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Forum Post: LIBOR Scandal - Jack Bondstalk dropped a boot

Posted 2 years ago on July 13, 2012, 1:23 a.m. EST by grapes (3429)
This content is user submitted and not an official statement

LIBOR rate is one of the most important interest rates in the world because so many loan rates, derivatives, and financial instruments are based on it.

According to: http://en.wikipedia.org/wiki/Libor_scandal

"Libor underpins approximately $350 trillion in derivatives." "Because mortgages, student loans, financial derivatives, and other financial products often rely on Libor as a reference rate, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide."

Here is a news story regarding the incumbent U.S. Treasury Secretary Timothy Geithner (not Hank Paulson who was the Secretary at the time) having some knowledge of the manipulations that were going on:

http://www.washingtonpost.com/business/economy/geithner-drawn-into-libor-scandal/2012/07/12/gJQArDhbgW_story.html

titled "Geithner made recommendations on Libor in 2008, documents show"

With $350 trillion in derivatives, most people with any loan, mortgage, pension, insurance, and bond holdings have probably been affected.

39 Comments

39 Comments


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[-] 2 points by Nevada1 (4829) 2 years ago

Good forum post.

[-] 2 points by grapes (3429) 2 years ago

Investigations are ongoing - we can see how the tunes change to limit the damage. This case seems to have driven even the big-moneyed and establishment folks mad at the financial shenanigans.

[-] 2 points by shadz66 (19985) 2 years ago

Interesting post & links, further to which I append the following :

  • "The Biggest Financial Scam In World History", by Washington's Blog (July 06, 2012) -- "Why Is the Libor Scandal So Important to You ? There have been numerous big banking scandals recently. But the Libor scandal is the biggest financial scam in world history." : http://www.informationclearinghouse.info/article31768.htm .

The 18 banks that have constituted the cabal / cartel / committee / confraternity, to set 'LIBOR' are :

  1. Bank of America

  2. Bank of Tokyo-Mitsubishi UFJ Ltd

  3. Barclays Bank plc

  4. BNP Paribas

  5. Citibank NA

  6. Credit Agricole CIB

  7. Credit Suisse

  8. Deutsche Bank AG

  9. HSBC

  10. JP Morgan Chase

  11. Lloyds Banking Group

  12. Rabobank

  13. Royal Bank of Canada

  14. Société Générale

  15. Sumitomo Mitsui Banking Corporation Europe Ltd (SMBCE)

  16. The Norinchukin Bank

  17. The Royal Bank of Scotland Group

  18. UBS AG

Some other relevant links on the matter :

radix omnium malorum est cupiditas ...

[-] 1 points by grapes (3429) 2 years ago

You gave many excellent references. It is time to send in the black-horse cavalry to wake up the U.S. populace which is but one of the young cats running from the front door to the back door yaowing about why we are being so mean to make rain fall outside EVERY door so that they cannot go out to play without getting wet.

[-] 1 points by shadz66 (19985) 2 years ago

Re. The Extreme Bankster Larceny, please also see :

e tenebris, lux ...

[-] 2 points by grapes (3429) 2 years ago

It gives great pictorial representation that may reach more people.

de lumen, principatum

[-] 1 points by Builder (4202) 2 years ago

I can't help thinking that this is a staged play, and even the name of the first to get the boot, diamond, was selected for a reason.

There's been doubts about the LIBOR system since 2005, so it's taken 8 years for this to come out?

The public's perception of the banksters has been heading into negative territory for several years, so maybe the playmakers decided they needed to hunt some heads and have some public lynchings to quiet the masses.

Apparently Bob Diamond's billions in "bonuses" will be staying in someone else's pocket too. Fat chance. He's probably gonna dissapear from public view, and turn up on a Mediterranean island with his own mega-resort, and a retirement villa. Oh, and new identity.

Can we all say Fall Guy?

[-] 1 points by grapes (3429) 2 years ago

There will be investigations of the other mega-banks followed by years of lawsuits. Attorneys and lawyers will have years of good-paying work. Robert Diamond is the second to get the jackboot but may not be the last. "Bankster" has surprisingly entered the lexicon of the "conservatives." The scandal has probably hurt the good and honest part of the 1% quite a bit (of course, the corresponding part of the 99% has been hurt but may not have "gotten" it yet) so we are seeing some sorely needed actions. They are very late but better late than never because the people in the know have been holding their breaths and onto their money for too long to the detriment of everyone else.

[-] 1 points by hchc (3297) from Tampa, FL 2 years ago

This is what happens when crimes are committed and we reward them instead of punish.

[-] 1 points by grapes (3429) 2 years ago

Magnanimity and leniency were taken for granted as privileges and aristocratic rights. Wall Street is probably having a belly laugh now that Obama had saved it from itself so they could totally ignore him and donate their money to their new champion to replace Obama.

[-] 0 points by hchc (3297) from Tampa, FL 2 years ago

I dont think Obama is going anywhere. If Mitt did the things Obama did, there would be riots in the streets everywhere.

Obama is a great bullshitter, and that is what they need.

[-] 1 points by grapes (3429) 2 years ago

Everyone loves a fairy tale (modernized and cleaned-up version only). Some old-time fairy tales have very sad and gruesome endings so older people might have been conditioned since childhood to be more realistic about the potential outcomes. Modern versions have been sanitized and the endings have been made happier so nowadays people probably expect better and unrealistic outcomes more. There is nothing wrong with high expectations but there needs to be the will to exert the effort and pay the associated costs. That is what we seem to have lost as a people and greatness will slip through our fingers because we do not have the will to grasp it when opportunities come.

[-] 1 points by brightonsage (4494) 2 years ago

With a new bank scandal every week with a string of multi $ hundred million settlements with the government I need to find spreadsheet with all of them in it so I can add the class action civil suit results as they dribble in. Since they all seem to involve 15 -18 major banks, it gets complicated.

The other part of the pattern seems to be that the GOP puts its head up to rail about over excessive regulation and red tape preventing the recovery that they would kill their mother and grand mother to prevent, the next scandal hits and they go quite for a week and then it's back to the same old song.

[-] 1 points by grapes (3429) 2 years ago

I surmise that the lack of credible regulations and vigorous enforcements are preventing the recovery from really taking hold. Above all, investors want to know that they will see their principals returned, hopefully with interests and/or dividends. When trust is gone, taking no action becomes more prudent than taking any risk. Investors can just sit on their capital because that IS better than be taken a ride of by the banksters.

[-] 1 points by brightonsage (4494) 2 years ago

I agree with you. There are a mess of regulatory rules in process with lobbying going full tilt. Even if the law were good, there is tremendous effort and money to keep the resulting rules from succeeding. In this climate they will almost certainly have to be redone after we get money and corruption out of governance. This will take some time under even the most optimistic scenarios.

[-] 1 points by grapes (3429) 2 years ago

In the U.S., there were other forms of justice before our current simulated justice system. There are people who prevent the re-regulation effort so that they can PROVE that regulations are futile later on. It is incumbent upon the U.S. populace to build up the alternate form of justice in parallel and effect a transition in order that the current corrupted system can be cleaned out.

[-] 1 points by brightonsage (4494) 2 years ago

Alternate forms? And they were great so we gave them up? Justice is just. Alternatives to justice are unjust.

If you fix the process its product is justice. And the fixes are .....?

[-] 1 points by grapes (3429) 2 years ago

The most massive aquatic animal is the blue whale. Its ancestor was a land animal whose ancestor was an aquatic animal. Think about that.

Justice is not absolute and unchangeable. It needs constant maintenance and upgrades. It is an end to which we can strive but never quite reach, just as there is no perfect form of life for all environments. The correct answer to the question of which is the "fittest" is always, "It depends on the context." It is great for an ancestor of blue whale to colonize the land when the land is a new frontier just as it is great for its descendant to return to the oceans having acquired the edge from breathing air and the resultant effective circulatory system.

We have learned that there are fewer dastardly deeds committed under the limelight. We should therefore build transparency and control into an improved justice system. There are backdoor deals and prejudices. An improvement would be to record all of these deals and utterances so that they can be subpoenaed and reviewed later.

[-] 1 points by brightonsage (4494) 2 years ago

I can agree with you on this which sounds much different from substituting an alternative with a questionable or no track record.

From a history of the recognition of more human rights and equality, we have suffered a major reversal. If were back on track much of the population appears to strongly favor its acceleration to the point that it would be a maintenance issue. Then we could work hard on rehabing and releasing the people who should not be in our prisons. We could work on economic justice, growing our economy for our shared security, and eliminating the cause of all of the misdirected priorities is the corrupting influence of money in all aspects of governance at all levels.

[-] 1 points by grapes (3429) 2 years ago

Rather than depending heavily on our imprisonment-oriented justice system, we should substitute other forms of justice, such as wearing badges of dishonor, social disapproval and ostracism for a duration, etc. which tend not to leave permanent disabling marks on people's livelihoods. The problem with our current system is that incarcerated people find it hard to re-integrate into society even after they have served their full terms. Why should we as a society create more social problems for ourselves? We need to substitute more moral laws for penal laws, reduce the number of penal laws, and enforce what remains vigorously. When there are too many laws, people tend to give up complying and start to feel that their enforcements are arbitrary. It is actually a very American idea that people be given new beginnings. There is definitely some truth to the idea of our ancestors being the "wretched refuse of your teeming shore." That was why the U.S. could grow so huge because so much of that exists all around the world but the "golden door" aspect of it is just as important. It is the New World, a new continent and a new society, and most important of all a new beginning where the past is greatly discounted in the future. We were Hope escaping from Pandora's box.

[-] 1 points by brightonsage (4494) 2 years ago

I hear ya.

[-] 1 points by brightonsage (4494) 2 years ago

No, the Treasury Secretary, Paulson. may or may not have had knowledge or suspicions. The head of the NY Fed made a suggestion.

You need to correct an otherwise good post.

[-] 1 points by grapes (3429) 2 years ago

Thanks for correcting me. Geithner was the head of the NY Fed (by the way, a board director of the N.Y. Fed tasked with investigating J.P. Morgan Chase's multi-billion dollar trading loss is Jamie Dimon, head of J. P. Morgan Chase). Geithner is now the U.S. Secretary of the Treasury who had promised not to work covertly (how about overtly?) as a shill for Wall Street any more. Hank Paulson, the then U.S. Secretary of Treasury was probably up to his eyeballs in 2008 plugging holes together with Ben Bernanke at the embankment on the "North Sea." He might not have had the time to notice the manipulations but questions of LIBOR anomalies had surfaced years earlier than 2008.

[-] 1 points by brightonsage (4494) 2 years ago

You are welcome. there are more details coming out. BBA is saying they took action based on Tim's email. But there are more communications to be released. This definitely justifies more regulation, not less. And not written by lobbyists.

[-] 1 points by grapes (3429) 2 years ago

If Tim truly tried to stem the manipulations at its sources, he can come out just fine and should be lauded for his perspicacity. However, the BBA which knew of Tim's email must be questioned as to why it took them several years to begin to address the problem. It reeks of systemic fraud and cover up. We will see what transpires with the new releases.

Perhaps BBA is doing what Chris Dodd did with the Dodd-Frank Act - getting a sweetheart VIP mortgage and enjoying it till it was discovered and then championing to correct the unfair systemic failure. We see the results years later - proprietary trading is still burning a big hole in a government-backed J.P. Morgan Chase while Jamie Dimon, heading it, is decrying and forestalling "heavy-handed" government regulations.

Hello, how many times do these urchins need to burn the house down before we take the matches from them? It is most ironic that Jamie Dimon, the one who heads up the government-backed firm which had discovered the lucrative matches and succeeded at passing HIS burning match to the others, used his reputation of not having been burned for decrying regulations. Recent losses showed that he was not much better than the rest. Dodd-Frank is still being written by lobbyists. They lost the legislative fight but the delaying tactics are working in their favor. Do not trust a word of what Obama said about this never happening again. This will definitely happen again because we are still not really fixing the problem years later.

[-] 1 points by brightonsage (4494) 2 years ago

Actually the initial proposals (in bullet form from staff), sounded good. GOP hostage taking and Dems acquiescence to lobbyist-written drafts watered it down far too much.

[-] 1 points by grapes (3429) 2 years ago

Yes, we need GOP cleansing and Dems flushing so badly that the Great Flood sounds attractive for being efficient and effective. The ancient Romans' practice of decimating a battle-losing legion can be a good model for strengthening our political system.

[-] 1 points by brightonsage (4494) 2 years ago

They did purge a few legions but they left the authoritarian system in place, even after Brutus' recall election.

[-] 1 points by grapes (3429) 2 years ago

It is one step at a time for a systematic transition. The way to go is to build a new system to take over while eviscerating the old system incrementally.

[-] 1 points by brightonsage (4494) 2 years ago

I prefer reconstructive surgeries. Evisceration rarely saved a patient. We live in this patient.

[-] 1 points by grapes (3429) 2 years ago

Is your goal still to save the patient? The patient's functions can be migrated to a new system but the old system may already be too broken to reconstruct. There is a reason that the U.S. had relatively good school buildings compared to some other countries' - the U.S. tore down the old school buildings completely. We may need to do the same to achieve rejuvenation.

[-] 1 points by brightonsage (4494) 2 years ago

People aren't buildings, however. They are the patient. When you put the wrong fuel in a car it may run very badly. Do some cleaning and put in the correct fuel and things might be looking up. You might still need to replace some parts but better wait to find out which ones.

We switched our system of governance from the fuel of participatory representative democracy to one fueled by money and corruption. Get rid of the wrong fuel and assess the situation. Might be less catastrophic than what is happening in Syria. It is dangerous to root for social chaos, you might just get it.

[-] 1 points by grapes (3429) 2 years ago

First people need to be informed of how they can save up rations for insuring against hiccups arising from the upcoming transition. Then they can gradually decouple from the old system and be shown how they can transfer their needs and wants incrementally to the new system. There needs to be an exchange rate mechanism to roll over the old system's legacy. No social chaos needs to occur but the social will for transition MUST exist and persist. The U.S. populace has so many instruments of "ultimate power" that the stability of transition can be well assured. In my people, I believe.

[-] 1 points by brightonsage (4494) 2 years ago

Pretty words.

[-] 1 points by grapes (3429) 2 years ago

Words need to be lived by. Much of our political structure dates to the eighteenth and nineteenth centuries. Remodeling and modernizing it seem desirable to address some deficiencies in our current system. Our system cannot act as quickly as a parliamentary system often practiced overseas. Very often, our system just does NOTHING. It may be just fine if the U.S. were just a relatively small state but it has grown to world dominance. With globalization imploding the world, the U.S. cannot just sit around, picking at its own navel lint or twiddling its thumbs while the world expects worthy leadership. The U.S. needs to take the leadership role and probably take some arrows in its back, too, but it will probably be better than just letting things happen "naturally" because nature itself did not lift us up but our ancestors' will and wits did.

[-] 1 points by brightonsage (4494) 2 years ago

There is much to recommend the parliamentary system, virtually all of the "new" democracies have chosen some version of it. That said, has it been immune to the same corrupting influences of money and propaganda of media empires like News Corp?

If we take the lead in getting rid of corruption, we will likely soon be leading in most aspects of governance that the world hungers for.

[-] -2 points by HCHC4 (-28) 1 year ago

Good thing we plugged Yellen into the Fed and Lew into the Treasury to right this ship!!

[-] 1 points by grapes (3429) 11 months ago

Yes, new branding can help until we come to the same old same old again. Never say never is a motto to live by unless you are a politician, in which case, use all, always, never, absolutely, etc. with passion.