In Britain, the investigations into Barclays Bank manipulating the benchmark Libor rate have begun in earnest. Parliament approved an official inquiry into the Libor scandal, though only at the Parliamentary level rather than an independent investigation. This came after a shouting match between the Conservative Chancellor of the Exchequer, George Osborne, and the shadow chancellor, Labour’s Ed Balls. Outside of Parliament, the Serious Fraud Office announced their own criminal investigation. So we’re on the road to seeing criminal prosecutions come out of the rate-rigging scandal.
Remember that Barclays is only bearing the full weight of scrutiny right now because they decided to cooperate with a Justice Department investigation. At least 12 and as many as 16 other banks are under scrutiny in the scandal, and that includes just about every major financial institution. The fallout from that DoJ investigation is that the Libor will get calculated in a new fashion:
Under the terms of the pact with the US’ Commodity Futures Trading Commission, Barclays agreed to a six-pronged plan to “encourage” benchmark publishers, such as the British Bankers’ Association, to improve the rate-setting process by increasing transparency and creating rigorous methodologies to determine submissions.
The pact is unusual because it requires Barclays to not only beef up its internal compliance systems but to take on a role as an advocate for increased oversight for the industry.
“We’re going to use every tool we can, whether it’s enforcement tools or rule-writing tools to try to benefit the American public and make sure markets are clean of fraud and manipulation,” said Gary Gensler, chairman of the CFTC.
Martin Wheatley, the UK regulator who has been asked by the UK government to lead a review of the legal framework for Libor and other rates, said his group would consider the CFTC’s demands. The BBA is conducting its own review and a person familiar with the progress said the settlement demands were “quite sensible” and could provide a template for reform.
It would certainly represent progress for the settlement to contain new standards to prevent future rate manipulation, but it would be harder to hold to them without some accountability for those who manipulated the rates. That’s why calls to purge the entire Barclays board, which is simultaneously tied up with just about every other multinational corporate board, seem more appropriate.
If this is culture change, it’s glacially slow. Five years after Northern Rock signalled a banking collapse that impoverished nations, there is no reckoning. Citizens are impotently angry but business as usual prevails [...] We need know nothing of these directors’ individual talents or deficiencies: they are all responsible for a bank that went out of control. Whether they were all “physically sick” together with Diamond when they heard the news of Libor-cheating in their trading rooms that inflated bonuses, who knows. But here is an establishment web, a hard-wired network of interests intertwined with regulators and ethics-setters where a thorough sacking would send an electric culture-change signal.
These signals matter more than technocratic calls to change reporting standards at this point. You have individuals that have no problem with rigging interest rates that affect tens of millions of borrowers. Applying more standards on that process isn’t entirely likely to help.





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When I see shackles and prison sentences, THEN I will believe it.
How much in profits did the banks make on this scheme?
I think where we, the USA, has been falling short on our investigations into bankster fraud is that we have not been holding them in earnest. Perhaps the British will show us how to do it.
“In earnest” …
That is either a VERY foreign country … or a VERY rare state of mind … ncg.
Does it exist “here”?
Anywhere?
Hmmm and ah, well ……
;~DW
A conservative estimate would be at least 5 times whatever penalty they end up paying.
You can’t have an administration that came to power through Bankster financing performing a serious investigation, much less prosecution, of its owners.
Like Bobster, I’ll believe it when I see it.
However, the first thought that occurred to me was: What are the chances of this investigation crossing paths with the Murdoch phone hacking scandal? What are the chances that any of the elected or appointed officials in Liborgate were also targets of hacking, or benefitted from info learned via hacking?
Maybe a long shot, but boy, would be interesting, no?
Close to 20 banks submit their rates. According to Diamond, “they all do it.” Barclays settled for almost 500 million. So, then conservatively, it would be 10 billion. That’s your 5x figure. If the liberal estimate is 50 times whatever they pay out, it could be 100 billion in crime we are talking about. But I think it would be naive in the extreme to not presume this goes all the way to Bernanke. We already know it goes to the Bank of England and Whitehall. Too big to fail means they get to use derivatives to siphon off as much money as they want. The idea that any fiscal or monetary policy can right a system that is designed for fraud is silly. Taibbi’s vampire squid is a gross understatement. It is more like a school of squids destroying middle class wealth. The implosion will be in the next 12 months. There isn’t much more to loot.
It’s a done deal….Murdoch,nothing serious is going to happen to uncle Rupert,remember he owns almost all the major players in both corrupt political parties(DNC & GOP).Murdoch has evidence.
And likewise,our so called political leaders on both sides of the Atlantic
are owned by the bankers.
WE have structural problems in every aspect of Govt…it can’t be band-aided.
When most buildings have structural flaws they are condemned and built over.
They may be able to cover it up for a few yrs & pretend we live in a righteous democracy.But we know that’s a farce.
If there was some justice in regards to our economic/banking system … ha ha ha … I know, I know, but stick with me here … then this would be used to start a movement towards debt forgiveness becoz they owe us money for ripping us off in regards to interest rates … that along with bailing the financial industry out with future taxpayer dollars.
Expect a whitewash … that’s a pretty solid bet in regards to anything the criminals in our banking system-federal government do.
Z
Whitewash? I don’t think so.
It’s the UK:
1. The Conservative Government is a minority Government in coalition with the Liberals
2. Labor is an effective opposition (there is no opposition in the US)
3. Votes of Confidence have ended Governments in the UK.
If the Liberals want an investigation (and they need something to save their sorry asses), then there will be an investigation.
The purpose for a Parliamentary Inquiry is to get lies on record. It is much easier to prosecute (in front of a jury) for lying to Parliament than prove murky details on a complex scheme.
‘The importance of being…’ as opposed to just seeming earnest. :)
I agree. The Brits LOVE scandals. They thrive on them. They consider themselves better than everybody else and they traditionally do not sweep such dastardly deed under the rug. They dig and dig until they root out every crook and bastard.
IMO, their only redeeming quality.
“Esse Quam Videri”
“To be rather than to seem.”
AMEN!