The Law LIBOR Scandal Again Points to Systemic Corruption in International Banking System

[The Passenger]

Its a freaken disaster always has been, yet we never wonder if theres a better way or system, we just happened to get it perfect all those years ago. In the hands of god know whom, out to profit for themselves and shareholders. Ive been looking about for arguments why its the best system or superior to dept free money..... im struggling to find it so far.

Well here's the thing. Human economics is a very old things, but in terms of actual world wide markets and all that sort of stuff, it's really a very very new things for humans and it's really not surprising that we hit these bumps along the way to working out what exactly is the best way. but it's not helped but some of these peoples just out to * everyone else over to get their own way.

it was good of the barclay's boss to forgo a 30 million dollar payout and only accept a 3 million dollar payout. what a ******* scumbag. wouldn't shed a tear or feel any sympathy if he was hung up by his balls in trafalgar square.

Gee this thread makes me feel old. I remember a time when bankers were honored members of the community. Sigh.

This is half the problem... it's so ingrained in a lot of the community the bankers are upstanding members of the community that a lot of them just listen to whatever they * they say. thank christ this is turning, and fortunately, not slowly. rather rapidly.

 

[The Passenger]

So what are the possible solutions here? More regulation? Economic watchdogs with bigger teeth? To me it's obvious we cannot let the markets and the corporate sector look after themselves as there are more than a few fantastically immoral people in this game who see no further than their own wallets.

So how do we learn from this?

just ask dan26.... it's a free market.... let everyone do what they want that works well....

btw, i don't think government intervention is necessarily the answer cause they are as corrupt as all the rest. it's friday night and i don't have the answers.

i've been reading a lot from a bloke called joseph stiglitz lately. i reckon he is pretty clued to what is going on and how it can be resolved.

http://en.wikipedia.org/wiki/Joseph_Stiglitz

maybe he's got us (me) conned like just about every other prick though, i don't know....

 

[medusala]

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So this kind of thing is pretty much unpreventable?

Ish. There are two separate scandals, one post GFC and one after. The market is actually hard to rig as above. Regulators could solve that by auditing the banks actual trades to verify their fixings. They already have the ability to do so, why they havent bothered I dont know.

As for post GFC, yes I think its unpreventable to stop central banks attempting to fix the market in collusion with governments and / or banks.

 

[Geelong_Sicko]

...I don't think government intervention is necessarily the answer cause they are as corrupt as all the rest. it's friday night and i don't have the answers...

Ish. There are two separate scandals, one post GFC and one after. The market is actually hard to rig as above. Regulators could solve that by auditing the banks actual trades to verify their fixings. They already have the ability to do so, why they havent bothered I dont know.

As for post GFC, yes I think its unpreventable to stop central banks attempting to fix the market in collusion with governments and / or banks.

I think Black Thunder is right - corruptors are gonna corrupt. Good, fair and honest people are hard enough to find let alone those willing and able to regulate a multi-billion dollar/pound/dirham/whatever industry like the banking sector.

With your two points Meds, I think one may be related to the other.

 

[OldBlueFan]

What do posters think about the current scandal, what can we possibly do to end this level of corruption? I know there is a senate enquiry coming up into banking behaviour post GFC in Australia. It address a number of allegations, amongst which that CBA allegedly defrauded HBOS of 900 million dollars worth of clawbacks (not the worst of the allegations that may be levelled).

Is the answer smarter regulation, or perhaps more stringently enforced regulation? Perhaps the banning of financial contributions from private institutions to political parties? Still what we do in Australia may have minimal impact overseas and honestly I am at a loss as to what can be done.

The laundry list of corruption in this article shows just how far this scandal extends and also explores some of the possible consequences.

Titanic Banks Hit LIBOR Iceberg: Will Lawsuits Sink the Ship?

But to answer the questions above, I think these comments just about sum it up:

A parasitic private banking system that feeds off the public will not be tamed by regulation. The banks' control over the money power always allows them to circumvent the rules. It is time to try the public solution. We, the people, need to own the banks and they need to be run for our benefit.

and:

Private banks have failed – we need a public solution

Only if the largest banks are broken up, the part-nationalised outfits turned into genuine public investment banks, and new socially owned and regional banks encouraged can finance be made to work for society, rather than the other way round. Private sector banking has spectacularly failed – and we need a democratic public solution.

 

[TheStinger]

When the Deputy Governor of the Bank of England can be asked by a governmental inquiry "Do you think that the deliberate misreporting of figures was dishonest?" and he is able to sit there and say quite unashamedly "In hindsight it would seem so, but at the time, no it did not raise any red flags.", you know that we are dealing with people for whom honesty is not a primary concern. Money is.

And they are the ones that are ruining economies around the globe.

 

[medusala]

Private banks have failed – we need a public solution

What about the FMs and the Landesbanks?

Very close to if not the worst losses as a % of capital amongst all the banks.

Good old Seamus, he is living in his own little world (bit harsh perhaps Polly T is probably knocking around when she isnt sunning herself in Tuscany)

It worked well in Oz though, state banks were managed brilliantly cf the private ones.

 

[OldBlueFan]

What about the FMs and the Landesbanks?

Very close to if not the worst losses as a % of capital amongst all the banks.

What a disingenuous argument. Were they responsible for the actual housing bubbles in the US, Spain and elsewhere that caused the crisis, or were they simply caught up in the whole sordid mess? Were they parties to the scandal that is the topic of this thread?

 

[medusala]

What a disingenuous argument. Were they responsible for the actual housing bubbles in the US, Spain and elsewhere that caused the crisis, or were they simply caught up in the whole sordid mess? Were they parties to the scandal that is the topic of this thread?

Fannie Mae and Freddie Mac controlled a huge % of the US mortgage market. They were front and centre. The Landesbanks were big subprime investors and lenders to property.

Neither group were contributors to LIBOR (though some of the LBs may contribute to EURIBOR fixings)

http://www.zerohedge.com/news/lieborgate-here-come-arrests

Lieborgate: Here Come The Arrests

 

[OldBlueFan]

Fannie Mae and Freddie Mac controlled a huge % of the US mortgage market. They were front and centre. The Landesbanks were big subprime investors and lenders to property.

Neither group were contributors to LIBOR (though some of the LBs may contribute to EURIBOR fixings)

Thanks for making my point.

The Federal National Mortgage Association (FNMA; OTCQB: FNMA), commonly known as Fannie Mae, was founded in 1938 during the Great Depression as part of the New Deal. It is a government-sponsored enterprise (GSE), though it has been a publicly traded company since 1968

Fannie Mae

http://www.zerohedge.com/news/lieborgate-here-come-arrests

Lieborgate: Here Come The Arrests

It should read "here come the scapegoats".

As with any huge corporation that gets caught red-handed, they'll throw a couple of dupes under the bus, wait for the hoopla to die down and go back to business as usual. All the while avoiding any real investigation into the systemic dysfunction that gave rise to the issue in the first place.

 

[medusala]

Thanks for making my point.

What point? They are GSE's. Not only that but ...

(Reuters) - Fannie Mae FNM.N and Freddie Mac FRE.N, the largest U.S. home funding companies, will delist their shares on the New York Stock Exchange after Fannie Mae fell below and Freddie Mac held near minimum price requirements, the companies' regulator said on Wednesday.

Oops.

 

[OldBlueFan]

What point? They are GSE's. Not only that but ...

(Reuters) - Fannie Mae FNM.N and Freddie Mac FRE.N, the largest U.S. home funding companies, will delist their shares on the New York Stock Exchange after Fannie Mae fell below and Freddie Mac held near minimum price requirements, the companies' regulator said on Wednesday.

Oops.

And pray tell ... after 2008, which of the "too big to fail" crew are not GSE's?

 

[medusala]

And pray tell ... after 2008, which of the "too big to fail" crew are not GSE's?

The US banks have nearly all paid the cash back (all the big ones have), in any even none of them were or became GSE's.

The GSEs however, continue to cost taxpayers cash

WASHINGTON | Wed Feb 29, 2012 12:49pm EST
WASHINGTON (Reuters) - Fannie Mae (FNMA.OB), the biggest source of money for U.S. home loans, said on Wednesday it would seek $4.6 billion in additional federal aid after reporting a fourth-quarter loss.

 

[OldBlueFan]

The US banks have nearly all paid the cash back (all the big ones have), in any even none of them were or became GSE's.

Now you're just being obtuse. Did they receive government funds in order to avoid collapse? If so, they are "government supported" whether you want to admit it or not.

And, as per the original point, Fannie Mae IS NOT a government OWNED bank, they are a privately run enterprise.

 

[medusala]

Now you're just being obtuse. Did they receive government funds in order to avoid collapse? If so, they are "government supported" whether you want to admit it or not.

There is a massive difference between taking cash from the govt and being a GSE. Enormous. The GSEs were set up for a particular purpose (ie housing), have stuck to it and have always been seens as government entities by the market (ie implicitly govt guaranteed)

And, as per the original point, Fannie Mae IS NOT a government OWNED bank, they are a privately run enterprise.

You really dont get the issue nor the argument. They are a GSE. They are a state sponsored organisation which is NO LONGER listed on the NYSE and is STILL receiving ongoing support from the government. The government has stood behind them as it always suggested it did. It does not do that for other banks.

To compare that to Goldmans et al is absurd.

 

[medusala]

just ask dan26.... it's a free market.... let everyone do what they want that works well....

yes it does. The market imposes far better discipline than Timmy bailout Geithner

i've been reading a lot from a bloke called joseph stiglitz lately. i reckon he is pretty clued to what is going on and how it can be resolved.

Have a look at this clip with Stiglitz. You may just change your mind. Cops an utter beating from a hedge fund guy.

Same chap (hugh hendry) on youtube.

Newsnight 26th May, Hugh Hendry 'I would recommend you panic'

 

[OldBlueFan]

You really dont get the issue nor the argument. They are a GSE. They are a state sponsored organisation which is NO LONGER listed on the NYSE and is STILL receiving ongoing support from the government. The government has stood behind them as it always suggested it did. It does not do that for other banks.

To compare that to Goldmans et al is absurd.

There's a difference between not geting a point and not agreeing with it.

Tell me meds, without the govt assistance of 2008 and beyond, where would JP Morgan, Goldman Sachs and Citibank be now?

If they're going to be propped up by government because they're "too big to fail", then they are government supported. Do you honestly believe that the market will not factor in similar bail-outs in the future?

Regardless, the original comment from you was suggesting that private banks were better than government banks and you then raised FM as an example. FM are NOT state-owned and haven't been for over 40 years.

 

[medusala]

Tell me meds, without the govt assistance of 2008 and beyond, where would JP Morgan, Goldman Sachs and Citibank be now?

Citi definitely gone, GS probably still around by skin of teeth, JPM would have survived.

If they're going to be propped up by government because they're "too big to fail", then they are government supported. Do you honestly believe that the market will not factor in similar bail-outs in the future?

YES and that is a huge issue. It is called moral hazard. They gamed the system and regulators were useless. Taxpayers got screwed. Citi got bailed out and then immediately paid out huge bonuses. Disgraceful. They should have been left to go bust.

 

[The Passenger]

Have a look at this clip with Stiglitz. You may just change your mind. Cops an utter beating from a hedge fund guy.

Because the videos says "nobel prize idiot", the guy laughs smugly and shakes his head doesn't constitute a beating. all it is a ******* banker typically pushing his views on the world that will suit him best.

I loved the bit where he goes "some hedge funds make millions (if greece defaults)" .... i.e. "my ones"

You know what the world needs less of? hedge fund managers, investment bankers etc,. etc,.

it's people like that that landed Europe in trouble in the first place, and the governments are all complicit in it anyway. the whole thing is just designed like a well oiled machine, and those on top never seem to have any consequences for what they do.

 

[medusala]

Because the videos says "nobel prize idiot", the guy laughs smugly and shakes his head doesn't constitute a beating. all it is a silly person banker typically pushing his views on the world that will suit him best.

The point is that Stiglitz was saying that Greece could simply borrow money at 1-2%, that is why the hedge fund guy teed off. Stiglitz has got no idea of the real world. Hugh Hendry has been proven right. Stiglitz is looking like a prize goose given what has happened in Europe.

it's people like that that landed Europe in trouble in the first place, and the governments are all complicit in it anyway.

Europe is in trouble NOT due to banks (ex Ireland and maybe spain). It is because of governments and their massive spending. People like Stiglitz have to carry a massive amount of blame for his repeated urgings with respect to failed Keynesian policies.

the whole thing is just designed like a well oiled machine, and those on top never seem to have any consequences for what they do

Agree. Look at Gordon Brown, should be jailed for what he did. Wont accept responsibility and will receive a massive pension. There is no downside at all for people like him and Wayne Swan.

Hedge fund managers on the other hand typically have all their net worth in their fund. If they blow up they go broke.

 

[OldBlueFan]

Europe is in trouble NOT due to banks (ex Ireland and maybe spain). It is because of governments and their massive spending.

Or lack of tax revenues ... always two sides to the ledger meds.

Agree. Look at Gordon Brown, should be jailed for what he did. Wont accept responsibility and will receive a massive pension. There is no downside at all for people like him and Wayne Swan.

Hedge fund managers on the other hand typically have all their net worth in their fund. If they blow up they go broke.

Oh yeah ... I'm sure Peter Falcone is going to be living with the arse hanging out of his pants in his $49 million mansion and "friends in high places"

Falcone Said To Face Lawsuit From Regulators Over Loan

With the proceeds of that wager he spent $49 million on a 27-room mansion near Central Park in Manhattan once owned by Penthouse publisher Bob Guccione.

 

[Hill2Pav]

WBankers!!

http://www.economist.com/node/21558281

The rotten heart of finance

A scandal over key interest rates is about to go global

THE most memorable incidents in earth-changing events are sometimes the most banal. In the rapidly spreading scandal of LIBOR (the London inter-bank offered rate) it is the very everydayness with which bank traders set about manipulating the most important figure in finance. They joked, or offered small favours. “Coffees will be coming your way,” promised one trader in exchange for a fiddled number. “Dude. I owe you big time!… I'm opening a bottle of Bollinger,” wrote another. One trader posted diary notes to himself so that he wouldn't forget to fiddle the numbers the next week. “Ask for High 6M Fix,” he entered in his calendar, as he might have put “Buy milk”.
What may still seem to many to be a parochial affair involving Barclays, a 300-year-old British bank, rigging an obscure number, is beginning to assume global significance. The number that the traders were toying with determines the prices that people and corporations around the world pay for loans or receive for their savings. It is used as a benchmark to set payments on about $800 trillion-worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. The number determines the global flow of billions of dollars each year. Yet it turns out to have been flawed.

Over the past week damning evidence has emerged, in documents detailing a settlement between Barclays and regulators in America and Britain, that employees at the bank and at several other unnamed banks tried to rig the number time and again over a period of at least five years. And worse is likely to emerge. Investigations by regulators in several countries, including Canada, America, Japan, the EU, Switzerland and Britain, are looking into allegations that LIBOR and similar rates were rigged by large numbers of banks. Corporations and lawyers, too, are examining whether they can sue Barclays or other banks for harm they have suffered. That could cost the banking industry tens of billions of dollars. “This is the banking industry's tobacco moment,” says the chief executive of a multinational bank, referring to the lawsuits and settlements that cost America's tobacco industry more than $200 billion in 1998. “It's that big,” he says.
As many as 20 big banks have been named in various investigations or lawsuits alleging that LIBOR was rigged. The scandal also corrodes further what little remains of public trust in banks and those who run them.

 

[Clay Davis]

Citi definitely gone, GS probably still around by skin of teeth, JPM would have survived.



YES and that is a huge issue. It is called moral hazard. They gamed the system and regulators were useless. Taxpayers got screwed. Citi got bailed out and then immediately paid out huge bonuses. Disgraceful. They should have been left to go bust.

Agreed. But the thing you miss is that the banks=govt=banks. Paulson, Geithner, Rubin, Sumner, aren't career political apparatchiks who believe in big govt. They're bankers who have become part of the govt, peddling free markets and socialism for whenever it suits them.

The problem lies solely with the corruption of the financial sector. In the US, UK, etc they have become the govt. It's a financial kleptocracy.

 

[Jhuner]

It s

Over the last week for those paying attention we may have been witness to the uncovering of the largest financial scandal since the events that precipitated the 2008 financial crash.

The LIBOR or BBA Libor is an average interest rate estimate based on information provided by 16 leading banks operating in London, that along with the Eurilibor provides a benchmark for interest rates throughout the world (thx wiki).

The scandal at present revolves around how Barclay's and the Royal Bank of Scotland have lied about their inter-bank lending rates, thus manipulating LIBOR to gain a financial advantage estimated to be in the tens to possibly hundreds of billions of dollars (roughly 75 billion at most conservative estimate). This is appears to be only the surface of the issue, with the possibility existing that all 16 banks, along with other financial institutions and traders have colluded in the past to systematically manipulate and rort international financial markets.



In this clip Matt Taibi and former US Attourney General Eliot Speitzer argue that this truly gargantuan corruption scandal, not only foreshadows more ominous revelations to come (if possible), but reveals the true nature of a corrupt international banking system that operates more like a series of criminal cartels than legitimate businesses.

What do posters think about the current scandal, what can we possibly do to end this level of corruption? I know there is a senate enquiry coming up into banking behaviour post GFC in Australia. It address a number of allegations, amongst which that CBA allegedly defrauded HBOS of 900 million dollars worth of clawbacks (not the worst of the allegations that may be levelled).

Is the answer smarter regulation, or perhaps more stringently enforced regulation? Perhaps the banning of financial contributions from private institutions to political parties? Still what we do in Australia may have minimal impact overseas and honestly I am at a loss as to what can be done.

It seems that this particular post was been made mainly to increase people's awareness against financial scandal.

 

[Geelong_Sicko]

It's high time our independent judiciaries made examples of these bastards, if found guilty. Their crimes screwed over countless thousands in this country alone as the arse fell out of super funds as a result of the stock market turmoil. My folks (just retired) have nothing left of their super while these c*ntrags get slaps on the wrist?

Time to make the rest of the financial world recoil in horror at the new sentencing structure for this kind of thing.