LIBOR-gate: The Gobal Financial System is Rotten to the Core

[Letsbereal]

Libor Guardians Said to Resist Changes to Broken Rate
26 June 2012, by Liam Vaughan and Gavin Finch (Bloomberg)
http://www.bloomberg.com/news/2012-06-25/libor-guardians-said-to-resist-changes-to-broken-benchmark-rate.html
 
Excerpt:

The U.K. bankers and regulators charged with reviewing Libor in the wake of regulatory probes are resisting calls to overhaul the rate because structural changes risk invalidating trillions of dollars of contracts.

The group, established by the British Bankers’ Association in March after probes into allegations that traders rigged the London interbank offered rate, may propose a code of conduct for banks and impose greater scrutiny of Libor’s correlation with other financial data over time, according to three people with knowledge of the discussions who asked not to be identified because the talks are private.

It won’t propose structural changes such as basing the rate on actual trades or taking away oversight of the benchmark from the BBA, the people said.

Libor is determined by a daily poll that asks banks to estimate how much it would cost them to borrow from each other for different timeframes and in different currencies.

Because banks’ submissions aren’t based on real trades, academics and lawyers say they are open to manipulation by traders.

At least a dozen firms are being probed by regulators worldwide for colluding to rig the rate, the benchmark for $350 trillion of securities.

“I don’t see a significant enhancement to the reputation of Libor without basing it on actual transactions,” said Rosa Abrantes-Metz, an economist with Global Economics Group, a New York-based consultancy, an associate professor with New York University’s Stern School of Business and the co-author of a 2008 paper entitled “Libor Manipulation?”

“It would only be disruptive if current quotes are inaccurate,” so resistance “is suspicious,” she said.

[Letsbereal]

Barclays prepared to settle Libor probe: report
27 June 2012, by Sara Sjolin - London (MarketWatch)
http://www.marketwatch.com/story/barclays-prepared-to-settle-libor-probe-report-2012-06-27

Barclays PLC may settle a probe into allegations that some bank employees manipulated the London interbank lending rate, as soon as later Wednesday, the Financial Times reported.

The settlement would cover both the U.S. Commodity Futures Trading Commission and the U.K. Financial Services Authority, people familiar with the matter said, according to the report.

Investigations into the Libor probe were confirmed in March, when officials were trying to determine whether some banks deliberately tried to skew the lending rate.

Libor is used to price home and auto loans, corporate debt and derivatives totalling more than $350 trillion.

A spokesperson from Barclays was not immediately available to comment.

[Letsbereal]

Shocking Details Of Barclays Epic Lie-bor Fraud: "Duuuude…Whats Up With Ur Guys 34.5 3m Fix…Tell Him To Get It Up!"
27 June 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/shocking-details-barclays-epic-lie-bor-fraud-duuuude%E2%80%A6whats-ur-guys-345-3m-fix%E2%80%A6tell-him-get-it

[Letsbereal]

Barclays Found To Engage In Massive Libor Manipulation, Gets Wrist-slapped By Coopted Regulators
27 June 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/barclays-found-engage-massive-libor-manipulation-gets-wrist-slapped-coopted-regulators

[Letsbereal]

Barclays fined $452 million for Libor 'misconduct'
27 June 2012, by Kim Hjelmgaard - London (MarketWatch)
http://www.marketwatch.com/story/barclays-fined-452-million-for-libor-misconduct-2012-06-27

British bank Barclays PLC on Wednesday was fined a total of about $452 million by U.S. and U.K. regulators, as well as the Department of Justice, for "misconduct" related to the London Interbank Offered Rate, or Libor, and the Euro Interbank Offered Rate, or Euribor.

In the U.K., the Financial Services Authority imposed a fine of 59.5 million British pounds, or about $92 million, on Barclays.

The Commodities Futures Trading Commission, or CFTC, imposed a fine of $200 million.

Barclays agreed to pay the Department of Justice $160 million.

The Libor and Euribor are benchmark rates that refer to the amount that banks levy for lending to each other.

In a statement, four senior executives at Barclays, including Chief Executive Bob Diamond, said they would forgo an annual bonus this year.

Read the full story: Barclays fined $452 million in interest-rate probe http://www.marketwatch.com/story/barclays-fined-452-million-in-interest-rate-probe-2012-06-27

[Letsbereal]

UK Opposition Calls for Barclays Probe
28 June 2012, (MarketWatch)
http://www.marketwatch.com/story/uk-opposition-calls-for-barclays-probe-2012-06-28-74852511

The leader of the U.K.'s opposition Labour Party, Ed Miliband, has called for a criminal investigation into Barclays Plc, Sky News reported Thursday, citing comments in a speech.

"When ordinary people break the law, they face charges, prosecution and punishment," Miliband told the Unite union, Sky said. "The same should happen here."

Barclays said Wednesday it will pay around $452 million in penalties to settle a probe into attempted manipulation and false reporting relating to two global benchmark interest rates that form the basis for hundreds of trillions of dollars of transactions.

Chancellor George Osborne is due to address parliament today on the issue, Sky reported.

Full story: http://news.sky.com/story/953618/miliband-calls-for-criminal-probe-into-barclays

[Letsbereal]

Why Barclays coughed up so much for Lie-bor - Egregious behavior led to massive settlement
27 June 2012, by Steve Goldstein - Washington (MarketWatch)
http://www.marketwatch.com/story/why-barclays-coughed-off-so-much-for-lie-bor-2012-06-27

Even by Wall Street standards, the decision by Barclays to pay nearly a half billion dollars to make American and British regulators end lawsuits was a steep one.

But a reading of the evidence stacked against the firm, now cleverly dubbed “Lie-bor,” explains why.

The emails and phone calls regulators uncovered tell the whole — if grammatically challenged — story of how the bank manipulated a key interest rate, called LIBOR, so that derivatives traders could maximize the value of their positions and so senior managers could lie about the bank’s financial health in the midst of the crisis.

Read MarketWatch’s full coverage of Barclays settlement http://www.marketwatch.com/story/barclays-fined-452-million-in-interest-rate-probe-2012-06-27

Here’s one exchange:

Trader C: “The big day [has] arrived… My NYK are screaming at me about an unchanged 3m libor. As always, any help wd be greatly appreciated. What do you think you’ll go for 3m?”

Submitter: “I am going 90 altho 91 is what I should be posting”.

Trader C: “[…] when I retire and write a book about this business your name will be written in golden letters […]”.

Submitter: “I would prefer this [to] not be in any book!”

And another:

Trader C (again): “If it’s not too late low 1m and 3m would be nice, but please feel free to say “no”... Coffees will be coming your way either way, just to say thank you for your help in the past few weeks”.

A Submitter responded “Done…for you big boy”.

And a final one for good measure.

Manager D, in a phone call with another manager after meeting with the U.K. Financial Services Authority: “Touched on topic” of LIBOR.

“We didn’t say anything along the lines of, you know, we’re not posting where we think we should […] because of. I just talked about dislocations, LIBORs […] and kept it […] simple, shall we say.”

Can’t get more cooked than that. In response, Barclays Chief Executive Bob Diamond and three other senior executives decided to give up their bonus for the year.

It’s easy to say that is the least that they can and should do, but in a system where not a single financial-sector executive has gone to jail for the financial crisis, it’s probably the most.

Wall Street, and the London equivalent of the City, hasn’t changed much from the financial crisis.

But after Barclays’ actions Wednesday, and J.P. Morgan Chase’s decision to pursue clawbacks after the trading loss of at least $2 billion, there is a perceptible change.

Traders and other Wall Street professionals still overwhelmingly get the upside if their risky and at times illegal behavior pay off.

But at the very least, they are starting to lose when the down side materializes as well.

[Letsbereal]

UK probing 4 more banks for interest rate fixing
28 June 2012, London (AP)
http://bigstory.ap.org/article/barclays-ex-ceo-board-faces-decision-leader#overlay-context=article/news-corp-announces-plans-split

Four more global banks are being investigated for the alleged financial market manipulation that led to fines of $453 million against Barclays Bank, British Treasury chief George Osborne said Thursday, driving stocks in those groups lower.

Osborne said Citigroup in the U.S., Switzerland's UBS, and Britain's HSBC and Royal Bank of Scotland were also being probed for allegedly providing false figures on key interest rates upon which mortgages and consumer loans are priced.

On Wednesday, U.S and British regulators imposed the fines on Barclays for manipulating the interest rate — the London interbank offered rate (LIBOR) — to its advantage between 2005 and 2009.

The banks' share price fell sharply as investors priced in hefty fines. By mid-afternoon in London, Barclays shares had fallen 15% RBS nearly 12%, HSBC 4% and Lloyds Banking Group 6%.

UBS shares were down 3.5% in afternoon trading, and Citigroup shares were down 1.6%.

Britain's Financial Services Authority cited evidence that Barclays traders were, in some cases, in touch with people in other banks.

"Banks were clearly acting in concert," said Andrew Tyrie, a British lawmaker who chairs the influential Treasury Committee in the House of Commons.

"I fear it's not going to be the end of the story, that we are going to find that other banks have been involved."

Tyrie said his committee would summon Barclays chief executive Bob Diamond to explain what happened at the bank.

Though Diamond has decided to waive his 2012 bonus in the wake of the fines, he's facing calls to step down.

"If Bob Diamond had a scintilla of shame, he would resign," said Matthew Oakshott, a member of the House of Lords.

"If Barclays' board had an inch of backbone between them, they would sack him."

Prime Minister David Cameron, when asked whether Diamond should resign, said he thinks "the whole management team have got some serious questions to answer. Let them answer those questions first."

The massive fines are unlikely to be the end of the pain for Barclays.

The cost of lawsuits related to the LIBOR scandal will likely be bigger, said Sandy Chen, banking analyst at Cenkos Securities.

"Since Royal Bank of Scotland, HSBC and Lloyds Banking Group have also been named in lawsuits, we expect they will also face significant fines and damages.

We are penciling in multi-year provisions that could run into the billions," Chen said.

The LIBOR is an average rate set by banks each morning that measures how much they're going to charge each other for loans.

That rate, in turn, affects returns on complex products such as interest rate derivatives contracts.

"These contracts may sound exotic but they are the bread and butter of our financial system and are used by businesses and public authorities every day,

and they affect the mortgage payments and loan rates of millions of families and hundreds of thousands of firms, large and small," Osborne said.

The U.S. Justice Department said Barclays would not face criminal prosecution, subject to certain conditions, but individual employees or officers could be prosecuted.

Diamond waived any bonus for this year, as did finance director Chris Lucas, chief operating officer Jerry del Missier and Rich Ricci, the chief executive of corporate and investment banking. Diamond said the decision reflected "our collective responsibility as leaders."

Martin Taylor, who was CEO of Barclays between 1995 and 1998, said the bank's board will have to make a decision whether Diamond can carry on in his post.

Though Taylor does not believe Diamond ordered anyone to fiddle the rates, and thinks Diamond should stay if he can "help clean out the stables," he told BBC radio that only the board can make that judgment.

The traders involved in the manipulations worked in Barclays Capital, the investment bank which Diamond headed between 2005 and 2009.

Former Barclays chief Taylor said he was confident that Diamond hadn't sanctioned the misbehavior in the unit, but added that the company's culture might have been a factor behind the misdemeanors.

"Bob runs an extraordinarily competitive and aggressive ship, and that is one reason why Barclays Capital has been very successful in the first decade of the century," Taylor said.

"And I think that when people are pushed to go to the limit, you know what traders are like, they sometimes go beyond it.

They don't need to have an instruction from headquarters to go beyond it, they think it is what the bank might expect, perhaps."

"Somebody at senior level somewhere will certainly have known.

I can't believe that Barclays haven't identified who that is," Taylor added.

[Letsbereal]

A Huge Break in the LIBOR Banking Investigation
28 June 2011, by Matt Taibbi (Rolling Stone - Blog)
http://www.rollingstone.com/politics/blogs/taibblog/a-huge-break-in-the-libor-banking-investigation-20120628

This is a huge story:

On Wednesday, Barclays won the race to reach a deal with U.S. and British regulators, beating UBS, which was reportedly the first bank to begin cooperating with international antitrust authorities.

Barclays agreed to pay at least $450 million to resolve government investigations of manipulation of Libor and the Euro interbank offered rate (or Euribor):

$200 million to the U.S. Commodity Futures Trading Commission, $160 million tothe criminal division of the U.S. Department of Justice and $92.8 million to Britain's Financial Services Authority.

I wrote about the Libor investigation in the current issue of Rolling Stone, in "The Scam Wall Street Learned From the Mafia," about muni bond bid-rigging.

Throughout this spring, while the Carollo bid-rigging case played out in a Manhattan courtroom, negotiations between banks and regulators were going on in this far larger cartel-corruption case.

It’s been clear for some time now that a number of players had begun cooperating, and the only question was which bank was going to settle first.

Despite widespread expectation that it would be UBS, it turned out to be Barclays.

You know how in Law and Order Jack McCoy always puts the two murder accomplices in separate rooms and tells them both that whoever talks first wins? Something like that happened here.

In any case, the Department of Justice filing on the settlement contained excerpts of emails and other evidence that recall the taped phone conversations in the Carollo case:

Once again, we have seemingly incontrovertible evidence of wide-scale market manipulation.

From Alison Frankel at Reuters:

Barclays employees agreed to manipulate the rates they submitted to the banking authority that oversees the daily Libor report for seemingly anyone who asked them to monkey with it:

senior Barclays officials concerned that the bank would look weak if it reported too high a borrowing rate; interest rate swap traders trying to improve Barclays' derivatives trading position;

even former Barclays traders begging for favors.

We're talking naked, blatant manipulation. Here's one exchange cited in the DOJ filing:

    Trader: "Can you pls continue to go in for 3m Libor at 5.365 or lower, we are all very long cash here in ny."

    Libor rate submitter: "How long?"

    Trader: "Until the effective date goes over year end (i.e. turn drops out) if possible."

    Submitter: "Will do my best sir."

This is unbelievable, shocking stuff. A sizable chunk of the world’s adjustable-rate investment vehicles are pegged to Libor, and here we have evidence that banks were tweaking the rate downward to massage their own derivatives positions.

The consequences for this boggle the mind. For instance, almost every city and town in America has investment holdings tied to Libor.

If banks were artificially lowering the rates to beef up their trading profiles, that means communities all over the world were cheated out of ungodly amounts of money.

First there were huge bid-rigging settlements for Chase, UBS, Bank of America, GE and Wachovia.

Now we’ve got a $450 million settlement for Barclays for Libor manipulation, and one imagines this won’t be the end of it.

Anyway, more on this to come soon, and if you’re wondering, yes, there should be a lot more press on this.

[Letsbereal]

RBS to be fined $233 million over Libor: report
29 June 2012, by Kim Hjelmgaard - London (MarketWatch)
http://www.marketwatch.com/story/rbs-to-be-fined-233-million-over-libor-report-2012-06-29

The Royal Bank of Scotland Group PLC is expected to be fined about £150 million, or $233 million, by regulators for its role in offences related to manipulating the London Interbank Offered Rate, or Libor, according to a report in the Times of London newspaper Friday, citing unnamed sources.

If true, the fine would follow a settlement made by rival bank Barclays PLC earlier this week with U.S. and U.K. regulators for $452 million related to Libor manipulation.

Libor is a benchmark rate that banks use to determine how much they should charge each other for inter-bank lending..

[Letsbereal]

And Now The Fed Gets Dragged Into LiEborgate
3 July 2012, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/and-now-fed-gets-dragged-lieborgate

The Fed knew all along that Barclays self-reported levels were impossible and did nothing.

[Letsbereal]

Max Goes BALLISTIC!! on Al Jazeera: Barclays, Libor, Bob Diamond, Bank of England and Cameron http://www.youtube.com/watch?v=zbQq33iTsrw

July 4, 2012

[Letsbereal]

The Fed And LIBOR - The Biggest Manipulator Of Them All
4 July 2012, by Peter Tchir of TF Market Advisors (Zero Hedge)
http://www.zerohedge.com/news/fed-and-libor-biggest-manipulator-them-all

The Fed does everything it can to keep LIBOR low. This chart says it all:



The Fed cannot affect LIBOR directly, but in general LIBOR trades in line with Fed Funds. You can see that historically as Fed Funds was changed, LIBOR responded appropriately. 

There was typically some small premium to reflect the "credit risk" of banks versus the Fed, but it was relatively small, and fairly stable. 

3 Month LIBOR would deviate a bit as rate cuts and hikes were anticipated in the market, but in general, it was a fairly stable game.

That all started to break down in 2007. We saw the first real signs of LIBOR deviating from its normal spread to Fed Funds in the summer of 2007.

The Fed responded by cutting the "penalty" rate for using the discount window, and in fact encouraged banks to use the discount window

(I still can't shake the mental image of someone sitting in a dark basement with a green eye-shade doling out money to banks that request it). 

Then the crisis got worse.  Bear needed to be rescued.  Facilities such as the Term Auction Facility that had been put in earlier were increased in size. 

The Fed backstopped some portfolios that JPM acquired as part of the Bear Stearns deal.

As the crisis re-ignited in the late summer of 2008 and peaked after Lehman and AIG, the Fed took step after step to reduce borrowing costs. 

The Fed was blatantly clear that it wanted borrowing costs to go down. 

They had the obvious tool of reducing Fed Funds to virtually zero, but when LIBOR didn't follow, the Fed took further action. 

The Fed did not want bank borrowing costs to be high. They increased dollar swap lines so foreign banks could borrow. 

The Fed stepped into the commercial paper market so banks wouldn't have to use money to meet drawdowns on revolvers. 

TALF was another creation to take pressure of bank lending.

The FDIC allowed banks to issue bonds with FDIC backing (so not quite Fed program, but who is going to quibble).

Fears that MS and GS and GE would topple the banks were alleviated by making them banks. The list goes on.

The Fed has done a lot and trying to control LIBOR as a key borrowing rate is one of the things they have worked on, both directly and indirectly.

[Letsbereal]

Euribor interbank lending rate hits record low
6 July 2012, (AFP)
http://www.france24.com/en/20120706-euribor-interbank-lending-rate-hits-record-low

The main reference interest rate in the eurozone, the Euribor three-month rate, fell to a record low level of 0.549% on Friday, down sharply from 0.641% a day earlier.

The Euribor rate reflects the terms on which European banks are prepared to lend funds to each other.

It has fallen steadily since the European Central Bank began refinancing banks for up to three years at the end of December.

[Brocke]

The largest financial scandal to date

http://www.wimp.com/financialscandals/

‘The mob learned from Wall Street’: Eliot Spitzer on the ‘cartel-style corruption’ behind Libor scam

“Viewpoint” host Eliot Spitzer, Matt Taibbi, Rolling Stone contributing editor, and Dennis Kelleher, president and CEO of Better Markets, analyze the Libor interest rate–rigging scandal engulfing the banking industry.

Barclays CEO Bob Diamond recently resigned after the bank was fined $453 million for its part in the scandal, which involved manipulating the London Interbank Offered Rate (Libor), a key global benchmark for interest rates, by essentially “faking their credit scores,” according to Taibbi. And as Taibbi explains, Barclays couldn’t have acted alone.

“It can’t just be Barclays and the Royal Bank of Scotland. In fact, it can’t even be four banks or even five banks,” he says. “Really, in the end it’s probably going to come out that it’s going to be all of them … involved in this. And that’s what’s critical for people to understand: that this is a cartel-style corruption.”

Kelleher argues that the Libor scandal is proof that the financial industry “is corrupt and rotten to its core.” “The same executives [using] the same business model that crashed the entire financial system in ’08 are still running these banks,” he says.

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

[Letsbereal]

Counting the Cost - The impact of the rate-rigging scandal [26 min] http://www.youtube.com/watch?v=wqIGbmaNXQA

Jul 7, 2012 by AlJazeeraEnglish

Before this week you may never have heard of Libor. But thanks to the actions of a 322-year-old British banking institution it has been all over the headlines, and for all the wrong reasons.

This week on Counting the Cost we are focusing on Barclays, which in the space of a few days lost its CEO, its chairman - and perhaps its reputation too - after British and US regulators fined it $453m for manipulating the Libor rate.

Can trust in British banks be restored? What is the role of regulators in the scandal?

Also on Counting the Cost: Laura Kyle is reporting on Burkina Faso's Gold rush.

The African nation is in the grip of a regional drought and while a poor harvest and rising food prices are leaving millions hungry, heavy foreign investment has prompted a resurgence in the country's gold mining industry.

And worse still, thousands of those affected by the drought - including children - are now working in illegal pits that have sprung up on the edge of official mines.

We are also looking at Mexico's elections, and leaving aside the dispute over the vote, there is a new face to watch at the top.

Enrique Pena Nieto, Mexico's new leader, tells us how he plans to shake up the Mexican economy.

[Brocke]

The World's Biggest Bank Just Got Thrown Into The Lieborgate Mess

Submitted by Tyler Durden on 07/08/2012 15:16 -0400

When on Friday news broke that German regulator BAFIN (which is just like the SEC except that it also regulates, investigates and actually prosecutes, instead of just watching porn all day) was launching a probe of the biggest bank in Europe, and actually, make that the world, Germany's Deutsche Bank, the shares took a quick, brisk hit, sliding 5% with everyone anxiously expecting to find out just which bank will follow Barclays into the scapegoat abattoir (because nobody had any clue Liebor manipulation was going on until a week ago). Yet while external inquiry into banks is to be expected (everywhere but in the US of course, because in the US no banks manipulated anything. Ever) as a proactive act on behalf of regulators to cover their back, things get a little more tricky when the bank itself admits there was an obvious supervision problem.

From Reuters:

"Two Deutsche Bank employees have been suspended after it used external auditors to examine whether staff were involved in manipulating interbank lending rates, German magazine Der Spiegel reported, citing no sources." Now what can possibly go wrong if the biggest bank in the world, with just shy of $3 trillion in "assets", which just happens to have a 1.68% Core Tier 1 ratio, is suddenly thrust smack in the middle of the scandal that the Economist just aptly named the finance industry's "tobacco moment"?

From Reuters:

A spokesman for Deutsche Bank on Sunday declined to comment on the article, referring to its quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates.

On Friday, people familiar with the matter told Reuters that Germany's markets regulator has launched a special probe into Deutsche Bank over suspected manipulation of interbank lending rates.

Investigators in the United States, Europe and Japan are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate (Libor).

 Britain's Barclays has been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million.

The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars worth of contracts around the world.

A spokesman for Frankfurt-based private bank Metzler said one of its investment companies has joined a number of class action suits in New York against banks accused of manipulating Libor rates.

"This is a standard procedure," he said.

And while all of that is fun and stuff, can we just fast forward to the moment where Jamie Dimon once again tells his Congressional muppets that LIeBOR is meaningless, and to look for their Christmas Libor-adjusted donation checks in the next few months.

http://www.zerohedge.com/news/worlds-biggst-bank-just-got-thrown-lieborgate-mess

[Brocke]

Paul Tucker 'aware of move to fix Libor’
Deputy Bank of England governor, Paul Tucker, will be grilled by MPs over the Libor scandal and whether regulators decided to turn a blind eye to misconduct.

By Philip Aldrick, Economics Editor
7:22PM BST 08 Jul 2012

The deputy governor of the Bank of England was warned that UK lenders were manipulating interest rates a year before he allegedly gave Barclays “a nod and a wink” to rig its own, in a call with former chief executive Bob Diamond in 2008.

Paul Tucker will on Monday be grilled by MPs on the Treasury Select Committee (TSC) over the Libor scandal, where he will be asked whether regulators decided to turn a blind eye to misconduct during the banking crisis in the interests of financial stability.

Specifically, he is expected to be quizzed about a meeting he chaired of the Bank’s Sterling Money Markets Liaison Group in November 2007, at which several members warned they “thought that Libor fixings had been lower than actual traded inter-bank rates through the period of stress”.

Mr Tucker will also be asked to explain why he did not want to relay a message from Barclays’ chief executive Bob Diamond to Westminster that other banks were low-balling their Libor submissions on Oct 29, 2008, according to Mr Diamond’s record of the event.

TSC sources on Sunday said Mr Tucker must have known that Royal Bank of Scotland and Lloyds Banking Group were posting false rates because their Libor submissions were lower than Barclays even after they had been locked out of markets and forced to take £60bn in secret loans from the Bank.


More: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9385359/Paul-Tucker-aware-of-move-to-fix-Libor.html

[Brocke]

What is Libor and why should we care?
http://www.youtube.com/watch?v=CI2M1olG2Oo

Libor - the London Interbank Offered Rate - is the average cost of borrowing at which Britain's banks lend each other money.

It is calculated daily, based on information supplied by those banks and is used worldwide as a benchmark for prices on trillions fo euros worth of derivatives and other financial products.

After the financial crisis, the Libor rate also was seen as a guide to the health of bank's balance sheets.

Barclays manipulation alone could not have had a big effect on the final rate, but the suggestion is a lot of the big banks were doing the same thing.

And the Libor rate has an effect on the real economy as Tony Greenham, Head of Finance and Business at the New Economics Foundation, explained: "That average is what drives the interest rates paid by hundreds of millions of people on their own mortgages, small business on their loans, student loans, insurance products. It affects a hugely diverse range of financial transactions globally, not just in the UK."

Britain's central bank, the Bank of England, is trying to avoid being dragged into this scandal. It has denied it knew about Libor manipulation and was allowing it to happen.

"It is nonsense to suggest that the Bank of England was aware of any impropriety in the setting of Libor," a BoE spokesman said. "If we had been aware of attempts to manipulate Libor we would have treated them very seriously."

Barclays said it submitted artificially low estimates of its borrowing costs because it thought rivals were doing the same, and higher submissions would make it appear to be in trouble.

Barclays is the first bank to settle in an investigation which is looking at more than a dozen other banks, including Citigroup, HSBC, UBS and RBS.

HSBC said that as a bank that contributes to setting the Libor interest rate it was providing information to authorities, but the Financial Services Authority said it was not investigating HSBC.

[Brocke]

Niall Ferguson - Libor & Too much Regulation
http://www.youtube.com/watch?v=b_Ipqenbu04

[Brocke]

Jeff Dunphy - Gold Radio Cafe - July 6, 2012
http://youtu.be/_bCBRFozycI

[Brocke]

LIBOR Scandal Latest Sign of Financial System’s Rotten Core

By Aaron Task | Daily Ticker – 17 hours ago

[...]

'Expect More Ugly Revelations'

"We expect more ugly revelations" over what's been dubbed LIBOR-gate, writes David Kotok of Cumberland Advisors. "Other institutions may be implicated. Critics of emerging-market governance standards need to look in the mirror. The so-called developed markets now exude a rising stench."

Kotok notes that if LIBOR was manipulated that means the so-called TED-spread -- the difference between LIBOR and rates on Treasury bills -- is also suspect.

"If one side of the TED is rigged, all of it is in doubt," he writes. "The TED is critical, or was critical. It was (is) used to indicate the market-based assessment of risk in the global banking system. A rigged TED was an unthinkable act. So much for 'unthinkability.'"

Indeed, this LIBOR scandal is yet another sign of how the financial system -- which is built on trust -- is rotten at its core, something that's seemingly only lost on people at the very top. The fact there isn't more public outrage about this scandal is partially due to its London roots and somewhat wonky nature. But it's also a reflection of the public's fatigue with revelations of lawlessness in the financial industry that, to date, hasn't resulted in people going to jail or more serious efforts to re-regulate the industry.

"The incentives of the banks is still to cheat and do things that are either illegal or immoral," NYU Professor Nouriel Roubini said an interview on Bloomberg TV this weekend. "Nobody has gone to jail since the financial crisis. The banks, they do things that are illegal and at best they slap on them a fine. If some people end up in jail, maybe that will teach a lesson to somebody. Or somebody hanging in the streets."

I don't think Roubini is advocating violence but predicting the masses might take matters into their own hands if elected officials and regulators don't get out of the pockets of Wall Street and start prosecuting the fraud.

http://finance.yahoo.com/blogs/daily-ticker/libor-scandal-latest-sign-financial-system-rotten-core-164703777.html

[Brocke]

Libor scandal: highlights from Paul Tucker's evidence to MPs
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9388073/Libor-scandal-highlights-from-Paul-Tuckers-evidence-to-MPs.html

Paul Tucker, deputy governor of the Bank of England, denies having any roll in the LIBOR rate-fixing.

[Brocke]

Timeline: Barclays' widening Libor-fixing scandal

Libor, the London inter-bank lending rate, is considered to be one of the most crucial interest rates in finance.

As early as 2005 there was evidence Barclays had tried to manipulate dollar Libor and Euribor (the euro equivalent of Libor) rates at the request of its derivatives traders and other banks. Misconduct was widespread, involving staff in New York, London and Tokyo as well as external traders. One Barclays trader told a trader from another bank in relation to three-month dollar Libor: "duuuude... what's up with ur guys 34.5 3m fix... tell him to get it up!"

Between January 2005 and June 2009, Barclays derivatives traders made a total of 257 requests to fix Libor and Euribor rates, according to a report by the Financial Services Authority (FSA).

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

[shipgeek]

The trouble is that these banksters and corrupt politician liar creeps most always come out unscathed from their actions.

The Rothschilds and co. know very well that they are at no risk.

For them it's "la vie en rose" while most of us have to struggle day by day just to get by.

i am still waiting for the whole system to collapse globally but I am afraid I may have to wait a really long time until the end global collapse happens.

They are in control and doing everything that needs to be done so it will always be us "the people" who will get scr*wed.

 

[Brocke]

The trouble is that these banksters and corrupt politician liar creeps most always come out unscathed from their actions.

The Rothschilds and co. know very well that they are at no risk.

For them it's "la vie en rose" while most of us have to struggle day by day just to get by.

i am still waiting for the whole system to collapse globally but I am afraid I may have to wait a really long time until the end global collapse happens.

They are in control and doing everything that needs to be done so it will always be us "the people" who will get scr*wed.

 

There is still very little in the news about this. When the lid blows confidence will be shaken and the markets will suffer. How much they will suffer is yet to be seen.

[Brocke]

Barclays scandal: Key players

The Barclays rate-fixing scandal has forced a number of high-level resignations and questions are now being asked about how widespread the practice was, and whether the Bank of England and senior Whitehall figures knew what was happening.

Full story
http://www.bbc.co.uk/news/business-18704603

[shipgeek]

When the lid blows confidence will be shaken and the markets will suffer. How much they will suffer is yet to be seen.

Not going to happen. There will be no revolt - no revolution. Not in the E.U. - not in the U.S. either.

The sheep are asleep with TV, latest mobile phones, debt to pay off, cars, way too much materialism.
The puppet masters have them in their hands manipulating them at will. It works.
Nobody is willing to take risk to really revolt and take down the system.

There will be no mass revolt. It will not happen.

 

[Brocke]

Not going to happen. There will be no revolt - no revolution. Not in the E.U. - not in the U.S. either.

The sheep are asleep with TV, latest mobile phones, debt to pay off, cars, way too much materialism.
The puppet masters have them in their hands manipulating them at will. It works.
Nobody is willing to take risk to really revolt and take down the system.

There will be no mass revolt. It will not happen.

 

I tend to agree with you. Too many sheep that will huddle in their cozy little lives waiting for the powers that be to save them. And the saving will never come.

The lid that will blow is the trust that the banksters have enjoyed for the last 100 years.

Next stop, war in the Middle East to distract the masses. Swapping focus from a financial armageddon to a nuclear one.

[Letsbereal]

Barclays agrees $3.1 million pay-off with Diamond: Sky
10 July 2012, London (Reuters)
http://uk.reuters.com/article/2012/07/10/us-barclays-diamond-idUKBRE8690DO20120710

Barclays has agreed a pay-off worth about £2 million ($3.1 million) for Bob Diamond, its former chief executive who quit last week following an interest rate rigging scandal, Sky News reported.

Diamond quit on July 3.

He took home about £17 million last year, including previous bonus awards that vested, and was entitled to a year's salary worth £1.4 million.

[Letsbereal]

Timmy Geithner Held ‘LIBOR FIXING’ Meeting w/ Fed in 2008
10 July 2012, (Silver Doctors)
http://www.silverdoctors.com/timmy-geithner-held-libor-fixing-meeting-w-fed-in-2008/

Move over Barclays, BOE, and Paul Tucker- US Treasury Secretary Timothy Geithner and the NY Fed’s William Dudley just moved front and center in the escalating LIEBORGATE scandal.

Reuters reports that Geithner, then head of the NY Fed, held a ‘Fixing LIBOR’ meeting with at least 8 Fed officials on April 28th, 2008!

Now that Geithner and Dudley have been fully implicated in the LIEBORGATE, it’s only a matter of time before The Bernank himself is caught up in the scandal.

The entire house of cards is now completely crumbling!

From Reuters:
According to the calendar of then New York Fed President, Timothy Geithner, who is now U.S. Treasury Secretary, it even held a “Fixing LIBOR” meeting between 2:30-3:00 pm on April 28, 2008.

At least eight senior Fed staffers were invited.

It is unclear precisely what was discussed at this meeting or who attended.

Among those invited, along with Geithner, was William Dudley, who was then head of the Markets Group at the New York Fed and who succeeded Geithner as its president in January 2009.

Also invited was James McAndrews, a Fed economist who published a report three months later that questioned whether Libor was manipulated.

“A problem of focusing on the Libor is that the banks in the Libor panel are suspected to under-report the borrowing costs during the period of recent credit crunch,” said that report in July 2008 that examined whether a government liquidity facility was helping ease pressure in the interbank lending market.

When asked for comment, McAndrews directed questions to a New York Fed spokeswoman. Dudley could not be immediately reached for comment.

With this damning evidence that not only was the NY Fed aware of Barclay’s manipulation of LIBOR but the NY Fed in fact held rate fixing meetings, the LIEBORGATE scandal has just escalated by several orders of magnitude.

The fact that the Western Central banks openly MANIPULATE ALL MARKETS is about to be entirely exposed to the general public and the MSM.

[Brocke]

The LIBOR scandal

The rotten heart of finance

A scandal over key interest rates is about to go global

Jul 7th 2012 | from the print edition

FULL ARTICLE MUST READ!
http://www.economist.com/node/21558281

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.

[...]

At the time, questions were asked about the financial health of Barclays because its LIBOR submissions were higher. Back then, Barclays insiders said they were posting numbers that were honest while others were fiddling theirs, citing examples of banks that were trying to get funding in money markets at rates that were 30 basis points higher than those they were submitting for LIBOR.



This version of events has turned out to be only partly true. In its settlement with regulators, Barclays owned up to massaging down its own LIBOR submissions so that they were more or less in line with those of their rivals. It instructed its money-markets team to submit numbers that were high enough to be in the top four, and thus discarded from the calculation, but not so high as to draw attention to the bank (see chart 1). “I would sort of express us maybe as not clean, but clean in principle,” one Barclays manager apparently said in a call to the FSA at the time.

[...]

The allegation by Barclays that some banks seemed to be fiddling their data would appear to be supported by the data themselves. Over the period of the financial crisis, the estimates of its borrowing costs submitted by Barclays were generally among the top four in the LIBOR panel (see chart 2). Those consistently among the lowest four were some of the soundest banks in the world, with rock solid balance-sheets, such as JPMorgan Chase and HSBC. However, among banks regularly submitting much lower borrowing costs than Barclays were banks that subsequently lost the confidence of markets and had to be bailed out. In Britain these included Royal Bank of Scotland (RBS) and HBOS.



The tobacco moment

Regulators around the world have woken up, however belatedly, to the possibility that these vital markets may have been rigged by a large number of banks. The list of institutions that have said they are either co-operating with investigations or being questioned includes many of the world’s biggest banks. Among those that have disclosed their involvement are Citigroup, Deutsche Bank, HSBC, JPMorgan Chase, RBS and UBS.

[...]

Copyright © The Economist Newspaper Limited 2012. All rights reserved.

[TahoeBlue]

Regulators around the world have woken up, however belatedly, to the possibility that these vital markets may have been rigged by a large number of banks

Really??? Shocked Shocked - In Ricks Casablanca moment...

Casablanca gambling? I'm shocked!  Here are your winnings...

[Brocke]

"A Quick & Dirty Explanation Of The LIBOR Banking Scandal" - MOC #154

http://www.youtube.com/watch?v=TN5psbXeHu8

As most of you know, the LIBOR banking scandal is rocking the world. Here's the quickest and easiest explanation you'll find anywhere. And only three minutes long!

[Brocke]

US, EU major banks probed as part of rate fixing scandal

http://on.rt.com/ele3dx

Published: 15 February, 2012, 16:51 [?]

Conspiracy in the financial world is common in Hollywood films. But now officials in the US, Canada, Europe and Asia are investigating whether the world’s major banks conspired to manipulate interbank rates at the height of the global crisis.

Separate cases have been opened by regulators in Japan, Canada, Switzerland, the USA, and the UK. A group of leading financial institutions including America’s JPMorgan and Citigroup, Germany’s Deutsche Bank, Swiss UBS and Credit Suisse and British HSBC are suspected of conspiring to make artificially high or low submissions for the Libor rate.

Libor is the average interest rate, charged by leading banks in London when lending to other banks. Libor is generated through a daily survey of 16 prime banks and calculated for 10 currencies, including dollars, euros, yen and Swiss francs.

Fluctuations in the Libor rates affect prices of many financial instruments, such as corporate loans, inflation swaps, mortgages and currencies.

“Manipulating rates increase risks and contributes to a destabilization of market situation”, explained Alexey Pukhaev, analyst from Investcafe. “Boosting the interbank interest rate caused a domino effect and led to freezing of bank-to-bank lending”.

Allegedly a broker at electronic trader ICAP asked London-based brokers to influence banks participating in generating the Libor. According to Bloomberg an HSBC broker agreed with cash brokers to influence the Libor. Now regulators are looking into other brokers who may have participated.

Though the investigations have already led to many traders suspected of involvement being fired, the wrongdoing is difficult to prove.

[Brocke]

FLASHBACK

Calls for Barclays CEO resignation crash bank’s shares

http://on.rt.com/6meg32

Published: 28 June, 2012, 15:41

UK major Barclays Bank saw its shares plummeted by 8% in late morning trading after it paid a $450 million fine after being found guilty of market manipulation. It has brought calls for the resignation of Barclays CEO Bob Diamond.

­Investors rushed to sell Barclays shares worried about changes in the Barclay’s board, and possible exposure in the inquiry into the banking sector.

On Wednesday, US and British regulators imposed the fines on Barclays for providing false figures on borrowing rates between 2005 and 2009, which affected hundreds of trillions of dollars of transactions, including bank-to-bank loans. The regulators also said Barclays tried to fix the rates as it was worried about its public image during the 2008 financial crisis...


more: http://on.rt.com/6meg32

[Brocke]

The Unravelling of the LIBOR Lie

James Corbett
The International Forecaster
July 11, 2012

http://www.prisonplanet.com/the-unravelling-of-the-libor-lie.html

What do you get when you cross a banker and a gangster? A bankster, of course. The temptation might be to think of this as colorful hyperbole, but it’s not. Exactly as the gangsters of old colluded to buy off the regulators, rub out the competition, and swindle the public, so too do the big banks cheat, steal, lie and swindle to support their corrupt practices. Although there is no dearth of evidence to support this thesis, this week was particularly ripe with examples of just how the banksters run their racket.
Libor is the London Inter Bank Offered Rate.

The biggest news, of course, was the unraveling of the Libor lie. Even more amazing than the scandal itself is the fact that people are hearing about it on mainstream television. Everything you’ve heard is true. It is, dollar for dollar (or, more accurately, pound for pound), the largest scam ever perpetrated through the banking system. Or at least the biggest scam unearthed so far. For those who don’t know (and somehow managed to miss the multiple explanations in the commercial press), Libor is the London Inter Bank Offered Rate. It represents the average lending rate between banks for a number of currencies and maturities. The reason the fixing of this rate is so monumentally important is that so many loans and derivatives are priced off of Libor. Some estimates place the value of Libor-linked loans and securities (interest rate swaps, syndicated loans, currencies, variable rate mortgages, forward rate agreements, etc.) at 800 trillion dollars, or about 10 times the GDP of the entire planet. To say that small changes in these rates can have large knock-on effects in the economy at large is an understatement. This isn’t to say that the rates were always manipulated upward to maximize profit. They can and were manipulated downward at times, too, to convey a confidence in the stability of the banks that the banksters weren’t necessarily feeling on the street.

Here’s the rub: the Libor scandal can’t be swept under the rug by blaming “one bad apple.” It’s the go-to excuse whenever the banksters are caught with their pants down, but it won’t hold this time. The Libor isn’t set by one bank, but by a number of them; eight, twelve, sixteen or twenty depending on the currency involved. The top and bottom quartile are thrown out and the middle 50% of values are averaged out to arrive at the final figure. In order to actually effect manipulation of the rate, over a quarter of the banks would have to be committed to skewing the numbers. And the whole thing requires, needless to say, a generous helping of governmental consent. And so it was that after the Barclays $455 million smackdown and the resignation of CEO Bob Diamond, Barclays itself released a memo detailing a conversation between Diamond and the Deputy Governor of the Bank of England, Paul Tucker, which seemed to suggest that the BOE was pressuring Barclays to drive the Libor down during the height of the credit crisis in October 2008. Cue Bob Diamond, ex-Barclays CEO, who resigned earlier this week and then sat down to testify before Parliament. Diamond claimed that Tucker and the BOE wasn’t trying to pressure Barclays into manipulating Libor, but he did reveal that he had been trying to blow the whistle for years on the collusion of other banks in fixing the rate. According to him, senior Labour MPs knew full well what was happening but nothing was ever done about the practice. Current British Chancellor George Osborne has opined that Gordon Brown’s cronies were “clearly involved.” The regulators failing to regulate? Why, I never!

If this is all too follow-the-bouncing-ball for you, the short and skinny is this: banks around the world were in on the fixing of Libor. Government “regulators” knew and didn’t step in.

Well, then, this seems pretty open and shut. The largest rate fixing scandal in the history of the world. Hundreds of trillions in loans and derivatives effected. Banks all over the world allegedly involved. Government regulators looking the other way. Surely this is the start of the Great Banking Bust-up of 2012 that we were pining for last week, the turning of the tide against the banksters and the beginning of public arrests, trials and convictions of the multi-trillion dollar racketeers and scamsters populating Wall Street, Washington, the City and London?…

Not by a long shot. So far Barclays has had to pay its fine, and it has lost its chairman, CEO and COO in the scandal. But what of all of those other banks around the world? What about the MPs who were allegedly in cahoots with them? When will they be rounded up? I know this is going to shock you, but the answer is: likely never. As of press time, Cameron has proposed a joint MP/peer led “investigation” into the scandal that will propose “reforms” to be implemented by the start of next year. This despite the fact that his own Attorney General has advised that any inquiry will likely prejudice criminal proceedings against the offenders. Ironically, the larger the scandal turns out to be, the less likely we will see criminal prosecutions and class action lawsuits. When the rot is exposed as systemic, the “reformers” will step in to make sure that this type of scandal “never happens again.” And so it is that the likelihood of seeing real, substantive, criminal investigations into the matter becomes less and less likely as the public gets suckered once again by platitudes about “reform” and “looking forward.” If you’re not sure how that works, just ask an Obama supporter who believed the Obama administration was going to investigate the criminal activities of the Bush era; they can tell you all about it. Meanwhile, Tom Cruise and Katie Holmes are divorcing, so the public won’t be asked to think too deeply about this whole largest-scam-in-history thing for very long.

One is tempted to just shrug one’s shoulders and move on, but perhaps the story deserves more than a few pithy paragraphs. A single bank being hit with a half billion loss on what amounts to the largest racketeering scheme in the history of the planet is hardly proportional. Why is it that a woman in Houston can be thrown in jail for holding up a sign warning drivers about a speed trap up ahead, but banksters who literally siphon untold billions out of the economy cannot be charged with anything? And why can a public that can be infuriated by Tour de France doping scandals not bother to hold the banksters to account? These should not be rhetorical questions.

But wait, there’s more. Much less reported is how the same Libor-fixing scandal is playing out in the US right now. Citigroup, BOA, and a dozen or so other banks are facing a suit by a group of institutional investors alleging that they participated in the exact same type of Libor-fixing that Barclays just got dinged for. The banks have motioned for dismissal, but given the attention on the case and the nature of the scandal, it’s unlikely to be dismissed so easily. Instead, market watchers note that an admission of criminal wrongdoing is unthinkable, so the only question is what size will the eventual payout be and how much leniency will banks get for playing ball with investigators. Which leads us to the ongoing JPMorgan fiasco. (You know it’s a busy news week when the story of a $9 billion trading loss gets relegated to the ninth paragraph.) When their initial $2 billion trading loss on credit derivatives was announced in May, CEO Jamie Dimon was predicting that number could double as the bank unwinds the trade and clears its position. That number may actually be closer to $9 billion. The new figure comes from an internal report from last April that showed a worst-case scenario of the loss could mean the bank will lose much more than it bargained for. The real test comes next Friday when they release their second quarter results. The smart money is on the bank losing as much from the trade as they made in profit in the quarter.

But as if that’s not enough, now Dimon and the boys at JPMorgan face a fresh scandal. J.P. Morgan Ventures Energy Corp. is being sued by the Federal Energy Regulatory Commission over allegations that Morgan had tried to manipulate energy prices upward in California and the Midwest. Now a federal judge is ordering the company to explain why it shouldn’t turn over emails that will shed light on its role in the scandal. Another week, another black eye for the JPMorgan crew.

And in some ways that’s the point. What better sign of the bankster nature of those in the hot seat than that they take beating after metaphorical beating in full view of the public, from rate-fixing scams to historical trading losses to market manipulations and yet nothing ever seems to change? The “investigative journalists” get a chance to break a big story, they play it out in the back pages of the newspaper for a few months, politicians get on their high horse and make wonderful sounding speeches about the need to rout out the rot at the heart of the system, a gold star panel is appointed to look into the problem, an ineffectual and toothless new regulatory regime is rolled out to placate whatever of the general public still remembers the problem in the first place, and everything is patched over until the next scandal erupts. Who else but organized criminals with bought-and-paid for “regulators” in their back pockets could possibly get away with such crimes?

Oh, and the piece de resistance? A certain European market rag that shall remain nameless (the third most read in Europe behind FT and The Economist, we’re told) just bestowed its Awards for Excellence 2012. Any guesses on the Best Global Flow House, Best Global Debt House, and Best Investment Bank and Risk Adviser in United States? Just a little outfit called Barclays. To coin a phrase: It’s good to be a bankster.

[Brocke]

Banks’ Libor costs may hit $22bn

By Brooke Masters in London and Alex Barker in Brussels
Aerial view of the City©Jason Hawkes/Barcroft Media

http://www.ft.com/cms/s/0/0231ace4-cc1d-11e1-839a-00144feabdc0.html#axzz20SJzklIw

Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22bn in combined regulatory penalties and damages to investors and counterparties, according to Morgan Stanley estimates.

The analysis, which the authors admit is “crude”, assumes that 11 more banks will be penalised like Barclays, which paid $456m last month to US and UK authorities for attempting to manipulate the London Interbank Offered Rate, the benchmark for $360tn in derivatives, loans and mortgages.

The calculation excludes the potential fallout from ongoing US and European Union cartel investigations, which could result in multibillion-dollar fines...

[InsideJob]

http://blogs.telegraph.co.uk/finance/thomaspascoe/100018574/the-price-of-gold-has-been-manipulated-this-is-more-scandalous-than-libor/

The price of gold has been manipulated. This is more scandalous than Libor

The new media and the 24-hour news cycle have a great deal to answer for, not least encouraging a political class which would otherwise be happily engaged expensing duck houses into the belief that it should demonstrate perpetual action on our behalf – hence the endless stream of badly drafted legislation from the corridors of Whitehall.
It does, however, reveal things that would otherwise be ignored. The issue of manipulation in the gold market which I wrote about last week is a case in point. The ball of half-truths and downright lies which have surrounded the issue for a long time is beginning to unspool in an issue internet activists kept alive long before it was acknowledged by the mainstream media.
People ask why the issue is important at a time of naked market manipulation of the Libor rate. The answer is simple: the Libor manipulation scandal can be seen as the thin end of the wedge in terms of government market manipulation.
Although Libor manipulation affects the interest rates we pay on all number of credit products, gold market manipulation is more serious still.
The price of gold is traditionally a proxy for the value of money. A soaring bullion price is indicative of a lack of faith in fiat currency.
Our financial system is predicated on the notion that money stands as a proxy for the factors of production – capital, labour, land and enterprise.
In short, the abundance of money in the economy should be related to the abundance of those factors. The harder we work, for instance, the more we create. There is more labour in the economy, therefore a rise in the money supply is legitimate in order to mirror this. There is nothing wrong with printing money per se so long as the printing reflects an expansion in the real economy.
Twentieth and Twenty-First century economics appears to have done away with this. Money is now created ex nihilo to feed both the top and bottom ends of society.
Money printing or Quantitative Easing is mainly of benefit to two parties. Firstly, the Government, which is able to borrow more and borrow cheaper than it otherwise would have done. This is because QE money is used to buy bonds, forcing down yields.
The Government uses this money to finance both existing debt and an expansive welfare state which bribes large portions of the population to accept a life of hellish boredom and dribbling docility in exchange for £70 a week in dole money. Such payments are not a genuine transfer of the fruits of existing production within an economy; they are borrowed. They help governments electorally at the cost of the vigour of society.
At the top end, Quantitative Easing money goes directly to banks, who are able to sell their government bonds at a profit. In theory they may use this to even up their balance sheet. In reality they frequently use it as stake money at riskier tables.
In both cases, paper money has been stripped of meaning. It is no longer a reflection of production nor any of its components. It now simply exists of its own right – but it can survive as a measure only for so long as the government keeps such printing in small enough doses that the de-leveraging does not become apparent to workers.
As with everything in economics, there is a correctional market mechanism for this scenario – the flight to commodities, particularly precious metals like gold. Gold holds its value when paper money loses value, because it is beyond the gift of the government to simply will gold into being and give it to friends in high places or voters in low ones.
If gold has been manipulated downwards and if that process continues, then all recourse to a store of value (other than land and property) has been taken from the individual.
The value of our money is falling thanks to Quantitative Easing. Fixing in the gold market takes away one of the key hedges for those with cash assets but no property.
The true fall in the value of money is probably better seen through the rise in house prices since the 1980s – a much better reflection of the market mechanism thanks to the suppliers being so large and because of the lack of a two-way interplay between house prices on the street and derivative products for traders.
In any case, it would appear that the Libor scandal at Barclays has acted to draw out more market figures willing to claim openly that organised price fixing has occurred in gold.

[Brocke]

http://blogs.telegraph.co.uk/finance/thomaspascoe/100018574/the-price-of-gold-has-been-manipulated-this-is-more-scandalous-than-libor/

The price of gold has been manipulated. This is more scandalous than Libor

The new media and the 24-hour news cycle have a great deal to answer for, not least encouraging a political class which would otherwise be happily engaged expensing duck houses into the belief that it should demonstrate perpetual action on our behalf – hence the endless stream of badly drafted legislation from the corridors of Whitehall.
It does, however, reveal things that would otherwise be ignored. The issue of manipulation in the gold market which I wrote about last week is a case in point...

http://www.gata.org/goldrush21

Gold Rush 21

the most important money in the world, in a world at risk.
leading commentators and economists reveal facts and evidence
of one of the most important and dramatic issues today...
the global manipulation of the gold market.

The Gold Rush 21 conference DVD records the proceedings of the Gold Anti-Trust Action Committee's Gold Rush 21 Conference held August 7-9 2005, in Dawson City, Yukon, Canada. This historic conference exposed the manipulation of the gold market by central banks and concluded with the adoption of the Dawson Declaration, an appeal for the liberation of the precious metals markets as a matter of international human rights.