Leapin' LIBOR - Banks Busted For Manipulating InterBank Interest Rates

rouletteBarclays was busted for manipulating the LIBOR. The London Interbank Offered Rate is the interest rate banks charge to lend to each other. This key interest rate sets most banking transactions, including retail. Manipulating the Libor is like being a casino with crooked roulette wheels and loaded dice.

Barclays has been fined £290m ($450m) for trying to manipulate a key bank interest rate which influences the cost of loans and mortgages.

Barclays' Chairman just stepped down:

Marcus Agius will step down from Barclays as soon as Monday, amid fallout from the bank's $453 million settlement of probe into Libor manipulation.

On Wednesday the U.K's Financial Services Authority announced to the world Barclays manipulated the Libor and was fined. Below is some of the FSA's press release:

The FSA has today announced that it has found serious failings in the sale of interest rate hedging products to some small and medium sized businesses (SMEs). We believe that this has resulted in a severe impact on a large number of these businesses. In order to provide as swift a solution to this problem as possible we have today confirmed that we have reached agreement with Barclays, HSBC, Lloyds and RBS to provide appropriate redress where mis-selling has occurred.

Interest rate hedging products can protect bank customers against the risk of interest rate movements and can be an appropriate product when properly sold in the right circumstances.  During the period 2001 to date, banks sold around 28,000 interest rate protection products to customers.

These products range in complexity from comparatively simple “caps” that fixed an upper limit to the interest rate on a loan, through to the more complex derivatives such as “structured collars” which fixed interest rates within a band but introduced a degree of interest rate speculation.

Over the past two months the FSA has conducted a review of these sales.  We have reviewed a significant amount of documentation from the firms (including sales files, customer complaints and taped conversations). We have also talked to over 100 customers who have come forward.

We have found a range of poor sales practices including:

  • Poor disclosure of exit costs;
  • Failure to ascertain the customers’ understanding of risk;
  • Non advised sales straying into advice;
  • “Over-hedging” (i.e. where the amounts and/or duration did not match the underlying loans); and
  • Rewards and incentives being a driver of these practices.

The FSA's Barclays final notice is the real horror show. Contained within are the evidence details. Clearly this has been going on for a long, long time. We've excerpted some of the emails that are extremely damning. The below excerpts show it is routine practice to manipulate the LIBOR in order to achieve derivatives trades gains and other large deals and transactions.

The FSA has identified that:

i.  between January 2005 and May 2009, at least 173 requests for US dollar LIBOR submissions were made to Barclays’ Submitters (including 11 requests based on communications from traders at other banks);

ii.  between September 2005 and May 2009, at least 58 requests for EURIBOR submissions were made to Barclays’ Submitters (including 20 requests based on communications from traders at other banks); and

iii.  between August 2006 and June 2009, atleast 26 requests for yen LIBOR submissions were made to Barclays’ Submitters.

At least 14 Derivatives Traders at Barclays made these requests. This included senior Derivatives Traders. In addition, trading desk managers received or participated in inappropriate communicationson, at least, the following occasions:

i.  on 22 March 2006, Trader A (a US dollar Derivatives Trader) stated in an email to Manager A that Barclays’ Submitter “submits our settings each day, we influence our settings based on the fixings we all have”.Manager A took no action as a result of this email;

ii.  on 5 February 2008, Trader B (a US dollar Derivatives Trader) stated in a telephone conversation with Manager B that Barclays’ Submitter was submitting “the highest LIBOR of anybody […] He’s like,I think this is where it should be. I’m like, dude, you’re killing us”. Manager B instructed Trader B to: “just tell himtokeep it, to put it low”. Trader B said that he had “begged” the Submitter to put in a low LIBOR submission and the Submitter had said he would “see what I can do”; and

iii.  in July 2008, euro Derivatives Traders sent emails to Manager C indicating that they had spoken to Barclays’ Submitter about the desk’s reset positions and he had agreed to assist them. This followed instructions from Manager C for the traders to speak to the Submitter.

 

Barclays’ Derivative Traders would request high or low submissions regularly in emails, for example on 7 February 2006, Trader C (a US dollar Derivatives Trader) requested a “High 1m and high 3m if poss please. Have v. large 3m coming up for the next 10 days or so”. Trader C also expressed his preference that Barclays would
be “kicked out” of the average calculation. Trader C’s aim was therefore that Barclays’ submissions would be high enough to be excluded from the final average calculation, which could have affected the final benchmark rate.

 

On Friday, 10 March 2006, two US dollar Derivatives Traders made email requests for a low three month US dollar LIBOR submission for the coming Monday:

i.  Trader C stated “We have an unbelievably large set on Monday (the IMM). We need a really low 3m fix, it could potentially cost a fortune. Would really appreciate any help”;

ii.  Trader B explained “I really need a very very low 3m fixing on Monday – preferably we get kicked out. We have about 80 yards[billion] fixing for the desk and each 0.1 [one basis point]lower in the fix is a huge help for us. So
4.90 or lower would be fantastic”. Trader B also indicated his preference that Barclays would be kicked out of the average calculation; and

iii.  On Monday, 13 March 2006, the following email exchange took place:

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!”

Matt Taibbi rightly calls LIBORgate a huge, big f@#kin' deal and points out:

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.

There are all sorts of products related to the LIBOR including $554 trillion in interest rate based derivatives. Even the currency exchanges are set by the Libor. That's why this is such a big deal, manipulating it is like the great big global ripoff. Everyone and everything is affected. Who needs a gun to rob a bank? The real way to steal is to own one.

The Financial Times reports regulators knew about LIBOR manipulation at least since 2007. That's before the financial crisis of 2008.

Bankers, traders and investors complained to US and UK central banks and regulators that false information was being supplied for the setting of a critical London lending rate as early as 2007.

But only the Commodity Futures Trading Commission, the US regulator, jumped on the issue and started demanding information about the setting of Libor, the London interbank offered rate, which is the benchmark for $360tn in mortgages, credit cards and other contracts worldwide.

There are over 20 banks involved in the ongoing investigation and already at RBS heads have rolled. Of course those are the heads of sacrificial lambs, the modus operandi for every corruption incident exposed.

Seems the blame game is now in full bloom as well. The BBC reports Barclays' managers believed they were lying about their dealings, because the Bank of England told them to.

In making false submissions about their borrowing costs, managers at Barclays believed they were operating under an instruction from Paul Tucker, deputy governor of the Bank of England, I have learned.

This belief was fostered after a telephone conversation in the autumn of 2008 between Mr Tucker and Bob Diamond, who at the time ran Barclays' investment bank, Barclays Capital, and is today chief executive of Barclays.

Mr Tucker did not issue this instruction. But he and Mr Diamond have different recollections of their conversation. So what Mr Diamond recalls about this telephone conversation may turn out to be the most explosive and important part of his testimony to MPs on the Treasury Select Committee, which will take place on Wednesday.

Now this is an amazing revelation. The Bank of England Governor, King, just railed on the U.K. banking system as corrupt and deceitful:

Bank of England Governor Mervyn King said the “deceitful manipulation” of Libor reveals wider cultural flaws in Britain’s banking system, as officials warned bank chiefs need to rebuild trust.

“Everyone now understands that something went very wrong with the U.K. banking industry,” King said at a press conference to present the central bank’s Financial Stability Report in London today. “From excessive levels of compensation, to shoddy treatment of customers, to a deceitful manipulation of one of the most important interest rates, we can see that we need a real change in the culture of the industry.”

Over and over and over again we see disaster, spawned by corrupt practices, because there is no firewall between commercial and investment banking. It's so obvious we need Glass-Steagall, the 1933 U.S. banking law which separates commercial banks from securities & investment firms, re-instated. Instead we get no derivatives reforms and even the Swiss Cheese passed by Congress delayed and watered down, not implemented.

The hits just keep on coming. Earlier we saw a massive bid rigging in the municipal bond market. Just the other day JPMorgan Chase's derivatives loss had widened to $9 billion. Lest we not forget MF Global and the list just goes on and on. In fact we have about 4000 articles on this site detailing most of the financial follies parade©.

What can we do except be dismayed at the dismantling of those Great Depression era laws some very wise people set up to stop these shenanigans. What was that about history and doomed to repeat?

While we're repeating, for some laughs at this latest Bankster rigged casino game exposed, check out LIBOR-4-1-9.

Meta: 

Comments

Just add this to the non-existent indictments + prosecutions

Barclay's again? Wow, I thought banksters clean themselves up after scandal/crime #1,2,3. . . or 99, but I guess nothing changes. And this fixing of international prices is so obviously criminal and screwed over anyone that relies on banking (so everyone from individuals to international businesses across the entire world). So, who's going to be arrested by Scotland Yard, the FBI, or anyone? US automatically has jurisdiction on this, international bank transfers obviously going through and affect everything in the US. US asserts jurisdiction on anything and everything when it's easily provable and they want to go after the person (like Iran's money going through banking system). Price fixing and fraud on a local level is a felony. On an international level by banksters, I guess it matters less when billions and trillions are involved and all the politicians and law enforcement don't want to piss off their future lobbying clients and risk their $1 million book deals and $300,000 dollar speech fees. Am I wrong? By the way, JP Morgan still US Govt.'s chief corporate "welfare queen," so don't expect them to be prosecuted either with Barclay's or anyone else.
Pull this price fixing by the mob and the USAttorney for SDNY would fall over rushing to the microphone to claim he's fighting crime before he joins a bankster-defending law firm like the former USAttorney did and they all do(despite the fact the old-school Italian mob now has many, many other offshoots and competitors from other nations the USG is still clueless about and ignoring), but when banksters do it, the SDNY (bankster jurisdiction central for bankster crimes) seems oddly silent. Same with Scotland Yard. I hope some country that isn't owned by bankster scum indicts them, pulls a "legal kidnapping" like the US Marshals do for US wanted criminals, and then tries, convicts, and punishes them. There, I just laid out what should happen in Utopia. Now we'll wait while the USG closes its eyes, its ears, and keeps its hand out from the suffering 99% while giving the same money to the criminal banks.

Kurtz

You must have Javascript enabled to use this form.

Diamond's UK responses were filled with pure arrogance

Parliament's Select Committee put bankster arrogance on display yet again. Calling everyone by their first names when he "responded" to questions/lathered himself up in self-love? No regrets, no humility, Barclays is a "master of the universe" still despite causing the entire world to be bilked out of hundreds of trillions of dollars in the bankster cartel? Business as usual, move on, nothing to see here yet again.
Can you imagine a suspect/defendant calling a cop, prosecutor, corrections officer, or judge by their first names? But yet these criminals show who controls and owns who. They truly believe they are above-the-law because, for all intents and purposes, they are.
"Sorry, Joe, I refuse to answer any question. So I raped, robbed, and pillaged globally, so what? Oh, hi John, I own you, so don't dare arrest me. Hi Jane, how's being a judge? I'll see you on the golf course. By the way, the public annoys me. Can you make them be my slaves in return for me not killing them?"

You must have Javascript enabled to use this form.

ya got it, globally, the Banksters rule the world

The minute we saw refusal to let Greece have a managed bankruptcy, beyond the eventual CDS hair cuts, all due to sovereign bond holdings in banks and CDSes by investors, you know Banks trump nation-states.

At minimum, we need Glass-Steagall back, 100%. But these Banks own governments, figuratively, through political "donations" and literally.

Lying, manipulating numbers, creative accounting, 105 repos and on and on and on. But the biggest crime to me is the destruction of the real, production economies, the financialization of the globe, which has in turn led to more offshore outsourcing, labor arbitrage and middle class destruction.

You must have Javascript enabled to use this form.

And as predicted - banksters will just pay fines + no jail

Who could have predicted this? Oh, wait.
UBS will pay a fine it has been declared, no one goes to jail or prison, and they will continue to operate their business as if nothing happened. Until they commit another crime, they will lobby the DOJ and regulators, no one goes to jail or loses a job (at least at the top bankster levels, pay a fine, rinse and repeat). And the fines, well, of course those will just be passed on to customers in the form of higher fees. And if they can't bleed clients or customers enough, they can always threaten to collapse and take the world with them (like good parasites, they apparently will sacrifice the host to survive) and then demand taxpayer $ for free like TARP from which to pay any fines and also megasalaries and bonuses. UBS, Barclays, and everyone else will go on as if nothing happened. I guess the people that paid and lost billions and trillions in the aggregate over all these years for paying way too much for $ will just have to suck it up. How's that for fairness or justice or capitalism or equality before the law? What a fantastic "free market" where a tiny group of people can rig a system to steal money and get away with it. I wonder, which book is this system praised in? Ayn Rand's? Is this the Utopian capitalism? Socialism? Communism? Anarchy? A piece of crap?

Compare what would happen if a small business or a group of regular citizens decided to pay bribes, commit wire or mail fraud daily involving thousands, or millions, or billions of dollars internationally involving individuals all the way up to national governments and multinationals, fix prices, etc. with tens of thousands of documents and witnesses proving easily they broke dozens of laws. Who would they lobby at the local DA's office to avoid culpability? Would the DOJ return their phone calls and meet them for lunch until a sweet deal was hammered out? Would their local city council members meet them, let alone Senators and Reps.? No, it's a quick indictment, a quick press conference by local authorities, 20+ years in prison for them even if they acted as a business, massive fines and forfeitures that would destroy them and their families and businesses. But that matters not in the United States and Global World of Banksterism. Break the law, step on other people, cry poverty and unfairness when someone calls you out and ask that criminals please, please not make $40 million/year. Damn it pays to be a bankster (literally and figuratively). Rules, morals, we don't need no stinkin' rules and morals.

You must have Javascript enabled to use this form.

Barclays open job for AVP for "Financial Crime Compliance"

I think this means you have to ensure everyone at Barclays is committing some type of financial crime in compliance with Barclays' criminal policies and procedures and the policies and procedures of fellow cartel members (e.g., JPMorgan, Govt. Sachs, UBS, Deutsche, etc.). If people aren't breaking the law daily, there will be repercussions for those law-abiders.

You must have Javascript enabled to use this form.

The typical bankster defense begins yet again

Banksters at Barclays begin the same moronic defense again, law enforcement didn't do anything about our crimes before, so it's okay (despite basically owning those same cops).
Let's see if this works. Joe Billionaire bribes most of local police force. He drives drunk, speeds 120 mph every day, and assaults his fellow citizens and robs them. 50% of the time cops turn a blind eye because they are bribed and want to work for wealthy criminal after they retire from force. Other cops are intimidated or are busy with other things. Finally law-abiding citizens can't take anymore after repeated deaths and massive thefts.

Joe Billionaire: "Come on, all my bribed cops didn't do anything and knew all about it, so it couldn't be wrong. And my fellow billionaire scoundrels are doing the same thing too. Boo hoo, life's not fair, leave me alone!"

Crowd: "We respectfully disagree. We follow the law and are screwed over by you day-after-day. Now let us show you how much we disagree."

Again, banksters act like sociopaths, destroy societies, and then when people can tolerate no more lawbreaking, banksters act like juveniles with same "logic." Poor excuses for vermin.

You must have Javascript enabled to use this form.

What's next?

This sort of corruption should be rewarded. It's time to scrap the bankrupt program Social Security and make private 401k mandatory. Consider it a tax, paid to JpMorgan and collected by their Strong Arm Dept. (the federal corrections dept.) Hey it's working for healthcare, approved by the SCOTUS and it's the only way to maintain the obscene profits we've become accustom to.

You must have Javascript enabled to use this form.

Odin

Happy July 4th! Banksters are mocking us globally!

Watch Bloomberg, CNBS, etc. to see these criminals lying through their teeth. Work hard + "The Golden Rule" + education + be ethical = a safe, secure, modest life where you can save for your future and family = BULLSH!!
These criminals are never satisfied. They are still pulling the "mistakes were made, my bribed regulators and politicians said I was good to make money illegally and bribe them, I'm a job creator, I'm the best and brightest, I'm a leech and pulling a leech off hurts the whole body" nonsense in 2012! But I still get to resign with $20 million and never lose any money or go to prison ever and if you make me uncomfortable I'll go on TV and whine like a 2-year old punk.
My God, when do these suckers pay for their crimes - and by pay I mean they go to a real prison with murderers and RICO criminals, they LOSE ALL THEIR MONEY, and their damn families get to scrounge for jobs at Walmart that haven't been outsourced.
July 4th? God Bless the America Thomas Paine wrote about endlessly that ended workhouses, created Social Security, helped the disabled and old, fought exploitation of private property and idiot relatives building mega-wealth, etc. AMERICA, TAKE IT BACK, TAKE IT BACK NOW FROM THESE VERMIN WHILE FOX NEWS AND OTHER IDIOTS BLAME THE UNEMPLOYED IN ENDLESS SPECIALS ON JULY 4th. Despicable, specials attacking the unemployed on July 4th? When veterans compose one of the biggest groups of long-term unemployed that Dobbs and John "I'm a massive hypocrite" Stossel says are all lazy? And no, I'm not a fan of Democrats/MSNBC/etc. either, they all lie and steal.
Not attacking Kochs for trading with Iran in the last decade, Stalin in the 30s or Murdoch interfering in child murder investigations a few years ago and bugging thousands of phones. But attacking the unemplyed on July 4th? I despise these fools, and our Founding Fathers would too.

You must have Javascript enabled to use this form.

Banksters seeking group civil settlement - so predictable

More proof of the sheer audacity of criminal banks aka "job creating financial institutions" and the pure double standards now existing in the US of [fill-in-corporate sponsor]. If regulators and law enforcement actually go along with this without huge forfeitures, criminal prosecutions of CEOs and others, as well as seeking jail/prison time for price fixing and public theft + corruption, then they really are letting the people know that the US is a banana republic. RICO, RICO, RICO, but then these banksters bought protection. Next time someone is accused of a crime from petty theft to murder to racketeering, see if you can get your attorneys to group together with all other criminal suspects and defendants and seek a civil settlement with every other suspect, admit no guilt or wrongdoing, and a promise to be left alone by all police, prosecutors, and judges so you can commit more crimes. Surely the remedies and corruption available to the financial "best and brightest" dopes are available to the average American that is forced to fund their criminal behavior against their will through the FDIC and TARP and QE1, 2, . . . As someone forced to finance these banksters, I demand criminal prosecution - I don't want to help finance criminal activity by banksters lest I be deemed an accomplice along with the rest of the commoners.

You must have Javascript enabled to use this form.

Congressmen that accepted HSBC/Hezbollah donations

It is Saturday, July 21st, 2012. Hezbollah has just killed civilians overseas in Bulgaria through Iranian conduits. Iran launders money through HSBC. Which US Congressmen help launder money/accept money from HSBC? Well, according to the US Senate/opensource.org and other sources, these Congressmen accepted money from HSBC:

•HSBC Holdings to Brian M. Higgins (D) in 2012
•HSBC Holdings to Ed Royce (R) in 2012
•HSBC Holdings to Frank D. Lucas (R) in 2012
•HSBC Holdings to Geoff Davis (R) in 2012
•HSBC Holdings to Gregory W. Meeks (D) in 2012.

Let them return all contributions ASAP. If not, surely they know they accept money from terrorist money launderers, as sure as Congressmen and other officials know that accepting $ from JP Morgan, Goldman, Wells Fargo, BOA, is accepting money from criminals (robosigning, Jefferson County bankruptcy/bribery, derivatives fraud, LIBOR collusion, etc.). If you accept money from them, you are helping launder money - good luck with that!!
Now, as patriotic Americans, 300 million of us expect Bloomberg, Obama, Holder, Boehner, and every other government official and citizen to no longer tolerate bankster crimes and to speak out against them, to pursue RICO prosecutions against banksters because they are easily provable to any prosecutor (SARs and CTRs are there for a reason - they make your case), and to treat banksters as they would treat every other citizen because no double standard should exist under the US Constitution. Are there double standards for banksters, US corporate oligarchs, and their political puppets? Not as we read the Constitution. Let those in the war against terror and international drug cartels know, so that they may know their enemies both foreign and domestic, no matter how big their bank accounts and how many vacation homes they may own, everyone is equal under the law.

Will Mayor Bloomberg pursue these banksters tomorrow with the same vigor as he pursued unarmed Occupy Wall Street American citizens who were sprayed in the face with mace? Will Mayor Bloomberg lash out against HSBC today or will he defend another international bank as his own police force sprays American citizens in the face with mace while they express their First Amendment rights? Who would Thomas Jefferson be proud of, Mayor? Will CNN and Fox News address both D and R politicians who accepted donations from HSBC? If these "Americans" will not do their jobs, let them step aside and forfeit their six and seven figure salaries so that those who care about this country, many of whom are unemployed, do what they know and protect their fellow citizens. If money laundering is hard to prove, then you have no business being a prosecutor. Placement, layering, and integration are the three stages for any prosecutor with a brain from an American who cares about the 99% - I am the 99%.
"Wealth does not equal patriotism nor wisdom.It simply means you obtained wealth by whatever means possible - whether by inheritance, cruelty, or by other means."

You must have Javascript enabled to use this form.

HSBC laundering money

Right, on the local news, if someone sticks up a 7/11 with a gun, we'll see it on the local news and that person is gonna get 20 years for armed robbery. Yet if a Bank does it or even an individual through "financial instruments" nothing happens.

You might register so you do not go into the comment moderation queue. I love reading what you have to say, as do others.

You must have Javascript enabled to use this form.