Barclay's LIBOR manipulation

JasonLVC

Extract from osbournes speech in parliment earlier :-

Under the previous government's regime, fines paid to the FSA are used to reduce the annual levy other financial institutions are asked to pay.

I'm far from convinced in all cases this is the best use of the money and we are considering amendments to the Financial Services Bill that will ensure that fines are of this nature go to help the taxpaying public, not the financial industry.


So the fine actually goes to reduce the annual charge the other banks have to pay for the FSA! Heaven forbid, if they all end up getting fined then the FSA will have to issue credit notes for their services for the next 20 years!

I never did like the concept of the regulator being funded by the very people it is regulating. Makes it harder to attack/criticise one of your own customers.

mr_fishbulb

Debt_Free_Chick wrote: »

AIUI there is no "independent" measure of what LIBOR should be. Rather, it's up to all the Banks to individually submit the rate at which they will lend to another Bank. In other words, the system is fundamentally built on honesty and integrity. Here, however, it appears that Barclays have been not been at all honest but have reported their rates simply to benefit their own derivative traders.

Except it can't just be Barclays because (as also said by Thrugelmir just above) you would have to do this in cahoots with a number of other banks.

How is it calculated?
Thomson Reuters calculates and publishes bbalibor on a daily basis. It assembles interbank borrowing rates from contributor banks at 11.10am and averages the middle two quartiles of these rates (discarding the top and bottom quartiles).

http://www.bbalibor.com/bbalibor-explained/faqs

Which means if one bank gave a number significantly higher or lower than the average of the rest, it would be excluded from the calculation as it would be in the top or bottom quartiles.

kaya64

Does this make the original mortgage contracts void ?

Thrugelmir

kaya64 wrote: »

Does this make the original mortgage contracts void ?

No chance.

How many Barclays mortgages are LIBOR linked anyway?

ILW

kaya64 wrote: »

Does this make the original mortgage contracts void ?

Why should it?

Graham_Devon

JasonLVC wrote: »

So the fine actually goes to reduce the annual charge the other banks have to pay for the FSA! Heaven forbid, if they all end up getting fined then the FSA will have to issue credit notes for their services for the next 20 years!.

You have to laugh!!

michaels

I'm not sure that is true - suppose there were 8 banks, if one bank had a fair idea where the other banks numbers would come in then they could massage their number by setting their rate to equal the third highest or third lowest to influence the group mean or indeed by just moving their quote out of the medile 2 quartiles altogether. Don't forget here that 0.5 basis points can be worth a lot of money.

mr_fishbulb wrote: »

Except it can't just be Barclays because (as also said by Thrugelmir just above) you would have to do this in cahoots with a number of other banks.

Which means if one bank gave a number significantly higher or lower than the average of the rest, it would be excluded from the calculation as it would be in the top or bottom percentile.

Nikkster

michaels wrote: »

I'm not sure that is true - suppose there were 8 banks, if one bank had a fair idea where the other banks numbers would come in then they could massage their number by setting their rate to equal the third highest or third lowest to influence the group mean or indeed by just moving their quote out of the medile 2 quartiles altogether. Don't forget here that 0.5 basis points can be worth a lot of money.

From this article on the BBC News website:

'Other big names believed to be under investigation include Citigroup, JP Morgan, Deutsche Bank, HSBC and Royal Bank of Scotland.'

kaya64

ILW wrote: »

Why should it?

because the whole contract and deal is now based on LIES .
Just for the record my mortgage is not with this bank so i am not trying to get out of my mortgage

The banks lied about the rate so the customer has been paying over the top ?

Thrugelmir

kaya64 wrote: »

The banks lied about the rate so the customer has been paying over the top ?

Barclays was attempting to lower LIBOR to disguise its own financial difficulties from other banks.

So the customers may well have underpaid.