love sacrificial lambs.

Absolutely, I do expect we will see 1 or 2 thrown to the wolves to appease our appetites so the masses think they've been fed, but we won't get the feast we should have. Every single trader that carried this out and all of their bosses who were aware of it should be inprisoned for a very long time, any bosses who didn't know about it should resign because of incompetence.

Someone got 6 months prison for stealing a bottle of water during the riots last summer, so by that logic the bankers should be castrated, violated with a cactus, made to watch the whole Twilight Saga and all of Glee then locked in the dungeon from "The Pit and the Pendulum"!

Esotera:
Nothing will change, maybe a few people will be forced to resign, and then another scandal will come up in a couple of years and the cycle will be repeated. Like the Reaper cycle, it is unbreakable.

If by "resign" you mean "be quietly transferred to a more low-profile position where they'll continue to wreck the economy", yes, I'm inclined to agree.

you might care to note there are 11 other "global" banks involved in this including "Bank of America, Citigroup, JP Morgan, Credit Suisse, UBS, Deutsche Bank, Société Générale, RBS, HSBC and Lloyds" but you can virtually count the number of times this fact is being mentioned "in the medja" on one hand because, as Holmes would say, "the game is afoot" and in nailing a few token peebs to the wall from the one bank that afaik actually broke ranks and brought this state of affairs to public attention is serving to both punish those who did so and is placing the necessary diversionary sacrificial lambs before the court of public opinion without ofc actually dealing with the real scale of the problem...

captcha - too many cooks...

Rage19:
How deep does this scandal run?

We cannot answer that unless we are whistleblowers.
At a guess I'd say Governments knew or heard rumours about it but as the press hadn't got wind of it, they had "bigger" problems to deal with.

Rage19:
What should be done? and what will be done?

Everyone involved should be thrown in prison for committing crimes... which they won't be.
What will happen is the non-judge led inquirey will find the most corrupt and most greedy people involved and then they will resign with most of their golden parachute intact.

Rage19:
What if anything will change in banking?

For the next year or two people will gather in a sealed room if they want to be corrupt so as not to get caught.

Rage19:
Is it right for the parties to throw political mud at each other over what should be clear cut issue?

No. Welcome to the world of politics.

Rage19:
Is there political blame to had?

When you say "political" it makes it seem as if there was one side to blame. No. Everyone with any sort of say or power since 1989 is to blame.

Rage19:
How should it be dealt with?

Firing squads. Line up the corrupt officials... They say deterrents don't work but fuck me, these WILL work >.>
Frankly I think anything less than that and people will always be corrupt to the greatest extent they can.

I thought I knew most English common words..What's "Libor"?

Realitycrash:
I thought I knew most English common words..What's "Libor"?

An acronym; apparently it stands for "London Interbank Offered Rate" and it's about interest rates between banks.
http://en.wikipedia.org/wiki/Libor

Skeleon:

Realitycrash:
I thought I knew most English common words..What's "Libor"?

An acronym; apparently it stands for "London Interbank Offered Rate" and it's about interest rates between banks.
http://en.wikipedia.org/wiki/Libor

Cool, thanks. Thought he meant "Labor", but that didn't make much sense either..

here's the simplistic question we should all be asking and that includes "in the medja": just how much money did these banks make from us* by manipulating LIBOR ?

*and ye if they are manipulating the inter bank rate that governs the rates used for loans and mortgages etc then it affects all of us.

splash the answer to that all over the headlines and people might just wake up to where we've got to...

because i've read suggestions that it cost 10s of Trillions and even the the "worst" estimates for punishing the banks only suggest billions in punitive fines...oh aye and you want to be having a real hard look at where those fines go too...fines to the FSA in the UK FOR example only go into a fund that is used to pay what are basically the membership fees for being overseen by the FSA and being marked as regulated by it...

make no mistake this is a huge story but it's being buried behind enough doublespeak and talking heads to ensure the "average joe" won't pay much attention to it and will instead assign it to that box where he keeps "people in suits using long words to talk about stuff that doesn't really affect me".

wrong guess.

if you or your place of work has used almost any form of commonly available credit product in the last however many years since this crap started you've been ripped off...and that's pretty much everybody in the English speaking world.

***UPDATE***

As suspected this did run all the way to the top, a Barclays executive has said he was under orders from Bob Diamond to manipulate the Libor rate.

http://www.bbc.co.uk/news/business-18854193

So, he's naive and not a fool. Still don't think he will get any jail time at all let alone being thrown in the dark pit he deserves.

In before someone tries to blame the state.

Or say that this means we should have less regulation.

To the best of my knowledge, Libor is effectively run and arranged by private companies as a useful tool; hence it could be argued it is their collective responsibility to run it cleanly.

If they cannot, it makes a case for better government oversight. Although I'd imagine that to put false data in almost certainly constitutes fraud and thus comes under government review one way or the other.

What intrigues me is that if banks were not borrowing at the rate the Libor claimed, then banks clearly had alternative and preferable information regarding how (un)safe other banks that were borrowing were. So all major participants must have been aware Libor was wrong, as they could all see they were lending at higher rates than the Libor.

So we can lead on - what was Libor accomplishing, if the organisations running and using it knew perfectly well it was wrong? Can we assume there may have been an 'insider' group aware it was wrong using it to screw organisations outside of the loop?

Danny Ocean:
In before someone tries to blame the state.

Or say that this means we should have less regulation.

Wouldn't that be a feat of policy, considering there is no regulation of the LIBOR rate.

Agema:
To the best of my knowledge, Libor is effectively run and arranged by private companies as a useful tool; hence it could be argued it is their collective responsibility to run it cleanly.

If they cannot, it makes a case for better government oversight. Although I'd imagine that to put false data in almost certainly constitutes fraud and thus comes under government review one way or the other.

What intrigues me is that if banks were not borrowing at the rate the Libor claimed, then banks clearly had alternative and preferable information regarding how (un)safe other banks that were borrowing were. So all major participants must have been aware Libor was wrong, as they could all see they were lending at higher rates than the Libor.

So we can lead on - what was Libor accomplishing, if the organisations running and using it knew perfectly well it was wrong? Can we assume there may have been an 'insider' group aware it was wrong using it to screw organisations outside of the loop?

LIBOR was set up by the BOE and BBA after a number of financial tools started being used in the mid 80's by large international banks across many different markets as a way of normalising the sometimes wildly differing interest rates by setting it to the rate at which the banks believed they could borrow from each other at 1059 in London each day. It was a way to simplify and allow easy comparisons between banks for these tools.

Of course it's now used as the preferred rate for much consumer level borrowing in the US (our internals had it as being the base for something like 90% of all subprime mortgages and around 55% of variable rate ones as of the 2008 crash) which certainly complicates things as any manipulation of it will cause a lot of trouble for the average person with their rates shooting up as it goes up to where it should be after being pushed down and having to pay a much higher interest rate if it's being manipulated upwards.

As for other banks being screwed over by LIBOR fixing. If you're a trader for one of the 16 banks that set the rate each day and know how your own bank is going to report you can move on any changes pre-emptively and cash out on the move immediately afterwards which as we've found out is exactly what's happened.

 

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