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Libor-Gate Will Take Down Many More Bankers, And The Claims Will Spiral Into The Trillions

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But it all just leaves me with a sense of deep depression - who will the billions or trillions of reparation funds go to? Not to the little people surely? It'll just be another long round of those with snouts in the trough doing very well and the rest being screwed further down. The people to do the best out of all this will inevitably be the lawyers - for both sides.

Quite, and consider this: even if say I as a saver, am compensated for my loss of interest, compensated for my reduced buying power in the housing market thanks to the inevitable forbearance of lower libor, compensated for my losses on shorting banking stocks from lower libor making them look stable, compensated for my specific lack of buying power on the London housing market thanks to continued bonus payouts to bankers who should barely be able to find work let alone price me out. Even if all that came to pass, I would still not be even. Why? Because the process of compensation will undoubtedly involve the printing up of ever more GBPs which will only further prop up the housing market, depress savings rates, support banks, support London prices and generally reduce the value of my savings.

To get straight we need the money back from those who benefited. Now what's the chances of that happening? As I've said before, the best we can hope for is a medal recognising our services to the country and a place in a retirement home for SW10 pensioners ( think Chelsea Pensioners only places awarded in recognition of ones contribution to supporting prices in London boroughs ).

Edited by Sledgehead

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Guest unfunded_liability

You'd have to be quite naive to think that anyone is going to receive any substantial compensation awarded against the banks for this. They are part and parcel of the system and the system looks after its own.

+ 1

The real finger pointing will start when bankers and politicians' backs are against the wall, when cans cannot be kicked further down the road. I reckon that's several more QE's away.

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trouble is all these bankers have already been paid vast sums, they will scarpa to another country first sign of trouble with a nice cosy resignation with a big fat pension.........nobody gets fired in banking it seems....

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And the civil litigation is probably a non-starter: how many cases have there been over losses from mis-sold MBS?

There are quite a few in the pipeline.

I would imagine it will take years to resolve due to the complexity involved which was deliberately done to confuse people.

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"The Canadian watchdog said lawyers acting for the cooperating bank had told it that traders at six banks on the yen Libor panel—Citigroup Inc., Deutsche Bank AG, HSBC Holdings PLC, J.P. Morgan Chase & Co., Royal Bank of Scotland Group PLC and UBS—"entered into agreements to submit artificially high or artificially low" quotes, according to the court documents"

Old but interesting read from Wall Street Journal in February which names some of the traders involved. Its pay wall but I think if you copy and paste this link you should get it.

http://74.6.117.48/search/srpcache?ei=UTF-8&p=wall+street+journal+Traders+Manipulated+Key+Rate,+Bank+Says&fr=aaplw&u=http://cc.bingj.com/cache.aspx?q=wall+street+journal+Traders+Manipulated+Key+Rate,+Bank+Says&d=4957522444487585&mkt=en-US&setlang=en-US&w=1f3ed642,cdceb1df&icp=1&.intl=us&sig=IF.YUSA5Tns4zweu2cHihw--

I doubt this will go away.

Edited by fixed

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Nice fantasy.

LIBOR isn't a single number, it's based on different lending periods and the top and bottom 25% of submissions are excluded from the calculations.

To prove that it made any difference to the actual rate, and that rate made a difference to the borrower or investor will be nigh on impossible, as most likely it didn't.

And take a look at this chart which shows Barclays manipulated LIBOR to show a higher rate, not lower.

http://www.economist.com/blogs/graphicdetail/2012/07/daily-chart-3

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Nice fantasy.

LIBOR isn't a single number, it's based on different lending periods and the top and bottom 25% of submissions are excluded from the calculations.

To prove that it made any difference to the actual rate, and that rate made a difference to the borrower or investor will be nigh on impossible, as most likely it didn't.

And take a look at this chart which shows Barclays manipulated LIBOR to show a higher rate, not lower.

If you took part in a derivatives trade, which was linked to LIBOR, and evidence showed on the date the trade happened Barclays had "tweaked" LIBOR rate, you would have an easy case in court to recover the difference between the transaction value and what the transaction value should have been, from Barclays.

If it turns out Barclays was on the winning side of that transaction, you could win many times your losses back.

These court cases could go on forever, and Barclays may face losses so high they have to be wound up.

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Nice fantasy.

LIBOR isn't a single number, it's based on different lending periods and the top and bottom 25% of submissions are excluded from the calculations.

To prove that it made any difference to the actual rate, and that rate made a difference to the borrower or investor will be nigh on impossible, as most likely it didn't.

And take a look at this chart which shows Barclays manipulated LIBOR to show a higher rate, not lower.

http://www.economist.com/blogs/graphicdetail/2012/07/daily-chart-3

I am sure the lawyers will find a way.

In particular I suspect they will not need to prove direct financial loss from interest rate manipulation to get courts to void contracts. Instead they will just have prove that one of the parties to the contract was either involved in or knew about the manipulation of LIBOR (be it up or down). That process alone is going to prove costly. The compensation claims will relate to the losses that subsequently might be calculated from unwinding contracts that had been entered into in bad faith rather than from the actual LIBOR distortion itself.

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Nice fantasy.

LIBOR isn't a single number, it's based on different lending periods and the top and bottom 25% of submissions are excluded from the calculations.

To prove that it made any difference to the actual rate, and that rate made a difference to the borrower or investor will be nigh on impossible, as most likely it didn't.

And take a look at this chart which shows Barclays manipulated LIBOR to show a higher rate, not lower.

http://www.economist.com/blogs/graphicdetail/2012/07/daily-chart-3

In that case then you saying that the regulators both sides of the Atlantic did the impossible because both of them found evidence of manipulation.

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http://

www.economist.com/blogs/graphicdetail/2012/07/daily-chart-3

Notes taken by Bob Diamond, then head of investment banking, of a phone call from Paul Tucker, a senior official at the central bank, appear to have been interpreted by some at Barclays as a nudge and wink to fudge the numbers.

So where are the notes. Have they been published. Did the Treasury Select Committee see the notes when they did the interview.

It's "Who owns the notes" again :lol:

From the article it sounds as if the Libor rate might have been subject to some manipulation for a long time even from the day it was created in 1986

Linked to the article:

http://

www.economist.com/node/21558281

The FSA has identified price-rigging dating back to 2005, yet some current and former traders say that problems go back much further than that. “Fifteen years ago the word was that LIBOR was being rigged,” says one industry veteran closely involved in the LIBOR process. “It was one of those well kept secrets, but the regulator was asleep, the Bank of England didn’t care and…[the banks participating were] happy with the reference prices.” Says another: “Going back to the late 1980s, when I was a trader, you saw some pretty odd fixings…With traders, if you don’t actually nail it down, they’ll steal it.”

but it only became obvious when Lehman Brothers collapsed in 2008? and Libor went really haywire (again) and as a result of the panic and in the light of all the manipulation Barclays possibly needed advice/instructions and permission from the BoE on what to do? There have been some equally huge and rapid movements and spikes in the Libor rate followed by sudden drops in the past.

http://

mortgage-x.com/general/indexes/historical_wsj_libor.asp

It wouldn't be a complete surprise if there were similar actions at other times of crisis since 1986 such as the Black Monday 1987 stock market collapse, the Black Wednesday 1991 sterling crisis, the dotcom crisis, the 2001 crisis and so on etc?

According to reports the regulators discovered manipulation between about 2005 and 2009 but it's not been made clear why they started the investigation in the first place other than mentioning taking notice of some media articles about Barclays/Libor. They aren't usually that zealous in acting on things just because they're mentioned in the media.

Edited by billybong

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In that case then you saying that the regulators both sides of the Atlantic did the impossible because both of them found evidence of manipulation.

Where did they say that?

I recall them saying Barclays admitted manipulating their submissions.

To the posters above too. Again, I say LIBOR removes the top and bottom 25% of submissions and therefore there is no evidence yet that the LIBOR rate was impacted.

We mustn't get worked up into a frenzy without the facts. It may come out that rates were affected, but then again it might not. For rates to be affected then many banks would have had to manipulate the rates at the same time.

Wait and see.

Edited by Redcellar

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REICH: This Is The Wall Street Scandal Of All Scandals

Read more: http://robertreich.org/post/26708840314#ixzz203fUDl7J

There are really two different Libor scandals. One has to do with a period just before the financial crisis, around 2007, when Barclays and other banks submitted fake Libor rates lower than the banks’ actual borrowing costs in order to disguise how much trouble they were in. This was bad enough. Had the world known then, action might have been taken earlier to diminish the impact of the near financial meltdown of 2008.

But the other scandal is even worse. It involves a more general practice, starting around 2005 and continuing until – who knows? it might still be going on — to rig the Libor in whatever way necessary to assure the banks’ bets on derivatives would be profitable.

This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us – whose money they’ve used for to make their bets – losers and chumps.

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To prove that it made any difference to the actual rate, and that rate made a difference to the borrower or investor will be nigh on impossible, as most likely it didn't.

It may come out that rates were affected, but then again it might not. For rates to be affected then many banks would have had to manipulate the rates at the same time.

You've relented, then. Just read the quote in TMT's post above to understand why the banks would have rigged LIBOR.

The derivatives market is hundreds of trillions of dollars in size and the banks had the means to load the dice. You think they wouldn't?

Edited by nmarks

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You've relented, then. Just read the quote in TMT's post above to understand why the banks would have rigged LIBOR.

The derivatives market is hundreds of trillions of dollars in size and the banks had the means to load the dice. You think they wouldn't?

Relented?

I was and still am saying nothing has yet been proven so far as the published LIBOR rate was actually affected.

If that's relented then I still relent.

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Mikhail Liebenstein and stormymonday_2011 make some interesting obeservations on management and culture.

You can bet the business schools will already know which management styles lead to a culture of deceit.

If so then surely it's time for the law to step in and legislate against them?

Does anyone know if there is any such legislation in existence yet?

I think this is almost certainly a gap in legal thinking - but if a manager says "make the number at any cost or else", then surely they are guilty of fraud when it occurs as the employee who commits the fraud. I could see the next Enron being one of the big US it companies that has perhaps missed the next wave and carries on trying to make things look right.

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The other thing to remember at the October 2008 time mentioned by the economist (including telephone conversation notes) is all the other stuff going on then including the $700 billion TARP bailout fund etc etc. From the economist link and chart posted earlier in this thread it's clear that during late September and early October 2008 Libor was skyrocketing upwards.

For an example of what was happening during October 2008:

https://

en.wikipedia.org/wiki/October_2008

It seems clear that skyrocketing Libor wasn't wanted.

------

The full FSA report on Barclays - Libor is at the link below:

http://

www.guardian.co.uk/business/interactive/2012/jun/27/barclays-fsa-findings-libor

-------

If some of the banks (including Barclays) were having difficulty getting finance at low rates (and under normal circumstances would have had to report the real higher finance rates for Libor purposes) then perhaps it might have been more difficult to get general rates down which is what they were trying to do at that time.

Likely some central bank/central bank/bank coordination of it all would be necessary - done by telephone calls? and sometimes needing "note" taking.

Edited by billybong

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Who got prosecuted when the Greek government lied about it's deficit?

:blink:

Govt officials in a western democracy don't get prosecuted!

Don't forget everyone knew they where lying and yet did nothing.

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+ 1

The real finger pointing will start when bankers and politicians' backs are against the wall, when cans cannot be kicked further down the road. I reckon that's several more QE's away.

A couple of months away, then?

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suspect inflation, over loose monetary policy and trade deficit

Are we talking potential appreciation v sterling and a decent interest rate?

Indonesia’s central bank hails ECB rate cut

The Indonesian central bank said that the European Central Bank’s (ECB) decision to cut its benchmark interest rates will push global investors to invest in emerging economies, including Indonesia, as the return will be higher, the Jakarta Post reported Saturday.

“The ECB’s policy will strengthen the monetary measures required to resolve the crisis in Europe. The impact of the policy will be positive on emerging markets because global investors will see that investing in emerging countries’ financial markets, including Indonesia, could provide more attractive returns,” Central Bank monetary policy and economic research directorate head Perry Warjiyo said.

Bank Indonesia’s benchmark interest rates currently stand at 5.75%.

http://www.livetradingnews.com/indonesia-see-europe-pushing-investors-to-asia-79777.htm

The debt to GDP dropped from 25.7 in 2010 to 24.5 in 2011

https://www.cia.gov/library/publications/the-world-factbook/geos/id.html

Is this HSBC doing an arb? Paying their punters 2.5% and getting 6% on it?

http://indonesia.deposits.org/

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On today's news there's been some pieces about the BoE bloke called Tucker and it's quite surprising how similar he looks to Barclays' Diamond even wearing a similar haircut, glasses and suit etc.

Imitation being the sincerest form of flattery?

It's still a puzzle why they fined Barclays now when it's being claimed that Libor has been manipulated since its inception in 1986 and it's apparently been generally known about and by implication the BoE has accepted it until recently.

Is it because now that they're printing money to keep interest rates down they don't want the risk of the banks going off at a tangent and trying to manipulate rates upwards.

It's not as if Barclays will lose out as I guess what's taken in fines will likely just be handed back in some form of bailout.

Apparently any financial sector fines are just put back into the financial sector at any rate. They aren't given back to taxpayers or given back to people who have lost out.

Edited by billybong

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On today's news there's been some pieces about the BoE bloke called Tucker and it's quite surprising how similar he looks to Barclays' Diamond even wearing a similar haircut, glasses and suit etc.

Imitation being the sincerest form of flattery?

It's still a puzzle why they fined Barclays now when it's being claimed that Libor has been manipulated since its inception in 1986 and it's apparently been generally known about and by implication the BoE has accepted it until recently.

Is it because now that they're printing money to keep interest rates down they don't want the risk of the banks going off at a tangent and trying to manipulate rates upwards.

It's not as if Barclays will lose out as I guess what's taken in fines will likely just be handed back in some form of bailout.

Apparently any financial sector fines are just put back into the financial sector at any rate. They aren't given back to taxpayers or given back to people who have lost out.

Tucker's pension pot went up 37% this last year to £5m

http://www.telegraph.co.uk/finance/economics/9371331/QE-boosts-Bank-of-England-deputies-pension-pots.html

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