Rate rigging scandal: Just the start?

http://edition.cnn.com/2012/07/05/bu...dal/index.html

London (CNN) -- Barclays former boss Bob Diamond was in the spotlight this week when he was questioned by British parliament's 13-strong Treasury Committee, but the rate-fixing scandal which lost him his job looks set to reach far further afield.
Diamond's committee appearance came after British and American regulators fined Barclays more than $450 million for rate fixing during the height of the global financial crisis. But Barclays is just one of a host of banks facing investigation.
Now lawsuits are being prepared in reaction to the rates fixing which may have left banking customers around the world out of pocket.

What happened at Barclays?

Between 2005 and 2009, when Diamond was in charge of the investment branch of Barclays bank, traders were influencing the pricing of rates which impacts up to $800 trillion of securities.

E-mails revealed as part of the rate fixing investigation showed traders were seeking beneficial rates for their trading positions.
During the credit crisis of 2007 and 2008, Barclays high Libor postings came under scrutiny and the bank, concerned about "unfounded negative perceptions," lowered its Libor submissions, according to Barclays notes to the Treasury Committee.
Regulators investigating Libor manipulation last month fined the bank more than $450 million. A report from the UK's Financial Services Authority concluded the issues were of the "utmost seriousness" owing to the prevalence of rates references throughout the markets.


But Barclays is unlikely to be the only bank facing financial penalties. Several additional banks are cited but not named in documents made public as part of Barclays settlement with the FSA.
Deutsche Bank, Royal Bank of Scotland, Credit Suisse, Citigroup, JPMorgan Chase and UBS are among the banks that are acknowledged as being investigated by regulators.


Why is Libor so important?
Libor, or the London Interbank Offered Rate, is the benchmark rate which is set every morning by banks posting the rate at which they are willing to borrow with the British Bankers' Association.
The BBA publishes Libor as a result of this, and the rate is then used to fix the borrowings of credit cards, mortgages, car leases and more.
According to Ralph Silva, a former investment banker, the Libor rates for different currencies are directly connected to 99% of all commercial banking products.
Barclays was accused of manipulating its Libor rate for reasons including for the personal benefit of some traders' books.
According to Diamond, other banks struggling during the credit crunch were posting Libor levels significantly below that of Barclays, which he said during Wednesday's questioning "did not seem to us to be right."


Why has this become so political?
The enthusiasm for politicians to wade into the Barclays furor indicates heat will remain on the sector as the investigations into rate fixing continues.
Politicians from both sides of the political fence took jabs at Barclays, with Prime Minister David Cameron saying the manipulation was "outrageous."
Before he came before the committee, Diamond appeared to be ready to point the finger at others for pressuring the bank on its rates. Barclays had released notes of a phone conversation between Diamond and the Bank of England's deputy governor, Paul Tucker, suggesting that politicians wanted Barclays to keep its rates low.
However, during the grilling Diamond deflected suggestions from MPs suggesting he must have known that conversation was misinterpreted by Jerry del Missier, then president of Barclays Capital, as an instruction to lower the level.
Under questioning by MPs, Diamond said his reaction was an appreciation that Tucker was "doing his job" and that Barclays needed to ensure Whitehall -- an all encompassing phrase for British government -- knew the bank was financially stable. Tucker has asked to appear before lawmakers to explain his side of the story.


What will the legal fallout be?
Civil suits are already being filed and others are in train. In the U.S., several law firms are taking class action suits with defendants including Barclays, RBS, Citigroup and Credit Suisse.
One, being pursued by Hausfeld LLP, is on behalf of the mayor and city council of Baltimore, who argue they suffered losses on interest rate swaps as a result of the defendants "anti-competitive conduct."
In the UK, Hausfeld says it is speaking to a number of "potential claimants with a view to bringing an action for damages in the English High Court against Barclays and other banks implicated in the LIBOR rate manipulation scandal."
It is not yet clear if criminal charges could be brought against traders involved in the rates rigging.


What happens next?
MPs are expected to debate if an inquiry should be held into the scandal, potentially through a Leveson-style judge-led investigation.
Investigations into Libor are continuing across jurisdictions including the U.S., UK, and through the European Union. Further high-profile resignations in the banking sector are possible given the precedent set by Barclays.
Regulators are also facing scrutiny. In its statement Barclays claimed it had alerted U.S. and British authorities about suspicious Libor submissions by other banks in late 2008, and was "disappointed that no effective action was taken."
The British Bankers' Association, meanwhile, says it's reviewing the process by which Libor is set.

I posted a thread on this about a week ago, but nobody seemed interested.

When I first heard about it, about ten days ago, I predicted it would explode. I proved to be correct.

There is a lot I can say, but the main thing is that I don't think this is just a UK/London thing. It is probably global, and the Department of Justice has been investigating Barclays and other banks for some years.

I've now read the above post, and there are a few things to add.

I watched all 3 hours of Bob Diamond answering questions from the treasury select committee, which consisted of 13 members of parliament asking a host of questions. It is not a court of law, but witnesses have to make an oath and are subject to perjury laws (I think, not completely sure).

The UK Serious Fraud Office yesterday announced they will be investigating.

There will be a parliamentary enquiry, and the committee will include a barrister, who will hopefully avoid the unfocussed effect of interview by committee. It will not be like Levenson, will not be led by a judge, because that takes so long to initiate and carry out. Parliament debated that yesterday.

Diamond was very charming, and did an excellent job of diverting the questions. He referred to the MP's by their first names, which destroyed the formality of the proceedings.

One thing which emerged - Diamond said he only heard of the scandal inside Barclays a few weeks ago. This was in spite of:

- traders shouting their false declarations across the trading floor
- supervisors knowing the traders were doing wrong
- submitters submitting wrong quotes
- DoJ investigating for many years
- Diamond accusing other banks of the same thing
- Diamond having conversations with BOE in 2008
- Diamond's chief operating officer admitting knowing it took place, and he and Diamond worked closely together.

But Diamond says throughout he had no idea the same thing might have been happening under his watch.

Worse, even though he accused other banks of doing it, he was not minded to check whether his own bank was doing it.

This is just the start. A lot of people in the UK want it to be more like the US and see a lot of bankers being led out in handcuffs. There is a lot of anger.

Clearly nobody is interested.

I posted a thread on this about a week ago, but nobody seemed interested.

When I first heard about it, about ten days ago, I predicted it would explode. I proved to be correct.

There is a lot I can say, but the main thing is that I don't think this is just a UK/London thing. It is probably global, and the Department of Justice has been investigating Barclays and other banks for some years.

I've now read the above post, and there are a few things to add.

I watched all 3 hours of Bob Diamond answering questions from the treasury select committee, which consisted of 13 members of parliament asking a host of questions. It is not a court of law, but witnesses have to make an oath and are subject to perjury laws (I think, not completely sure).

The UK Serious Fraud Office yesterday announced they will be investigating.

There will be a parliamentary enquiry, and the committee will include a barrister, who will hopefully avoid the unfocussed effect of interview by committee. It will not be like Levenson, will not be led by a judge, because that takes so long to initiate and carry out. Parliament debated that yesterday.

Diamond was very charming, and did an excellent job of diverting the questions. He referred to the MP's by their first names, which destroyed the formality of the proceedings.

One thing which emerged - Diamond said he only heard of the scandal inside Barclays a few weeks ago. This was in spite of:

- traders shouting their false declarations across the trading floor
- supervisors knowing the traders were doing wrong
- submitters submitting wrong quotes
- DoJ investigating for many years
- Diamond accusing other banks of the same thing
- Diamond having conversations with BOE in 2008
- Diamond's chief operating officer admitting knowing it took place, and he and Diamond worked closely together.

But Diamond says throughout he had no idea the same thing might have been happening under his watch.

Worse, even though he accused other banks of doing it, he was not minded to check whether his own bank was doing it.

This is just the start. A lot of people in the UK want it to be more like the US and see a lot of bankers being led out in handcuffs. There is a lot of anger. Originally Posted by essence

US banker were led out in handcuffs. I must have missed that. NOT that I am against it. If they broke the law...fuckem

Clearly nobody is interested. Originally Posted by essence

I'm interested.
I post info in the New Orleans Sandbox.
Don't take it personal.
People just don't understand how dire our financial problems are.
Jokes and insults are how uniformed ignorant people respond.
It's part of the social programming.

Yes, lets talk about this BS.

I'm interested.
I post info in the New Orleans Sandbox.
Don't take it personal.
People just don't understand how dire our financial problems are.
Jokes and insults are how uniformed ignorant people respond.
It's part of the social programming. Originally Posted by SEE3772

Excellent observation..

Yes, lets talk about this BS. Originally Posted by IIFFOFRDB

Part of A PM from someone sent to me that pretty much sums it up around here....
-----------------------------
"I like your posts and I think you are correct. I follow the likes of Peter Schiff etc etc. I bought a lot of gold back in 1990 at about $425 or so.

However the dumb fucks on here only care about "who's fucking who" and how much does it costs for a bbbj.

The providers live from hand to mouth and most haven't a pot to piss in.

I think the US and the rest of the world just continue to kick the can forever.

But good luck to you. Your message is valid but your audience is a bunch of hookers and horny broke old men. Lol"

Yes this is pretty much a SHMB with some people posting in the sandbox in between getting their bbbjs.
Much like yourself, each person has their issues with different parts of what is not right with the world. For you it is the financial system and anybody that cant see what you see is ignorant. So in your world, if a person is not as passionate about your issues, they are lesser mortals than yourself. I like your righteous indignation that you bring here. It makes you fit in rather well with the rest of us.
I believe that if you check into the bible, you will find that there has been an issue with "money changers" for a long long time. Controlling the money changers has always been as difficult as controlling those that rule over us. Are they one in the same? Is it possible that by getting control over our government could allow us better controll over the money changers?

Mos of us know that paper currnecy without anything substantial to back it up is an issue. There are laws against illegal activities in the financial system but as the financial systems has become more global do you now become a supporter of international law and a body to enfoce it? Or do you think this is someting that should be dealt with within the confines of each government body?