Barclay's LIBOR manipulation

movilogo

a) what they actually do and why it's necessary b) why they are so well paid and c) why it's never their fault when anything goes wrong.

a] if they ever disclose that public will know that they actually do nothing productive. Anyone with average (or lower than average) IQ will be able to do what they do (for a far cheaper salary in return).

b] see answer to above question, it is a cartel, they won't allow anyone to enter their zone citing the applicant does not have necessary experience.

c] that's the culture in this country - everything is someone else's fault. From MPs to normal people (just look at the insurance claims section).

CLAPTON

it completely kills any possible argument that 'chinese' walls can isolate parts of a bank.

GeorgeHowell

CLAPTON wrote: »

it completely kills any possible argument that 'chinese' walls can isolate parts of a bank.

In terms of information I suspect that is true. But I'm sure that it's possible to construct a law that prevents the casino gambling operations of the banks (investment banking) from using the current accounts and savings of ordinary citizens and businesses with which to do it.

The fact that is not going to happen for some years is indicative of how powerful a lobby the financial sector is, how much the civil service loves them and will do anything to protect their interests from meddling politicians, how dependent the UK economy has become on them, and how weak and spineless our politicians are.

Generali

vivatifosi wrote: »

There was an interesting contributor on Radio 4 yesterday, who said that Diamond may not have known about what was going on but ran a culture in which Barclays had to be (can't remember the actual wording but in effect) extremely aggressive and competitive. Therefore while he wouldn't necessarily have known about it, he engendered the culture that fostered it through his style of leadership.

I'm not sure if you've spent much time around dealing rooms or not Viva but that is the culture regardless of the bank.

If you promote someone from the trading side of the bank into leadership you can be certain that what you'll get is an aggressive, betting-type (think more on the bookmaker side than the mug punter however). If you promote from the banking side you'll get something more risk averse and technocratic.

CLAPTON

GeorgeHowell wrote: »

In terms of information I suspect that is true. But I'm sure that it's possible to construct a law that prevents the casino gambling operations of the banks (investment banking) from using the current accounts and savings of ordinary citizens and businesses with which to do it.

The fact that is not going to happen for some years is indicative of how powerful a lobby the financial sector is, how much the civil service loves them and will do anything to protect their interests from meddling politicians, how dependent the UK economy has become on them, and how weak and spineless our politicians are.

you start by separating the two types of banking i.e. splitting the bank into two totally separate banks

making breaking many rules and regulations into criminal offences will also have an important role

changing the law to encourage and protect whistle blowers would also have a role

product abuse of things like PPI, rate swaps, the pension mis-selling, unfair charges, the way credit reference agencies are unregulated etc etc needs a far more pro-active regulator with the willingness to impose very large fines

unfortaunately I'm not familar with the more esoteric working of banks but there seems to be many cosy will cartels and relationships that need reviewing and changing (why is QE applied only to banks, why not fund lending direct to businesses, how are banks able to borrow billions from the ECB at 1% interest rate that's not available to normal businesses etc.

purch

I think what is also easily forgotten is that there are now vastly fewer Banks in the World than there were 20 years ago.

Fewer Banks, mean fewer market makers, less liquidity, more volatility and more chances for manipulation. At the same time as the sector was shrinking in participants, the financial markets ballooned hugely, with more and more products and huge amounts being traded.

Remember, 20 years or less ago everyone's favourite pantomime bully JPMorgan Chase, was JP Morgan, Morgan Guaranty Trust Co, Chase Manhattan Bank, Chemical Bank, Manufacturers Hanover Trust Co and a few other smaller Banks. That is 5 large trading Banks into one huge trading Bank.

I guess many forget the name Midland Bank. Once one of our big 4 clearing Banks, they had the largest trading floor in London at one time, but they were swallowed up by HSBC, who had recently taken over Marine Midland Bank as well. That was 3 large trading Banks into one huge trading Bank.

Then Bank of New York Mellon. Once they were The Bank of New York, who bought out Irving Trust Company (once a major trading Bank) and then merged with Mellon Bank. Again, that was 3 large trading Banks into one huge trading Bank.

I could go on, but I am starting to bore myself but there is a repeating pattern here. (look at Japan and Germany...same story)

So many market makers gone means that virtually all the markets are controlled by only a few huge Banking groups.

Manipulation is now easier than it ever was, whilst the amounts and variety of instruments (crap) traded have exploded.

John_Pierpoint

pqrdef wrote: »

I've got two questions.

(1) What happened to those Chinese walls we heard so much about at the time of the Big Bang in the 80s?

Back in the `1980s the joke was:
Q. How do you recognise a Chinese wall?
A. .....It has got a grapevine growing over it !

Not so funny now.

I worked for an integrated multinational, when ever there was a conflict of interest between sovereign states and subsidiary A had done something that would be illegal for subsidiary B to do, lesser mortals would simply say "Oh it is all Chinese money". (back in the days when the Chinese did not own all the money). I was not even allowed to talk to those evil people in Hong Kong and Canada, let along mainland China.
Or perhaps they were not allowed to talk to evil me?

So before anyone gets too "holier than thou" answer this question:

Have you eaten any expensive sweetener today?
So was it sugar from the cane in the tropics?
or
Was it massively subsidised beat sugar
or
Was it the "artificial" corn syrup, that makes people obese because it bypasses the normal appetite suppressant mechanism. It is made in order to avoid expensive N.American corn surpluses.

Do you think it is right to suppress the peasants who could produce more sugar but live on a near starvation wage; while forcing up the sweetener price by converting it into road fuel ?

I'm not saying that rigging the market by fiddling LIBOR is OK.
I think it is criminal and very stupid, as it is an action that has lowered the trust and so the prospects for the financial services industry on which a lot of us are dependent.

However a lot of other markets are being rigged, many of them in our name by politicians we have elected. As far as I know, the bankers have not arranged to bomb "collateral" families yet.

pqrdef

worldtraveller wrote: »

Bob Diamond has admitted that the bank made a conscious decision to falsify Libor rates in order to protect the bank at the height of the financial crisis.

So is it like
(a) traders got into a mess and asked for help to cut their losses,
or
(b) traders deliberately made bets against the odds with the intention of fixing the result

purch

pqrdef wrote: »

So is it like
(a) traders got into a mess and asked for help to cut their losses,
or
(b) traders deliberately made bets against the odds with the intention of fixing the result

No.

In the piece you quote the situation is very clear.

Barclays lied about the rates they were having to pay to borrow funds.

The LIBOR's they submitted were artificially low during the period.

By doing so they gave the markets a false impression about their situation, which would have inflated their stock price in addition to probably saving them from requiring a Government bailout.

pqrdef

purch wrote: »

By doing so they gave the markets a false impression about their situation, which would have inflated their stock price in addition to probably saving them from requiring a Government bailout.

No doubt, but this seems to be a separate story from the one told by the emails between traders and submitters.