US Launches $400BN Libor Case

US launches $400bn Libor case

Rate-rigging by British lenders ‘fuelled failure of American banks’ https://t.co/KAS3DhQQu1

— fiatcurrency (@fiatcurrency) August 17, 2017

This will run and run!

LIBOR Funding

Armed Forces and Emergency Service charities can now apply for the next round of LIBOR funding. MORE INFO: https://t.co/opUiTbuspG pic.twitter.com/riHajku7Gk

— HM Treasury (@hmtreasury) June 22, 2017

LIBOR Rigging

Following the acquittal of two former Barclay's traders last week, Panorama asks if the right people are being blamed for what has been called the biggest financial fix of all time.

Piecing together explosive new evidence, which calls into question the safety of other convictions, Panorama reporter Andy Verity reveals that manipulation of the world's most important interest rate, Libor, was allowed and even ordered by people at the highest levels of the financial establishment.

A secret recording that implicates the Bank of England in Libor rigging has been uncovered by BBC Panorama. 

The 2008 recording adds to evidence the central bank repeatedly pressured commercial banks during the financial crisis to push their Libor rates down.

In the recording, a senior Barclays manager, Mark Dearlove, instructs Libor submitter Peter Johnson, to lower his Libor rates.

He tells him: "The bottom line is you're going to absolutely hate this... but we've had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower."
Mr Johnson objects, saying that this would mean breaking the rules for setting Libor, which required him to put in rates based only on the cost of borrowing cash.

Mr Johnson says: "So I'll push them below a realistic level of where I think I can get money?"

His boss Mr Dearlove replies: "The fact of the matter is we've got the Bank of England, all sorts of people involved in the whole thing... I am as reluctant as you are... these guys have just turned around and said just do it."

It is of course convenient for banks to blame others (eg the Bank of England).

Barclays May Face $60M Fine

Bloomberg reports that Barclays Plc will probably be fined for violating a three-year-old settlement over interest-rate rigging, the amount of the fine may be up to $60M.

Forex Criminal Investigation

The SFO has launched a criminal investigation into whether a number of traders at top banks colluded to artificially fix rates in the £3 trillion-a-day foreign exchange markets.

London is where around 40% of foreign exchange trading takes place and traders are alleged to have colluded via online chatrooms with names such as the “Bandits’ Club” and the “Dream Team”.

The Telegraph reports that so far more than 25 traders working at a number of the world’s biggest banks have been fired or suspended while regulators around the world continue their investigations.

The forex scandal is likely to be as damaging to the "reputations" of banks as the Libor scandal.

The lesson to learn from this, and all the other scandals, is that all markets are rigged in favour of the "house".

Bank of England Shaken By Rigging Allegations

Bank of England Governor Mark Carney has said that allegations of manipulation in the £3trillion a day foreign exchange market could prove to be a bigger scandal than the Libor rate rigging fiasco.

During a five-hour grilling by the Treasury Select Committee yesterday, Carney said that the bank was “ruthlessly and relentlessly” investigating the claims of manipulation, which has already seen the suspension of one member of staff from the bank.

Carney told MPs that it would create a new deputy governor position, with responsibility for markets and banking. That person would carry out "a root and branch review" of how the Bank conducts market intelligence.

Carney is quoted by the BBC:

"This is as serious as Libor if not more so because this goes to the heart of integrity of markets and we have to establish the integrity of markets."

He said the bank had no warning of the alleged manipulation before October.

Within 48 hours of hearing the allegations, the Bank had called in law firm Travis Smith to conduct an independent investigation. 

The chairman of the Treasury Committee, Andrew Tyrie, remains somewhat unconvinced:

"This is the first real test for the Bank of England's new governance structures. Early signs are not encouraging.

It has taken some time for the Bank's Oversight Committee to take the lead on accusations of misconduct relating to forex.

The public needs confidence that the Bank's governance structures will ensure that it gets to the bottom of forex-related misconduct allegations. The public also needs confidence that any misconduct in other areas will be discovered."

It is bad enough that "ordinary" banks rigged the system. However, for there to be reasonable suspicion that the Bank of England also was involved in such rigging is a hammer blow that may well do untold damage to Britain's standing in the financial world and the ability of the City to maintain its position as the "go to centre" for global finance.

Barclays Fines Staff For LIBOR Fraud

Barclays will impose £450M of financial penalties on its staff for rigging LIBOR.

Sky News reports that Barclays will disclose details in its forthcoming annual report. The "fines" will be levied against the "variable pay", ie bonuses and deferred share awards of the staff.

However, it should be noted that Barclays will still award £1.8BN in bonuses to its staff.

LIBOR Still Rigged?

It seems that LIBOR is still rigged.

RBS Does A Deal With The DoJ

The Royal Bank of Scotland (RBS) has done a deal with the US Department of Justice (DoJ) over its involvement in the LIBOR scandal.

Sky reports that RBS' UK subsidiary has signed a two-year deferred prosecution agreement with the DoJ, as part of a package of measures that will include almost £400M in fines.

This means that if RBS commits any form of criminal offence during the two-year period, it could find itself excluded from the US market.

Additionally, 21 RBS employees have either left or have been disciplined as a result of Libor-related misconduct.

John Hourican, head of RBS's investment bank, will step down and forfeit about £4M in deferred share awards despite having had no involvement in or knowledge of the malpractice.

RBS will make a statement on the matter at 13:00 today.

Happy Bonus Season!

As a bleak and gloomy January draws to a close, the banksters are looking forward to awarding themselves some fat bonuses for all their "hard work" last year.

Sadly for the banksters not everyone is happy at the prospect of their self awarded largess. Step forward Unite which has demanded a meeting with UK Financial Investments Ltd (UKFI), which manages the government's (ie the taxpayer's) investments in RBS, Lloyds and UK Asset Resolution, over RBS's expected bonus payout of £250M.

As if things were not already bad enough for RBS, the Wall Street Journal reports US authorities are pushing for a settlement of LIBOR allegations that would result in the bank not only paying a fine of £500M, but also pleading guilty to criminal charges. Barclays and UBS got away with criminal charges, because they co-operated with the authorities.

RBS executives don't want to plead guilty because they fear that it will cause clients to cut off activity with the bank, and that it could increase exposure to ever more litigation.

Maybe then they should hold back on paying out a bonuses this year, lest the money be needed to pay for ongoing litigation?

Diamond Geezer In The News Again

The Telegraph reports that some of Barclays’ most senior executives, including former chief executives Bob Diamond and John Varley and current head of investment banking Rich Ricci, are among 104 people who unsuccessfully attempted to keep their names private ahead of the UK’s first trial related to the manipulation of Libor.

The list of 104 individuals comes from a case brought by Guardian Care Homes, which is seeking about £38M in damages from Barclays over interest rate swaps it claims it was mis-sold by the bank.

Guardian Care Homes says that the swap product it was sold was tied to Libor, which it argues was set dishonestly.

Barclays was ordered to give lawyers working for Guardian Care Homes the identities and emails of staff that it passed to regulators investigating the manipulation of the key interest rate.

Why LIBOR Matters

As per Max Keiser:

"LIBOR and other mrk riggers have just dropped UK 10-yrborrowing costs below 2%. Each £ saved in interest loses 2 £'s from pensions/savers."

In other words the LIBOR riggers profited at the expense of the rest of us!

UBS Fined $1.5BN

Last Friday I wrote that UBS was to be fined $1Bn for its role in the LIBOR rate fixing scandal.

I was wrong, UBS has in fact been fined $1.5BN.

Mea culpa!

UBS $1BN LIBOR Settlement

UBS is, according to the Telegraph, close to agreeing a settlement with UK and US regulators on LIBOR rigging.

The bank is expected to announce next week that it has reached a combined $1BN deal with US and British authorities to settle an investigation into the role it is alleged to have played in rigging global borrowing rates.

To put the $1BN into context, LIBOR is the basis for $800 TRILLION of financial products. The banks that participated in its rigging would have made billions out of this over the years.

Additionally, UBS's bonus pool was $2.79BN in 2011.

Therefore shed no tears for them!

Allegations of Gas Market Rigging Akin To LIBOR

The FSA and Ofgem are looking into allegations that some of the UK's largest utilities have manipulated the UK physical natural gas markets.

Seth Freedman, a whistleblower, told them that he saw evidence that wholesale gas prices, used as the basis for domestic energy bills, were manipulated by some of the big power companies.

Mr Freedman, who worked at ICIS Heren (a firm which reports gas prices), said he saw what he took to be suspect trading on September 28 (the end of the gas industry’s financial year).

The fact that gas is traded like all other commodities makes it susceptible to speculation.

In the event that Mr Freedman's allegations are proven to be true, then this would be a scandal equivalent to the LIBOR rigging by the banks.

You can almost hear the lawyers rubbing their hands with glee at the thought of the lawsuits that are going to come from this.

UBS Redundancies Smokescreen

Whilst UBS is enveloped by the smokescreen of publicity derived from its mass culling (and handling of that mass culling) of staff today, it seems to have been a "good" day for it to also let the world know that it is under investigation in Singapore, along with other banks, for possible manipulation of Libor and other benchmark rates.

As per Reuters:

"These investigations focus on whether there were improper attempts by UBS (among others), either acting on our own or together with others, to manipulate LIBOR and other benchmark rates at certain times."

 

Liborgate

Liborgate, despite the brief interlude provided by the chaff from the DFS over Standard Chartered, rumbles on.

The BBC reports that seven banks (HSBC, Royal Bank of Scotland Barclays, Citigroup, Deutsche Bank, JPMorgan and UBS), are to be questioned in the US for alleged Libor manipulation.

The US authorities will look to see if there is sufficient evidence to support a criminal prosecution.

The coming weeks will see much behind the scenes haggling between the banks, the regulatory authorities and governments, in order to avoid this going to court.

Scrap Libor

Martin Wheatley has called for Libor to be scrapped, and for the fictitious Libor rates be replaced with "reality".

What an excellent recommendation!

Read his full report below:

Secret Bankers' Meeting

Apparently, last Tuesday, there was a secret meeting of the CEO's and Chairmen of some the UK's leading banks.

The purpose of the meeting was to address the reputational damage from the industry's ongoing spate of scandals.

Mark Kleinman of Sky News reports that the meeting at HSBC's head office discussed Liborgate, as well as the payment protection insurance and interest rate swaps mis-selling.

It is regrettable that it has taken the banks so long to start to try to address issues that have been in the public domain, and the source of much public contempt, for such a long period of time.

The meeting also discussed the appointment of a successor (an outsider) to Marcus Agius as chairman of the British Bankers' Association (BBA).

Given the BBA's dismal reputation it would be better that they simply shut it down and set a new organisation up.

The BBA Tries To Rewrite History

Zero Hedge have revealed that the hopeless, hapless and despised British Bankers' Association (BBA) has attempted to rewrite history, and is trying to pretend that it had no regulatory role wrt Libor.

Specifically, as per Zero Hedge, here is an extract of the BBA's current governance documentation:

"There is a named individual at each bank responsible for submitting the daily bbalibor rates to Thomson Reuters and this will be the person responsible for the bank's cash - usually their title is 'treasurer' or similar. There is written guidance on what information that person should take into account when calculating that day's rates for his or her bank. As all contributor banks are regulated, they are responsible to their regulators, rather than BBA LIBOR Ltd. or the FX&MM Committee, for maintaining appropriate procedures for contributing, including the maintenance of internal chinese walls."

This is the "same" paragraph a few weeks ago:

"BBA LIBOR Ltd. receives the fixings and underlying contributor data at the same time as all other live data recipients and monitors all submissions into the fixing process. Any anomalous rates are queried with the submitting bank, and a log of these queries is kept and given to the FX&MM Committee on a periodic basis, who may choose at their discretion to follow up these queries in line with established governance and scrutiny procedures."

Now that the arrest warrants are being prepared, the BBA is doing everything it can to distance itself from Liborgate.

Too little too late!