LIBOR scandal - Largest Banking Scandal in History

[Moridam]

As usual, Matt Taibbi has written a handful of fun and accessible pieces on this topic over the last few weeks:

http://www.rollingstone.com/politics/blogs/taibblog

Almost seems kind of useless to mention, because I imagine most of the people who actually follow this sort of stuff and have the capacity for outrage have already read them. And of course, anyone of a Serious Person sort of leaning, or the jaded/apathetic/'well that's just what businesses (are supposed to) do' types will probably disregard his articles/reporting on account of his actually caring about/taking a position on something.

Useless bitching aside, for my money, he's probably the best popular writer covering the corrupt practices of the financial services industry.

[Drex]

Awful, but entirely unsurprising. I'm not sure why some Republicans are so obsessed with "free market" capitalism. This is the shit you get, only if you completely deregulate then you have no legal recourse when you catch douchebaggery like this.

Yes, it's entirely coincidental that the British government and central bank are being investigated for encouraging and participating in the scandal too

[BaneTheBrawler]

I didn't say regulation was perfect, but at least with the regulation we have the ability to put some assholes in jail. No regulation = no punishment.

[quannum]

As usual, Matt Taibbi has written a handful of fun and accessible pieces on this topic over the last few weeks:

http://www.rollingstone.com/politics/blogs/taibblog

Almost seems kind of useless to mention, because I imagine most of the people who actually follow this sort of stuff and have the capacity for outrage have already read them. And of course, anyone of a Serious Person sort of leaning, or the jaded/apathetic/'well that's just what businesses (are supposed to) do' types will probably disregard his articles/reporting on account of his actually caring about/taking a position on something.

Useless bitching aside, for my money, he's probably the best popular writer covering the corrupt practices of the financial services industry.

Matt is the fucking man.



from the vid description:
See the following articles by Matt Taibbi for additional information on the LIBOR rate fixing scandal:

1. Why is Nobody Freaking Out About the LIBOR Banking Scandal?
http://www.rollingstone.com/politics...andal-20120703

2. Another Domino Falls in the LIBOR Banking Scam: Royal Bank of Scotland
http://www.rollingstone.com/politics...tland-20120629

3. A Huge Break in the LIBOR Banking Investigation
http://www.rollingstone.com/politics...ation-20120628

[quannum]

REPORT: News Networks Give Massive Banking Scandal Only 12 Minutes Of Primetime Coverage

Major American television news outlets are devoting scant coverage to one of the largest banking scandals in history. Regulators are investigating whether major financial institutions have been manipulating the LIBOR, a key interest rate that banks use to borrow money from one another. The British multinational financial institution Barclays has already been fined $450 million for its role in the scandal. Despite the massive scope of the controversy -- LIBOR is "used as a benchmark to set payments on about $800 trillion worth of financial instruments" -- CNN, Fox News, MSNBC, ABC, CBS, and NBC have only spent about 12 minutes combined covering the story during their evening newscasts and opinion programming.

...

How does all of this affect the average American?

The LIBOR, as The Boston Globe reports, not only determines "lending rates for trillions of dollars of credit, from loans between financial institutions to credit cards and adjustable-rate mortgages" but also impacts local government agencies and municipalities that have financial investments directly tied to LIBOR.

In a federal lawsuit filed by Baltimore City against the banks that set LIBOR, the city argues that artificially low LIBOR denied it millions of dollars in returns on investments. As a result, Baltimore alleges that the city was forced to make service and payroll cuts during the recent financial crisis. According to the Globe, "dozens of states, cities, and other government entities are exploring whether they lost money" due to the rate-fixing scandal.

In a post pondering the lack of outrage stateside regarding the scandal, Rolling Stone contributing editor Matt Taibbi explained that the "story is so outrageous that it shocks even the most cynical Wall Street observers." Indeed, numerous economists and economic observers have been quick to label this one of the largest banking scandals in history, with MIT professor of finance Andrew Lo telling CNN Money that it "dwarfs by orders of magnitude any financial scams in the history of markets." The Economist quoted an anonymous "chief executive of a multinational bank" who called the story "the banking industry's tobacco moment."

But most American television news outlets haven't taken enough time to explain the story to their viewers.

HSBC, Libor Manipulation, Microsoft, JPMorgan: Compliance

Bagley was among at least six HSBC executives who testified before the Senate’s Permanent Subcommittee on Investigations yesterday after the panel released a 335-page report describing a decade of compliance failures by Europe’s biggest bank. London-based HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report.

more news

[Reality]

cgreene34, has good videos about this on youtube.

[quannum]

more matt, easier to hear.
Matt Taibbi: You Should Be Freaking Out Over LIBOR Scandal!

[Kaslo]

http://www.colbertnation.com/the-col...t-rate-scandal

[quannum]

part of a larger article

The list of institutions that have said they are either co-operating with investigations or being questioned includes many of the world's biggest banks. Among those that have disclosed their involvement are Citigroup, Deutsche Bank, HSBC, JPMorgan Chase, RBS and UBS.

Court documents filed by Canada's Competition Bureau have also aired allegations by traders at one unnamed bank, which has applied for immunity, that it had tried to influence some LIBOR rates in co-operation with some employees of Citigroup, Deutsche Bank, HSBC, ICAP, JPMorgan Chase and RBS. It is not clear whether employees of these banks actually co-operated or, if they did, whether they succeeded in manipulating rates.

Two big changes are needed.

Two big changes are needed. The first is to base the rate on actual lending data where possible. Some markets are thinly traded, though, and so some hypothetical or expected rates may need to be used to create a complete set of benchmarks. So a second big change is needed. Because banks have an incentive to influence LIBOR, a new system needs to explicitly promote truth-telling and reduce the possibilities for co-ordination of quotes.

Ideas for how to do this are starting to appear. Rosa Abrantes-Metz of NYU's Stern School of Business was one of a group of academics who, in 2009, raised the alarm that something fishy was going on with LIBOR. One simple change, she proposes, would be significantly to raise the number of banks in the panel. The theoretical changes needed to repair LIBOR are not difficult, but there are practical challenges to reform. The thousands of contracts that use it as a point of reference may need to be changed. Moreover, the real obstacle to change is not a lack of good ideas, but a lack of will by the banks involved to overturn a system that has served most of them rather well. With lawsuits and prosecutions gathering pace, those involved in setting the key rate in finance need to get moving. Adding a calendar note to “Fix LIBOR” just won't do.

some cute graphs:
http://media.economist.com/sites/def...707_FBC552.png

http://media.economist.com/sites/def...707_FBC557.png