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It’s really getting difficult to take the entire global financial regulatory apparatus seriously in the wake of the Libor scandal.
The British Bankers’ Association was given weekly warnings in 2008 that the process of setting the Libor interest rates was being distorted.
A former member of the Libor compilation team at Thomson Reuters says it regularly warned senior BBA staff about the problem.
Its reports regularly highlighted the implausible rate submissions of several banks involved in the Libor process.
The BBA denied these had amounted to warnings of wrong-doing.
Right, the Libor compilation team only said that the submissions were impossible, how could that ever be considered as wrongdoing on the part of those who submitted?
According to this report, the rate compilers would make calls every day to the banks, explaining that their Libor rates varied wildly from other member banks, and asking whether they wanted to revise. This was all a game. Everyone knew the rates were fictional. And this had a massive effect on trillions in structured finance products.
The Bank of England has repeatedly passed the buck to the other financial regulators in Britain, saying they were responsible for ferreting out the fraud. But the British Bankers’ Association has nowhere to turn. They collect the Libor submissions and were being told every single week that they were wrong. For that matter, the Financial Services Authority, in their regulatory oversight, should have learned that and acted on it.
The picture we can then make, given all this, is that the regulators wanted the Libor to be rigged. This is the theory that former Barclays CEO Bob Diamond stressed when he said that the Bank of England encouraged the rigging. The theory holds that such rigging, in terms of masking the ill financial health of the banks, was necessary to preserve the financial system. When you look at this in hindsight, several years on, you have to ask yourself why was this financial system worth preserving? Nationalization has become a taboo subject, but breaking up the banks hasn’t (heck, Sandy Weill agrees with it now), and both have the same basic point, to end this system of runaway finance and get the world back to something with a hair more sanity.
Why it’s desirable to sustain an industry based almost wholly on fraud escapes me.
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Oo, that cries out for rephrase.
He did it … No, he did it. The core of crapitalism.
Capitalism has from its beginnings been a tool for amassing wealth and power in the hands of an elite few. The fact that it should continue to do so even as profit-making descends into the realm of fraud should surprise nobody.
I doubt this will escape you.
Sometimes they sit silent while reaping the profits.
Special Counsel anyone?
If FnF got personal with Issa, I wouldn’t be surprised to see him start issuing subpoenas on this one pretty quickly.
Is that a rhetorical question or should I try to come up with an answer????
Because it’s *us*, old bean!
I think it’s a given we have a few bugs to work out.
Why was Tim G. smiling in that photo? Instead, shoulda been a triad. . . see, hear, speak no evil?
If you think LIBOR was nobbled, wait and see what they replace it with, long after Timmy’s gone.
It is about time we put this in context. The biggest corporations, and financial institutions are certainly included, buy our politicians, run our governments and do what the hell they want with very little chance of criminal action.
It is no accident that the cost of a Senate seat is about ten million dollars, or that both Obama and Romney will amass over a billion each to run for an office that pays four hundred thousand per year for four years. This is how the game is rigged so that politicians have no choice but to cater to the check writing corporations.
Goldamn ( no error) Sachs almost single handedly wrecked our economy and how many indictments has Justice handed down? Yeah right. How many Financial industry CEO’s are in the Obama administration?
Why is the CEO of General Electric, the company which outsources the most, the company which made six billion in profit two years earlier and paid a whopping ZERO tax on it, heading a commission to find jobs for our workers? This is a particularly unfunny joke, Barack.
Makes sense to me. And I’m not just any schmo — I just bought the Brooklyn Bridge for $49.95. You’ll have to look far and wide to find someone cannier than that.
Amusing piece up on the FT by a trader who dealt with Bob Diamond and problems in LIBOR fixing–IN 1991!
New day, same shit.
Don’t be so smug, you could have saved $1.00 if you’d used the coupon.
Hey DD…
“Why it’s desirable to sustain an industry based almost wholly on fraud escapes me.”
Have you read “The Creature from Jekyll Island” ?
“Man, I wish had taken the blue pill…”
The first printing was way back in the nineties as I recall, so I read it but cannot cite chapter and verse after all that time.
The book , and your comment, are both seemingly confined to this nations business practices and government (lack of ) regulation. My comment was aimed at the world wide control of all our governments by corporations.
But yes, think globally, act locally still does apply. In my own opinion I would think that working to make elections free would be a better road to take than any attempt to reform or disband the Fed.