Barclay's LIBOR manipulation

vivatifosi

Generali wrote: »

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.

Funnily enough I contracted for a short while at Barclays HQ in the 80s, though in retail. I sense it has morphed into a totally different animal since then. The interviewee also mentioned Diamond's rise from the more risky side of things.

I'd love to know how central to the boards the person with risk as their portfolio sits in these organisations.

heathcote123

So, who gets the £200,000,000 then? Where does that go?

The_J

heathcote123 wrote: »

So, who gets the £200,000,000 then? Where does that go?

The two regulators. This is the most relevant part of Bob's letter:

The first issue is that Barclays traders attempted to influence the bank’s submissions in order to try to benefit their own desks’ trading position. This is, of course, wholly inappropriate behaviour. Barclays submissions should reflect the cost of interbank borrowing rather than individual traders’ positions. The interventions in question were typically on the short term one and three month rates relevant to the wholesale markets and not the longer term rates used to set, for example, retail mortgages. It is also important to note that these traders had no way of knowing whether or not their actions would ultimately benefit or detriment Barclays overall. They were operating purely for their own benefit.

It's also clear that Barclays were probably the least bad, hence the decision to cut a deal early and comply fully. Funny that they are getting the worst headlines.

Graham_Devon

heathcote123 wrote: »

So, who gets the £200,000,000 then? Where does that go?

To the FSA. (for the UK part of the fine).

The brilliance of it is that the fines are then recycled into reduced member payments for the banks.

They don't lose. What they pay in fines, they claw back through lower member payments....the only bank that can't do this, is the one thats fined.

So as long as each bank is fined (which looks likely), they will all be basically helping reduce each others member payments to the FSA.

It's a bit like the residents of a village all going out, getting an £80 fine for being drunk and disorderly and then having their council tax waivered due to the collection of fines. Or getting a parking fine, and then being rewarded with an annual free pass for the car park upon paying the fine.

Banks can't lose. Ever. It seems.

Don't worry though, the government is looking into changing this...once all the fines are collected, of course!

The US however, send it to the treasury.

Insurers, at the same time, face an increase of £20m to provide the FSA with a platform to stop whiplash claims etc. This will be passed on to the consumer. Why not use the bank fines to pay for the platform?! All far to easy!

1echidna

The_J wrote: »

The two regulators. This is the most relevant part of Bob's letter:



It's also clear that Barclays were probably the least bad, hence the decision to cut a deal early and comply fully. Funny that they are getting the worst headlines.

Possibly because it was a cunning maneuver on Bob Diamond's part to come clean first.

vivatifosi

A couple of updates on this.

First Stiglitz has said that banks are a threat to democracy as their rent seeking is making the economy worse:
http://www.cnbc.com/id/48010168

Second (no link for this sorry), watching news yesterday, a commentator said that banks are at risk of being totally isolated as they face losing the business community. Up to now they have frustrated individuals and small business, but the latest scandals, whether LIBOR or large companies not being able to pay their creditors/receive payments under RBS Group, is now starting to p*ss off the large businesses.

Nikkster

vivatifosi wrote: »

A couple of updates on this.

First Stiglitz has said that banks are a threat to democracy as their rent seeking is making the economy worse:
http://www.cnbc.com/id/48010168

Second (no link for this sorry), watching news yesterday, a commentator said that banks are at risk of being totally isolated as they face losing the business community. Up to now they have frustrated individuals and small business, but the latest scandals, whether LIBOR or large companies not being able to pay their creditors/receive payments under RBS Group, is now starting to p*ss off the large businesses.

From the first link:
" A lot of inequality, especially at the top, does not come from people really making the size of the pie bigger, making our economy work better, it comes from what we call rent seeking, trying to seize a bigger slice of that pie through things that actually make our!economy weaker,” Stiglitz told CNBC’s 'Worldwide Exchange' on Friday."

I think this sums the underlying problem up nicely.

Graham_Devon

Nikkster wrote: »

From the first link:
" A lot of inequality, especially at the top, does not come from people really making the size of the pie bigger, making our economy work better, it comes from what we call rent seeking, trying to seize a bigger slice of that pie through things that actually make our!economy weaker,” Stiglitz told CNBC’s 'Worldwide Exchange' on Friday."

I think this sums the underlying problem up nicely.

Is he talking about landlords or bankers!?

Sorry!!

Nikkster

The_J wrote: »

It's also clear that Barclays were probably the least bad, hence the decision to cut a deal early and comply fully. Funny that they are getting the worst headlines.

1echidna wrote: »

Possibly because it was a cunning maneuver on Bob Diamond's part to come clean first.

I think this is where Cameron has made a big error with his soundbites re Barclays and Diamond (similar to the Jimmy Carr tax 'scandal'). By bowing to public (press?) pressure for a soundbite, it doesn't leave very much wriggle room when more cases emerge.

The only reason Barclays have already been fined and no-one else is that they have admitted to what went on first.

Graham_Devon

Milliband has now called to spend taxpayers money on an enquiry into this.

Like we need another long drawn out enquiry. What's it going to find out that the FSA haven't already found out!?

We need action, not just another enquiry.

Some suggest he's had to say something to appear to be against what's been done, and this is the best for the party due to the nature of the problem and when it happened.

Doesn't offer anything but looking at it again.