So here come the banks finger-pointing on the Libor scandal.
Major banks, which often band together when facing government scrutiny, are now turning on one another as an international investigation into the manipulation of interest rates gains momentum.
With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities, according to government and bank officials with knowledge of the matter. While acknowledging their own wrongdoing, institutions are pointing out actions at other banks that they believe are worse — and in some cases, extend to top executives.
One official involved in the case said that banks are emphasizing that “we’re not as bad as the next guy.”
Why would this ever be considered a credible defense? “Not as bad” as the next guy is an irrelevant standard if both of you broke the law. It really doesn’t matter who started the rate-rigging process, what matters is the conclusion.
This suggests to me that the banks are out of ideas when it comes to evading accountability in the Libor case. It’s too cut and dried, there’s too much documentary information out there. But it is fun to watch these banks turn on one another. UBS has delivered communications showing culpability by Deutsche Bank, HSBC and the Royal Bank of Scotland. HSBC has provided conflicting documents. Barclays called out HSBC, Deutsche Bank, Société Générale and Crédit Agricole. Citigroup is flipping on all of them, distancing themselves from the wrongdoing and pinning it on Barclays. It’s all great theater.
The good news here is that all this back-biting means that it will probably not be possible to negotiate a common deal, a global settlement among all the banks. And the banks probably know that, which is why they’re trying to limit the damage by turning on each other.
Deep in the piece we find out that the Justice Department will probably file criminal actions against two banks sometime this year, and will arrest ex-traders implicated in the scheme. This looks exactly like the October surprise for bank accountability about which I speculated last month.
It is a hoot watching these banks squirm, however.