MaverickM11
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So Libor Might Be Fake...

Fri Jul 06, 2012 3:19 am

This seems like a much bigger deal than the press it's getting.

"Banking giant Barclays Capital has been rocked this past week by revelations that it manipulated Libor, a key benchmark for interest rates worldwide, for its own benefit. "

"Between 2005 and 2008, Barclays traders repeatedly requested that colleagues in charge of the Libor process tailor the bank's submissions to benefit their trading positions. Barclays staffers also colluded with counterparts from other banks to manipulate rates, according to the settlement. "

""This dwarfs by orders of magnitude any financial scams in the history of markets," said Andrew Lo, a professor of finance at the Massachusetts Institute of Technology. "

http://money.cnn.com/2012/07/03/inve...-rate-faq/index.htm?source=cnn_bin
E pur si muove -Galileo
 
Klaus
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 4:17 am

Of course it only proves again that any kind of effective oversight – particularly on an european level – must be avoided at any cost…   
 
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scbriml
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 5:25 am

At least Bob Diamond had the decency to fall on his £25m sword.   

Quoting Klaus (Reply 1):
Of course it only proves again that any kind of effective oversight – particularly on an european level – must be avoided at any cost…

Yes, whenever anyone has the temerity to mention the dreaded R-word, the standard response from the industry is "Oh, if you regulate, the financial sector will leave London." And the downside is...?

Q: What's the collective noun for bankers?
A: A wunch.
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imiakhtar
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 5:49 am

Quoting Klaus (Reply 1):
Of course it only proves again that any kind of effective oversight – particularly on an european level – must be avoided at any cost…

I was wondering how long it would be before you reared with your snide and incessant British bashing remarks.

A Federal EU which you folk are pushing would be a greater calamity than the one in the financial districts of London.

The sooner we're out of the "community" the better.

Quoting scbriml (Reply 2):
And the downside is...?

Unfortunately, we've gotten into the awful situation where the financial sector is the linchpin of the UK economy and has been for the best part of 20 years. Even if there was the political will (which there isn't with either lab or con), it would take many years to wean ourselves away from it to a more sustainable industry.
Whatever happened to Leon Trotsky?
 
Klaus
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 12:45 pm

Quoting imiakhtar (Reply 3):
I was wondering how long it would be before you reared with your snide and incessant British bashing remarks.

Where, exactly, have I "bashed Britain" in my post?

Maybe you're just identifying Britain's interests a bit too closely with the interests of certain corporations in the City of London for your own good.

I'm highly critical of corrupt bankers wherever they lurk. And I'm highly critical of elected politicians who instinctively cuddle up to those to the extent that they completely lose track of the interests of the people who actually elected them.

Which seems to be an anglo-american phenomenon for the most part.
 
smittyone
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 1:40 pm

Quoting Klaus (Reply 4):
Which seems to be an anglo-american phenomenon for the most part.

HEY NOW!

We have the best Government that money can buy and I won't stand for you criticizing it.

 
 
Bongodog1964
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 3:05 pm

It appears that a number of banks were trying to influence the LIBOR rate to their advantage, bearing in mind something like 30 banks across the world submit their data to make this figure up, you have to wonder if all the attempts at rigging evened out ? If Barclays wanted to lower it, you can be sure that someone else wanted to raise it.
 
MaverickM11
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 3:28 pm

Quoting Klaus (Reply 1):
Of course it only proves again that any kind of effective oversight – particularly on an european level – must be avoided at any cost…
Quoting scbriml (Reply 2):
Yes, whenever anyone has the temerity to mention the dreaded R-word, the standard response from the industry is "Oh, if you regulate, the financial sector will leave London." And the downside is...?

We've had financial disasters in spite of loads of regulation and the new proposed regulations generally seem to make things worse and more complicated rather than stem future abuse. The bigger question in my mind is how long will shareholders stand for this? Not only have they seen their holdings in financial institutions take a huge hit in the last few years, but the meagre returns the finance industry has afforded them on the assets they manage stands in direct contrast to the finance industry's fat fees and pay. I think there's going to be a seismic shift shortly in the industry not b/c of government regulation, but because shareholders are tired of supporting high wages for terrible returns and coffer draining scandal after scandal.
E pur si muove -Galileo
 
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Aesma
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 3:52 pm

Quoting imiakhtar (Reply 3):
The sooner we're out of the "community" the better.
Quoting imiakhtar (Reply 3):
it would take many years to wean ourselves away from it to a more sustainable industry.

Well, I'm sure getting out of the EU would accelerate the downfall of the City by a lot.

Quoting MaverickM11 (Reply 7):
We've had financial disasters in spite of loads of regulation and the new proposed regulations generally seem to make things worse and more complicated rather than stem future abuse. The bigger question in my mind is how long will shareholders stand for this? Not only have they seen their holdings in financial institutions take a huge hit in the last few years, but the meagre returns the finance industry has afforded them on the assets they manage stands in direct contrast to the finance industry's fat fees and pay. I think there's going to be a seismic shift shortly in the industry not b/c of government regulation, but because shareholders are tired of supporting high wages for terrible returns and coffer draining scandal after scandal.

That's already happening here, more than half of the French investors have fled the markets, and the French have a lot of money aside. That means that the housing market has continued to get tighter even as we're in a crisis, homes and condos are selling for ridiculously high prices, and you need 2 good salaries and the help of 3 family members if you want to buy your first 20m² studio.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
Klaus
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 4:13 pm

Quoting SmittyOne (Reply 5):
We have the best Government that money can buy and I won't stand for you criticizing it.

Oooh…!   

Quoting MaverickM11 (Reply 7):
We've had financial disasters in spite of loads of regulation

Which ones, exactly?

I can't seem to recall anything remotely resembling the 2008 crisis which we're still in having happened under tight regulatory oversight.

Care to bring a few examples of comparable magnitude?

Quoting MaverickM11 (Reply 7):
and the new proposed regulations generally seem to make things worse and more complicated rather than stem future abuse.

It's obviously more tedious for the bankers involved, no doubt about it. But experience shows that the absolutely egregious misconduct in recent years was crucially enabled by deregulation.

Quoting MaverickM11 (Reply 7):
The bigger question in my mind is how long will shareholders stand for this? Not only have they seen their holdings in financial institutions take a huge hit in the last few years, but the meagre returns the finance industry has afforded them on the assets they manage stands in direct contrast to the finance industry's fat fees and pay. I think there's going to be a seismic shift shortly in the industry not b/c of government regulation, but because shareholders are tired of supporting high wages for terrible returns and coffer draining scandal after scandal.

The largely ficticious revenues of the past have largely evaporated, which has led to an unavoidable contraction and to the shedding of various business models whose viability is just not there any more.

The crazy notion of the financial "industry" being an actually "value-creating" segment has mostly dissolved, so it's by necessity shrinking back towards the regular, low-margin, but also actually legitimate business which is the actual core of the business, as it should be.

The buzzed-out orgy is mostly over, and that is a good thing in the medium to long run.
 
smittyone
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 4:44 pm

Quoting Klaus (Reply 9):
The largely ficticious revenues of the past have largely evaporated, which has led to an unavoidable contraction and to the shedding of various business models whose viability is just not there any more.

The crazy notion of the financial "industry" being an actually "value-creating" segment has mostly dissolved, so it's by necessity shrinking back towards the regular, low-margin, but also actually legitimate business which is the actual core of the business, as it should be.

The buzzed-out orgy is mostly over, and that is a good thing in the medium to long run.

Agreed. It does seem silly in hindsight that so much money could be 'made' while not really producing anything. It's sort of like the financial system became more of a casino than anything else. And eventually the house always wins.

But it was fun while it lasted.
 
Klaus
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 5:12 pm

Quoting SmittyOne (Reply 10):
But it was fun while it lasted.

At least for some. For many others, not so much.

The substantial erosion of middle class income (particularly after subtracting the ficticious riches from the housing bubble and fraudulent pseudo-investments), the shedding of proper middle-class jobs and the massive rise of precarious jobs for a growing number of "working poor" have been the flip side – that's where much of the funds eventually came from.

The financial firms indeed didn't actually create any value – they just extracted and repurposed it.
 
aloges
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 6:11 pm

Quoting MaverickM11 (Reply 7):
I think there's going to be a seismic shift shortly in the industry not b/c of government regulation, but because shareholders are tired of supporting high wages for terrible returns and coffer draining scandal after scandal.

It would have happened long ago if the boards that approve these wages weren't manned by other fat cats who want their own approved. I'll give you 20 million a month if you give me 20 million a month... and round and round it goes.
Don't cry because it's over, smile because it happened.
 
Pyrex
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 6:18 pm

Quoting Klaus (Reply 1):

Of course it only proves again that any kind of effective oversight – particularly on an european level – must be avoided at any cost…

Agree, all banks should not only be heavily regulated by wise government employees who couldn't get a job in the industry if one fell on their heads but do one better and be local, government-owned non-profits. I mean, it worked out so well for the Spanish cajas, the German Landesbanken, the... oh, wait.

Quoting Klaus (Reply 9):
But experience shows that the absolutely egregious misconduct in recent years was crucially enabled by deregulation.

I extend the same challenge here as I have extended to anyone that brings up this ridiculous argument over the past year. Since what people usually mean when they talk about this is Glass-Steagall I challenge you to find one paragraph of that law (one single paragraph) that could have prevented this crisis. Go right ahead - nobody has succeeded so far. I even promise not to bring up the countless ways in which not having Glass-Steagall made the crisis a lot less intense than it could have been.

Quoting Klaus (Reply 9):
I can't seem to recall anything remotely resembling the 2008 crisis which we're still in having happened under tight regulatory oversight.

Care to bring a few examples of comparable magnitude?

The Savings & Loans crisis of the 1980s and 1990s was comparably much worse.
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MaverickM11
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 7:50 pm

Quoting aloges (Reply 12):
It would have happened long ago if the boards that approve these wages weren't manned by other fat cats who want their own approved.

Of course....but on the bright(er) side boards are becoming feistier and say-on-pay votes are gathering steam, and in some cases are even binding. I really think shareholders are fed up, and rightly so.

Quoting Pyrex (Reply 13):
Since what people usually mean when they talk about this is Glass-Steagall I challenge you to find one paragraph of that law (one single paragraph) that could have prevented this crisis.
Quoting Klaus (Reply 9):
Which ones, exactly?

Every single financial crisis has yielded thousands of pages of regulations that have obviously failed to stem the following crisis.
E pur si muove -Galileo
 
mt99
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 8:15 pm

Quoting MaverickM11 (Reply 14):
Every single financial crisis has yielded thousands of pages of regulations that have obviously failed to stem the following crisis.

True.. but is the answer less regulations? Ask Jamie Dimon. Chase has lost substantially more money in their latest "bad trade" that they were claiming that the more regulations would cost them
.

Quoting Pyrex (Reply 13):
I extend the same challenge here as I have extended to anyone that brings up this ridiculous argument over the past year. Since what people usually mean when they talk about this is Glass-Steagall I challenge you to find one paragraph of that law (one single paragraph) that could have prevented this crisis. Go right ahead - nobody has succeeded so far. I even promise not to bring up the countless ways in which not having Glass-Steagall made the crisis a lot less intense than it could have been.

What you are trying to prove is that the regulations may not be the proper ones, or that they should be better ones in place, not that there is no need for them...

If the mechanical design of a brake system in a car is faulty and there is a crash, does it mean that we should take brakes out of all cars?
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Dreadnought
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 9:10 pm

Quoting MaverickM11 (Thread starter):
"Between 2005 and 2008, Barclays traders repeatedly requested that colleagues in charge of the Libor process tailor the bank's submissions to benefit their trading positions. Barclays staffers also colluded with counterparts from other banks to manipulate rates, according to the settlement. "

I have not had the time to read about this in detail, but my initial reaction is "what's the big deal?" There are over 200 different financial institutions (including Barclays) making up the LIBOR committees. Of course each will push for rates and prices influenced by their own positions, that's why you have so many institutions represented. It is no different than democratic elections, where most people vote their own financial benefit.
You have enemies? Good. That means you've stood up for something, sometime in your life. - W. Churchill
 
Pyrex
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 9:30 pm

Quoting mt99 (Reply 15):
What you are trying to prove is that the regulations may not be the proper ones, or that they should be better ones in place, not that there is no need for them...

What I am arguing is that the bogeyman of "deregulation" is a straw-man argument. If the regulation is wrong, as Glass-Steagall was, repealing it might actually be a good thing. More regulation isn't always better regulation.

Quoting Dreadnought (Reply 16):
There are over 200 different financial institutions (including Barclays) making up the LIBOR committees. Of course each will push for rates and prices influenced by their own positions, that's why you have so many institutions represented


I actually think it is more like 20 banks,but the funny thing is, just because some trader at Barclays wanted a higher or lower Libor for his desk to make money that does not mean that, when taken as a whole institution, Barclays wanted for that same thing to happen - their overall exposure is not the same as that of a specific desk. That is why Barclays is probably a victim of the behavior of their own employees in this whole thing - they probably lost money on the fixing as many times as they made money.
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MaverickM11
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RE: So Libor Might Be Fake...

Fri Jul 06, 2012 9:31 pm

Quoting mt99 (Reply 15):
True.. but is the answer less regulations?

I think the answer is smarter regulations but that may be asking for the moon

Quoting mt99 (Reply 15):
If the mechanical design of a brake system in a car is faulty and there is a crash, does it mean that we should take brakes out of all cars?

The trap we inevitably get into is "we need to do something" > "this phone book of regulations is something" > "we need this phone book of regulations". You can guarantee that all the regulations in the world will miss the next crisis, but perhaps giving shareholdes more say in the companies they own would mitigate some of the terrible decision making that's going on.

Quoting Dreadnought (Reply 16):
There are over 200 different financial institutions (including Barclays) making up the LIBOR committees

I thought it was 16 banks?
E pur si muove -Galileo
 
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Dreadnought
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RE: So Libor Might Be Fake...

Sat Jul 07, 2012 2:28 am

Quoting MaverickM11 (Reply 18):
I thought it was 16 banks?

This is what Wikipedia says:

"Member banks are international in scope, with more than sixty nations represented among its 223 members and 37 associated professional firms (as of 2008)."

Unfortunately it's not footnoted and I can't find an online source. I remember the 200+ quote from a conference I attended years ago.

But even if it was only 16, a single bank is not going to cause a very big swing either way.
You have enemies? Good. That means you've stood up for something, sometime in your life. - W. Churchill
 
aloges
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RE: So Libor Might Be Fake...

Sat Jul 07, 2012 9:02 am

Quoting Dreadnought (Reply 19):
But even if it was only 16, a single bank is not going to cause a very big swing either way.

But does it excuse fraudulent behaviour?
Don't cry because it's over, smile because it happened.
 
imiakhtar
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RE: So Libor Might Be Fake...

Sat Jul 07, 2012 11:23 am

Quoting Dreadnought (Reply 19):
But even if it was only 16, a single bank is not going to cause a very big swing either way.

From what's been said thus far, Barclays' involvement is just the tip of the iceberg. Four RBS executives were sacked last year for their role and there has been mention of HSBC being involved too.

Rotten to the core.
Whatever happened to Leon Trotsky?
 
jamincan
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RE: So Libor Might Be Fake...

Sat Jul 07, 2012 2:15 pm

I suspect that there is a very good chance that most if not all of them are involved to an extent. I wish that governments would actually have some balls and incarcerate the executives of these companies. They are obviously operating with no sense of morals and ethics and the only way I can see things improving is if they are completely extracted from the industry.
 
MadameConcorde
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RE: So Libor Might Be Fake...

Sun Jul 08, 2012 3:22 pm

This may turn into one of the largest financial scandals to date.

http://www.wimp.com/financialscandals/

‘The mob learned from Wall Street’: Eliot Spitzer on the ‘cartel-style corruption’ behind Libor scam
Barclays CEO Bob Diamond recently resigned after the bank was fined $453 million for its part in the scandal, which involved manipulating the London Interbank Offered Rate (Libor), a key global benchmark for interest rates, by essentially “faking their credit scores,” according to Taibbi. And as Taibbi explains, Barclays couldn’t have acted alone.

http://current.com/shows/viewpoint/v...style-corruption-behind-libor-scam

This is huge. No doubt. These banksters are crooks.

 Wow!
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zkojq
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RE: So Libor Might Be Fake...

Mon Jul 09, 2012 1:26 pm

Quoting Pyrex (Reply 17):
More regulation isn't always better regulation.

Very true.

Quoting MaverickM11 (Reply 18):
I think the answer is smarter regulations but that may be asking for the moon

   but look at where the Chairman and Ranking Member of the Senate Banking Committee are getting campaign contributions from:
http://www.opensecrets.org/politicia...mmary.php?cid=N00010084&cycle=2012
http://www.opensecrets.org/politicia...mmary.php?cid=N00009920&cycle=2012
I'm sure the political campaigns of their European counterparts get donations from similar sources.
First to fly the 787-9 (ZK-NZE, NZ103, 2014-10-09)
 
MaverickM11
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RE: So Libor Might Be Fake...

Mon Jul 23, 2012 4:33 am

Quoting zkojq (Reply 24):
but look at where the Chairman and Ranking Member of the Senate Banking Committee are getting campaign contributions from:

Of course, but even if the regulations don't change--and I suspect they will to some extent--these banks are still going to be sued to kingdom come because so many financial contracts are based on what is now a falsified metric.
E pur si muove -Galileo

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