Barclay's LIBOR manipulation

chewmylegoff

Graham_Devon wrote: »

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!

If you have been fined, you do not get any discount on your fees as a result of fines paid by others (or yourself).

Graham_Devon

chewmylegoff wrote: »

If you have been fined, you do not get any discount on your fees as a result of fines paid by others (or yourself).

Not on the fine paid for by yourself, but the FSA have agreed, it will reduce other members payments.

chewmylegoff

Graham_Devon wrote: »

Not on the fine paid for by yourself, but the FSA have agreed, it will reduce other members payments.

Yes, but that discount is only available if you haven't yourself been fined.

Graham_Devon

chewmylegoff wrote: »

Yes, but that discount is only available if you haven't yourself been fined.

The way it was decribed on TV was that members payments will be reduced, apart from a payment reduced based on the fine they received.

The answer to the question "so if RBS are fined, barclays will get a reduction in members fees" had the answer "yes".

This was from the FSA themselves. The spokesperson may of course have got it wrong. But certainly every media article I see states the same sort of thing.

chewmylegoff

That's correct, but the answer to the question "if bank x and bank y get fined, does bank x get a discount as a result of the fine paid by bank y and vice versa" is "no".

schrodie

Just a thought, if you had a mortgage based on LIBOR during the years it was being manipulated do you have any form of redress?

Generali

schrodie wrote: »

Just a thought, if you had a mortgage based on LIBOR during the years it was being manipulated do you have any form of redress?

You could sue Barclays.

grizzly1911

schrodie wrote: »

Just a thought, if you had a mortgage based on LIBOR during the years it was being manipulated do you have any form of redress?

Of course if LIBOR was manipulated downwards and you benefited, you will, no doubt, be rushing round with a cheque to recompense those who lost out.

AIUI LIBOR was lowered by a nominal amount so Jo(e) bloggs in the street is more likley to have received a "benefit". The nominal increase will likely to have been averaged and smoothed further before they hit the personal customer in the high street.

The same will not necessarily be true of Large Corporates and wholesale borrowing which is much more volatile.

John_Pierpoint

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

Stiglitz argues his corner, with one of America's richest "self made" men on the BBC World Service.
In The Balance

• 18:32 BST

Lesley Curwen and Justin Rowlatt get behind the headlines to find out what's really going on in this changing global economy.

• Duration: 28 mins

This is followed by a repeat of :

The Reith Lectures

• 19:06

Niall Ferguson reflects on the causes and lessons of the global financial crisis.

• Duration: 54 mins

Those three sets of views dovetail nicely.

grizzly1911 wrote: »

Of course if LIBOR was manipulated downwards and you benefited, you will, no doubt, be rushing round with a cheque to recompense those who lost out.

AIUI LIBOR was lowered by a nominal amount so Jo(e) bloggs in the street is more likley to have received a "benefit". The nominal increase will likely to have been averaged and smoothed further before they hit the personal customer in the high street.

The same will not necessarily be true of Large Corporates and wholesale borrowing which is much more volatile.

Most large corporations join in the fun each day with their cash balances.

A few year's back a senior man at BP was reminiscing, in a TV documentary, about how he got noticed as a then bright young man:

He found himself "pointing Percy at the porcelain" next to the boss of BP, the conversation went a bit like this:

"Well Young Bloggs - how are you getting on during your period in Finance"

"Well Sir, not very well I want to resign"

"??".

"No BP is a wonderful company, I just want to resign and then work for BP as a freelance. All I ask is that you pay me 1% of the money I make by lending out the BP over-night balances on the interbank market."

I cannot remember the interviewee's name so cannot comment if the curse of financial management side lined the authority of the engineers in the Gulf.

Which brings us round in a circle to discussing with Stiglitz the parasitic nature of those who seek to grab a larger slice of the pie, against those who can bake a bigger pie for everyone.

The discussion suggests that it is not a simple case of engineering good versus financing bad.

[Forget the "glass ceiling", in organisations there is also a porcelain wall not to mention the dangerous "in vino veritas", all situations where important business decisions can occur.]

purch

pqrdef wrote: »

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

Yes.

But the piece you quoted

Originally Posted by worldtraveller
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.

...refers specifically to the period when Barclays were falsely quoting LIBOR at a lower level than they should have with the express purpose of trying to show that they were in a better position, credit wise than they actually were.

This has nothing to do with the time they were submitting false LIBOR in order to boost the profits of derivative trades.