The LIBOR rate fixing scandal could grow

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After heads rolled last week at Barclays Bank following admission that the bank rigged key interest rates that underlie millions of consumer loans from home mortgages to credit cards, there are new allegations that other banks may be involved, and that this massive rip-off has been going on for decades. As one financial insider admitted to The Economist, “fifteen years ago, the word was that LIBOR was being rigged.” The insider went on to say that he remembers rate fixing as far back as the 1980’s. And Business Insider is reporting that the Federal Reserve was worried about LIBOR manipulation as far back as 14 years ago.

Now, other banks are being investigated for their role in rate-rigging – including JP Morgan Chase, Bank of America, and UBS. However, it’s unlikely anyone will actually go to jail for this multi-billion dollar fraud since we have a two-tiered justice system – one for working people who can be thrown in prison for stealing a Slurpee - and one for the banksters who get to skate with a small fine when they steal billions of dollars.

Curiously, even Wall Street knows criminal activity pays off for banksters. A recent survey of 500 Wall Street senior executives revealed that 24% of bankers believe they need to “engage in unethical or illegal conduct to be successful.” I don’t call them banksters for nothing.

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Thom Hartmann A...
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Matt Tiabi explains to Eliot Spitzer how the mob learned their tactics from Wall St. or visa versa squared.

http://current.com/shows/viewpoint/videos/the-mob-learned-from-wall-street-eliot-spitzer-on-the-cartel-style-corruption-behind-libor-scam/

You admit Thom, that it is unlikely that anybody will go to jail for the LIBOR scandal or the Wall St. Looting of America. Yet we are urged by you everyday to vote for Obama who shields these banksters, launches drone attacks to protect oil and gas pipelines, has Monsanto represented via Hillary Clinton, has expanded executive powers, etc. Let's just agree that democrats are not necessarily progressives and progressive talkers don't necessarily promote progressive candidates. I just don't feel I should cast a vote based on fear of republican supreme court nominations. The democrats had power in all three branches and refused to investigate the GW Bush crimes so I afraid things have to hit rock bottom for the neandrethals among us to wake up. I'm looking at Rocky Anderson and if the dems really cared they would have fixed the corporate lock on the two party oligarchial system. I think you should do many interviews with Rocky. Norman Goldman has him on every Wednesday. Progressives, remember!

www.voterocky.org

Choco's picture
Choco
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Jul. 31, 2007 3:01 pm

anyone who doesn't vote for Obama this time around is a friggin idiot.

Dr. Econ's picture
Dr. Econ
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Here is a clip from a Fox News site. They're a bit freaked out about the speedy progress of the call for the Glass-Steagall Act ... even in the heart of the beast — London !!!

Now that we have the ball rolling, time to turn up the steam!!! Call your Congress people and let their offices know that you want them to back up Glass-Steagall.

In the House the Glass-Steagall Bill is H.R.1489, sponsered by Marcy Kaptur of Ohio and 70+ cosponsers.

In the Senate there must be a call for a sister bill to H.R.1489.

We need to now Occupy Wall Street from inside of their firms and corporations. No need to camp out in the park anymore.

Oh—and spread the word!

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Karolina
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I wonder if Sen Sanders might consider the bill. In a related
article http://marketday.msnbc.msn.com/_news/2012/07/10/12662946-many-on-wall-st... Fraud is now considered necessary and proper. Sat college entrance exam cheating was also OK when the scheme was discovered just recently. Election fraud was approved by the highest court in the land in 2000. War by fraud in 2003 was just fine, too. Only 3500 dead and 20,000 maimed, and suicide every 75 minutes is an improvement over suicide every 45 minutes last year. Greatest country in the history of the world based on truth justice and the American way. Our money says it best 'In Fraud We Trust'.

Many on Wall Street think cheating breeds success
By Allison Linn

Nearly one-fourth of financial services professionals feel it’s at least sometimes necessary to do illegal or unethical things to be successful, and many are motivated to do so by fat bonuses and other compensation.

That’s according to a new survey of 500 U.S. and British fund managers, bankers, asset managers and other financial services professionals. It was conducted in June on behalf of the law firm Labaton Sucharow, which specializes in whistleblower cases.

Twenty-four percent of respondents said if you work in financial services you must at times engage in unethical or illegal activity to be successful.

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douglaslee
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LIBOR Crime-Spree Blows Doors Open for Glass-Steagall
July 11, 2012 • 7:07AM

The scandal of bottomless bankster criminality evidenced in the LIBOR rate-setting has now "jumped the pond" and is hitting U.S. institutions directly, specifically the New York Fed, which at that time under investigation was under Obama's Treasury Secretary Tim Geithner.

At the same time, the protection has been lifted from Wall Street in the press, where the truth about Wall Street's criminality is finally being aired, reviving memories of the Pecora Commission of the Roosevelt era. In The Nation, dated July 6, Robert Scheer, author of The Great American Stick-Up, calls LIBOR "The Crime of the Century." Sheer's opening salvo is enough to wake up any Congressman: "Forget Bernie Madoff and Enron's Ken Lay — they were mere amateurs in financial crime. The current Libor interest rate scandal, involving hundreds of trillions in international derivatives trade, shows how the really big boys play. And these guys will most likely not do the time because their kind rewrites the law before committing the crime."

Another blow is an outrageous (in the best sense) episode of Eliot Spitzer's CNN "Viewpoint" television show, done July 4, on which he interviewed financial bloodhound Matt Taibbi and "white shoe" legal investigator Dennis Kelleher. Making the point that this goes back to the bank de-regulation in the 1980s, Kelleher states that, since then, corruption "has become the business model," and Wall Street has reached the point where it is now "rotten to its core." Taibbi's point was that this is a cartel, that one bank couldn't influence the rate — of the 16 banks which set the rate, the BBA throws out the top four and bottom four numbers — to which Kelleher added "Libor means 'lie more.'"

Headlines across the country this morning are filled with more revelations — ultimately coming from Barclays documents released last Tuesday, July 3 — that the New York Federal Reserve was communicating directly with Barclays as early as 2007. Forced to respond to these revelations, the Fed said in a statement that they "received anecdotal reports from Barclays of problems with Libor" in the wake of the market crash in 2007," and that this dialogue continued until after the collapse of Bear Stearns in March of 2008. Indicating that there was more than simple "exchange of information" going on here, the Fed admitted that "[w]e subsequently shared our analysis and suggestions for reform of Libor with the relevant authorities in the U.K."

Based on these reports, Congress was forced to at least begin to (re)act. The House Financial Services Subcommittee on Oversight and Investigations has sent notification to the Fed, seeking transcripts of specific phone calls between Barclays and the Fed during that interval. In the letter, Subcommittee chair Randy Neugebauer (R-TX) said that he was concerned about, "12 contacts between Barclays and the Federal Reserve of New York related to its Libor submissions." Today, Senate Banking Committee chair Tim Johnson (D-SD) indicated that Ben Bernanke and Tim Geithner "should be prepared" to testify on this topic, and his staff is now preparing briefings for members. The Baltimore Sun reveals that Geithner even had a meeting scheduled for April 28, with a note "Fixing LIBOR" in his calendar. "At least eight senior staffers" were invited to attend, according to the Sun.

By any estimation, these hearings alone could be very contentious, although a lot more will happen before they even begin. With just a single e-mail's contents exposed thus far, the "temperature" could get very warm, indeed. A 2006 e-mail from a trader to a LIBOR rate-setter just revealed by the Baltimore Sun, says, "For Monday we are very long 3m [three-month—ed.] cash here in NY and would like the setting to be set as low as possible." Shades of Enron, anyone?

See Article.

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Karolina
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When a system cannot grow,it start feeding on itself. It`s natural law!(LIBOR is cannibalism)

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tayl44
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Quote Karolina:

[quote]LIBOR Crime-Spree Blows Doors Open for Glass-Steagall
July 11, 2012 • 7:07AM

I whish you would stop posting useless articles like this stuff from the Larouche gang. It is all horce race, no facts. Mat Thaibi said this. A congressman said that. Who cares how someone reacted to information that is no spelled out in the arcle. ? Now I have to go read a real news source to find out what exactly is going on.

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Dr. Econ
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I had high hopes for this adminisration until Geithner was tagged for Treasury Secretary and we were told we had to have the ACA to save our country. Health care did not cause the September 08 crash; the major banks did. It was not hard to conclude that it was business as usual in DC. Voting for Obama again means more of the same.
I wonder what Geithner knew about LIBOR. Does the President understand the criminal activities of the big banks and just does not care? Or is he afraid to take action?

SaltoftheEarth
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Apr. 25, 2011 5:01 pm
Quote Dr. Econ:I whish you would stop posting useless articles like this stuff from the Larouche gang. It is all horce race, no facts. Mat Thaibi said this. A congressman said that. Who cares how someone reacted to information that is no spelled out in the arcle. ? Now I have to go read a real news source to find out what exactly is going on.

I disagree—their news briefings are mainly facts, especially European financial news. That's why I've been posting the LIBOR information before it was out on other news sites.

There are many things on this site that I think are stupid and pointless—and I just avoid them. You don't have to read anything that I post either.

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Karolina
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It's a whores race, and the question whores are asking you to answer for them.

anonymous green
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Quote Dr. Econ:
Quote Karolina:

[quote]LIBOR Crime-Spree Blows Doors Open for Glass-Steagall
July 11, 2012 • 7:07AM

I whish you would stop posting useless articles like this stuff from the Larouche gang. It is all horce race, no facts. Mat Thaibi said this. A congressman said that. Who cares how someone reacted to information that is no spelled out in the arcle. ? Now I have to go read a real news source to find out what exactly is going on.

Thom just posted what I put here yesterday—and they are NOT different FACTS.

IMO, you should not automatically believe every smear you hear. Sometimes people who speak out are smeared to make them less respected—and consequently less believed.

Apparently the corruption that we are seeing now has been continuously revealed for several decades, but was effectively undermined—and as a result ignored.

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Karolina
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Quote Karolina: their [larouche] news briefings are mainly facts

The only "facts" of the article was quoting people's unproven allegations of how they felt about the scandal.

At the risk of being pendantic, let me try this. Here we go.

The first paragraph is introductory, and contains no facts. The second paragraph quotes Robert Scheer stating unproven allegations.The third paragraph quotes Elliot Spitzer stating unproven allegations. The third paragraph mentions a fact that the FED 'was communicating' with Barclays - but why this fact is important was not explained. The Fourth paragraph mentions two congressmen are invovled with an investigation -again - no facts, no explanations. The Fifth paragraph says merely that something may happen.

The article does not explain what the facts were, what the crimes were, or the effect on the economy.

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Dr. Econ
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Quote Thom Hartmann Administrator:

After heads rolled last week at Barclays Bank following admission that the bank rigged key interest rates that underlie millions of consumer loans from home mortgages to credit cards,...

So the banks are setting their interest rates? Is there something wrong with that?

What do you think happens all the time, all over the world with bank rates? Banks are largely oligopolies who all set their 'prime rates' the same way. The fact that Britain sets it by committee is just silly - but whatever a bank whishes to set it's rate - for whatever reason - is largely ok in most other countries.

This scandal is just a foolish diversion, as far as I can see.

Dr. Econ's picture
Dr. Econ
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Why the hell are you doing this? For what fucking purpose?

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Karolina
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We may be naive believing that bankers can be trusted to set honest LIBOR rates instead of cheating in some way or other. Individual bankers may just be giving their own banks a slight edge in the numbers sent in to be averaged. There could be a systematic error rather than pure conspiracy and cheating.

I am shocked that Dr. Econ would dismiss fiddled LIBOR rates as a minor diversion. It is like adding to the House percentage in Vegas by fixing the wheels and stacking the decks. Imagine the scandal that would be! Would that Wall St. had Vegas integrity.

And I say Wall St. to refer to global corporate banksterism. What the LIBOR scandal reveals is that there is no honor among thieves. Even "in their best interests" as a mob, these guys cannot resist the temptation to get ahead. They may even believe their optimism as they inflate the numbers.

What is clear is that LIBOR rates effect everything in credit. Tempest in a teapot, I think not.

drc2
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Apr. 26, 2012 11:15 am

I want to know who the hell Econ thinks that he is — criticizing what I posted? Didn't have facts that he requires?? Now because of me, he needs to go and find an article that tells him what is really happeneing???

WTF, moron??? LOL

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Karolina
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Nov. 3, 2011 6:45 pm

Actually, he has been a pretty reliable and informed poster and I was surprised at this one. Critics have to stand by their words too, so dare away you all critics.

drc2
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Apr. 26, 2012 11:15 am

What I'd like to know is, did LIBOR affect Interest Rate Swaps over the past decade. Because hundreds if not thousands of our local governments and agencies - states, counties, cities, transit, school districts - bought into these swaps, and now find themselves mired in debt. It's the reason many of them are going into bankruptcy. Check out the Pennsylvania State Auditor's office website, just as one example of what's going on throughout the US.

beatrice h.
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Mar. 13, 2012 4:50 pm
Quote Karolina:

Why the hell are you doing this? For what fucking purpose?

Why in the 'hell' did you spend a post asking a rhetorical question instead of responding to the points I raised?

Now, what is the purpose of that?

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Dr. Econ
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Quote drc2: ...We may be naive believing that bankers can be trusted to set honest LIBOR rates instead of cheating in some way or other. Yes, Individual bankers may just be giving their own banks a slight edge in the numbers sent in to be averaged. There could be a systematic error rather than pure conspiracy and cheating.

Yes, I think that is a good way to put it. But I would put it more strongly. There is no such thing as an honest LIBOR rate. Banks are an oligopoly. In nearly every country, they can set any rate they want - within whatever petty regulations may hinder them. Banks collude to set the prime rate so that all players can be rich. In Britain, there is a little game where they set the rate by committee, using financial statements of bank assets and liabilities. It is a way to avoid outright oligopoly profits that occurs in the rest of the countries. But of course, it doesn't work, because there is a massive incentive to cheat. And it still good to be a banker - except for the recent recession.

The reason why there is no scandal in this country is we have no committee - so the banks all collude to set the prime x% above the discount rate. Is that so much better? At least in Britain they try!

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Dr. Econ
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Quote Karolina:

I want to know who the hell Econ thinks that he is — criticizing what I posted? Didn't have facts that he requires?? Now because of me, he needs to go and find an article that tells him what is really happeneing???

WTF, moron??? LOL

Yes. I have been trying to get some good information on the scandal and it is actually very difficult. Much of the posts were like yours - the usual kind of ill-informed - 'well this blog writer said the scandal is really bad and comming to America'!

As I understand it, the bank was simply trying to make profits - to cover risky investments and influence the rate that way. In a free market, it would simply be called good business practice.

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Dr. Econ
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Quote beatrice h.:

What I'd like to know is, did LIBOR affect Interest Rate Swaps over the past decade. Because hundreds if not thousands of our local governments and agencies - states, counties, cities, transit, school districts - bought into these swaps, and now find themselves mired in debt. It's the reason many of them are going into bankruptcy. Check out the Pennsylvania State Auditor's office website, just as one example of what's going on throughout the US.

What if - be the comittee - they decided on that exact interest rate anyway? One could easily make the case that expected inflation or future risky investments would require a higher rate. I imagine many banks would have argued this point. A rate by comittee is not some purely objective measure.

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Dr. Econ
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Quote SaltoftheEarth:I had high hopes for this adminisration until Geithner was tagged for Treasury Secretary and we were told we had to have the ACA to save our country. Health care did not cause the September 08 crash; the major banks did. It was not hard to conclude that it was business as usual in DC. Voting for Obama again means more of the same. I wonder what Geithner knew about LIBOR. Does the President understand the criminal activities of the big banks and just does not care? Or is he afraid to take action?
Besides empty words, what would have made you think Obama ever cared? Let's start by putting Geithner & Co. up on criminal charges: to wit, homicide. The conspiracy to fix Libor rates and run insurance fraud on municipalities and water departments and school districts — killed people and turned our cities into slums.

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Karolina
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Nov. 3, 2011 6:45 pm

Geithner knew about libor fraud, Jamie Dimon with a seat on the fed bod obviously also knew, which means JP Morgan knew, and cashed in.

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