Barclay's LIBOR manipulation

Graham_Devon

Anyway, this scandal is old news...

Onto the next!!!

By Mark Kleinman, Sky News City Editor

Barclays will tomorrow be drawn into another huge City mis-selling scandal that threatens to intensify the pressure on Bob Diamond, its under-fire chief executive.

I can reveal that the Financial Services Authority (FSA) is preparing a statement revealing it has uncovered evidence that many small business customers (SMEs) were the victims of inappropriate selling of interest rate swap products and that the major high street banks will write to every customer who was sold them.

The City regulator is in talks today with the major banks about its proposed statement, which is being scheduled for tomorrow morning. It could lead to another compensation bill for the country’s biggest banks running potentially to hundreds of millions or even billions of pounds.

http://news.sky.com/story/953742/exclusive-banks-braced-for-new-mis-selling-scandal

kaya64

Graham_Devon wrote: »

Anyway, this scandal is old news...

Onto the next!!!


http://news.sky.com/story/953742/exclusive-banks-braced-for-new-mis-selling-scandal

bad boys but no naughty corner for them

wotsthat

Graham_Devon wrote: »

Anyway, this scandal is old news...

Onto the next!!!


http://news.sky.com/story/953742/exclusive-banks-braced-for-new-mis-selling-scandal

A while back I saw a news article about a large furniture or carpet shop owner complaining about how interest rate changes had dramatically altered the financial situation as far as swaps were concerned. Needless to say he was delighted with the deal until then!

FTBFun

The-Joker wrote: »

Sounds a lot like the department of justice 5 year investigation into the silver price manipulation by JPMorgan.

Except for this actually happened, of course.

grizzly1911

Graham_Devon wrote: »

Anyway, this scandal is old news...

Onto the next!!!


http://news.sky.com/story/953742/exclusive-banks-braced-for-new-mis-selling-scandal

Yes the LIBOR issue is big but Barclays cannot have acted alone.

Yes executives should be held to account.

I would suggest that the impact on the man/woman in the street is probably less than the PPI scandal.

There will no doubt be more misseling/misinformation scandals to come. The nature of the finance industry is that it sells a lot of "promises" based on assumptions good and bad. Unlike buying a new washing machine you don't get anything tangible for your money and those "promises" are often broken.

worldtraveller

Debt_Free_Chick wrote: »

Share price heading south - now down 15%

Yup, it dropped to -18% at one point, now around -17%.

abaxas

You cant compare the PPI situation with this.

PPI was mis-selling of a product and revoking of contract. This is fraud.

michaels

As I have already said:
) Unless the pool is extremely large then it is possible for 1 participant to impact the rate
2) Only those who have lost as a result of LIBOR manipulation (and not only those who have been in a trade with Barclays) will sue in the US for their money back. Given that Barclays will have to make up gross losses not net losses this will be extremely expensive and I would be surprised if Barclays get very far trying to recover any extra payments from those who gained from the market manipulation. I would be suprised if the gross loss from shifting libor by 1bp on one day would not be enough to bankrupt Barclays.

If I were an employee I would be looking to get my redundancy now in the hope of being able to hang on to some of it.

Generali wrote: »

From the reports it sounds like the manipulation issue connected to trading was that Barclays' employees had entered into a 'bet' with another bank which very, very simplistically could be said to be a bet on LIBOR.

Barclays could influence the level of LIBOR so tilt the results in their favour. It's a bit like a soccer ref being in on a betting coup and giving away a last minute penalty.

To continue with the analogy, the unintended consequence of the ref messing with the result of the match is that people in the Football Pools won or lost a different amount to what they would have done had the match been straight.

In the case of LIBOR, millions of borrowers and people that have bought or sold derivatives contracts have won or lost differently as a result of this manipulation.

TBH, I'd stick these jokers in gaol pour encourager les autres. Alternatively, chain them down to the foreshore outside the Captain Kidd as modern pirates and let the next high tide have them.

grizzly1911

abaxas wrote: »

You cant compare the PPI situation with this.

PPI was mis-selling of a product and revoking of contract. This is fraud.

So selling something that wasn't fit for your need was just bending the truth a little?

My point was the impact on the person in the street not the legality or otherwise.

grizzly1911

michaels wrote: »

As I have already said:
) Unless the pool is extremely large then it is possible for 1 participant to impact the rate
2) Only those who have lost as a result of LIBOR manipulation (and not only those who have been in a trade with Barclays) will sue in the US for their money back. Given that Barclays will have to make up gross losses not net losses this will be extremely expensive. I would be suprised if the gross loss from shifting libor by 1bp on one day would not be enough to bankrupt Barclays.

Don't know the answers but:-

How big is the pool?

By shifting 1 basis point what impact would this have on the LIBOR at the time in question? If the top and bottom quartile submissions are ignored when setting the rate, based on an average of the remainder the scope for large change must be limited.

That is of course unless there is large conclusion in those middle quartiles.

Trying to establish and evidence that you have made a loss will be interesting especially when they appear to have been maneuvering it down as often as it went up.

It will also be interesting to see if the regulators will have the stomach to see it go.