"The Biggest Financial Scam In World History
But the Libor scandal is the biggest financial scam in world history. See this and this.
The former CEO of Barclays said today that banks across the world were fixing interest rates in the run-up to the financial crisis.
Professor of economics and law Bill Black notes:
It is the largest rigging of prices in the history of the world by many orders of magnitude.
Indeed, the scandal effects an $800 trillion dollar market – 10 times the size of the real world economy.
Matt Taibbi explains that this is the “mega scandal of all mega scandals”, because Libor is the “sun at the center of the financial universe”, and manipulating Libor means that “the whole Earth is built on quicksand.”
Local governments, credit card holders, students, small businesses, small investors, homeowners and virtually everyone else in the entire world has been impacted by the manipulation.
As just one example, let’s look at mortgages. The Washington Post notes today:
60 percent of prime adjustable rate mortgages, and nearly 100 percent of subprime ones, were indexed to LIBOR.
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That means that when LIBOR rises, so do the prices ordinary consumers pay to, say, get a mortgage.
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So how did the manipulations by Barclay’s affect this rate? First, from 2005 and 2007, the bank allegedly varied the rates it reported to the BBA and Thomson Reuters so as to improve its margins on internal trades. For example, it could have placed bets that the LIBOR rate would increase, and then reported artificially high rates which in turn artificially increased the LIBOR averages, so that the bets were likelier to pay off. This … bumped up mortgage rates – however infinitesimally – for consumers even when the risk of the loans hadn’t changed at all.That is dramatic enough. But the entire U.S. mortgage market is around $10 trillion dollars. Many hundreds of trillions of dollars worth of assets are effected by Libor.
Indeed, the scandal is so big that it will further destroy trust in our financial system and drive many people from investing in the capital markets altogether.
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Of course, the banker's mouthpiece, otherwise known as the corporate AmeriKan media, is minimizing the thing:
"After $450m settlement, Barclays chairman steps down" by Mark Scott and Michael J. de la Merced | New York Times, July 03, 2012
LONDON — Marcus Agius, the chairman of Barclays, resigned Monday, less than a week after the British bank agreed to pay $450 million to settle accusations that it had tried to manipulate key interest rates to benefit its own bottom line.
A chump-change kiss for trillions in theft!
The resignation comes as Barclays tries to limit fallout from the case, which is part of a broad investigation into how big banks set certain rates that affect borrowing costs for consumers and companies. Since striking a deal with US and British authorities on Wednesday, the Barclays management team has faced increasing pressure from politicians and shareholders to take action....
Barclays’s board has been criticized for signing off on a multimillion-dollar pay packages for chief executive Robert E. Diamond Jr. He has come under scrutiny from British politicians, and some have called for him to step down. While he has dismissed those calls, Diamond has apologized for the bank’s missteps.
Is my debt interest check with punitive penalty in the mail?
Barclays said it will have an independent audit of its business practices. It will center on what led to the rate manipulation, as well as other “flawed” practices since the financial crisis and how these issues will affect the bank’s business units. The audit will help create a new code of conduct for the bank.
The Serious Fraud Office in Britain said it may pursue criminal prosecutions in cases connected to the manipulation of the London interbank offered rate, or LIBOR....
I'm not going to hold my breath.
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"Barclays ex-chief testifies" by Mark Scott | New York Times, July 05, 2012
LONDON — Robert E. Diamond Jr., former chief executive of Barclays, told a British parliamentary committee Wednesday that the manipulation of global interest rate benchmarks involving 14 traders at the bank had made him ‘‘physically sick.’’
But the banker, who resigned Tuesday, also placed some of the blame for the rate manipulation scandal on regulators.
Diamond, who was born and raised in Concord, Mass., said the bank had raised concerns multiple times with US and British authorities about discrepancies about how Libor — the London interbank offered rate, a measure of how much banks charge each other for loans — was set. The bank was not told to stop the practice, according to Barclays’ documents submitted to the British Parliament.
“A number of banks were posting rates that were significantly below ours that we didn’t think were correct,’’ Diamond told the committee.
‘‘I can’t sit here and say no one in the industry didn’t know about the problems with Libor,’’ he said. ‘‘There was an issue out there, and it should have been dealt with more broadly.’’
Diamond also sought to deflect attention from the bank’s role in the authorities’ continuing investigation, pointing out that other major global financial institutions also had been implicated. US and British regulators, who announced a $450 million settlement with Barclays last week, are investigating the actions of more than 10 large financial institutions, including JPMorgan Chase, UBS, and Citigroup.
Yeah, and I'll bet I can guess a few of the others not mentioned.
The former chief of Barclays, who said he had been notified about the fines and civil penalties just a few days before the settlement was announced, said the bank had been singled out because it was the first to settle.
The agreement with regulators showed that Barclays traders had altered Libor for their own benefit from 2005 to 2009. Senior executives also told employees to suppress the bank’s rate submissions during the three years through 2009, in response to the financial crisis that was pushing borrowing costs for most global financial institutions to record highs....
They are really something, aren't they? If they aren't selling you MBS turds and betting both ends for profits they are stealing from your pension funds through currency swaps or fee-f***ing you into oblivion.
The 60-year-old executive, who initially appeared nervous giving his testimony, but gradually became more comfortable during the nearly three hours of questioning, batted away questions of his being solely to blame for the scandal.
“I don’t feel personal culpability. What I do feel is a strong sense of responsibility,’’ Diamond said, adding he had made the decision to resign when support from regulators and shareholders for his position at the bank began to wane.
He also implicated the Bank of England, the country’s central bank, and leading British politicians....
Oh, that LAST ONE DOESN'T SURPRISE ME in the LEAST! I'm sure the banks RUN PARLIAMENT like they run the U.S. Congress!!!
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Update: Moody's, S&P take steps to downgrade Barclays
Uh-oh.
