Liebor scandal may have cost families their home

Generali

This probably has cost the banks their political support.

To clear up a couple of things:
- this has most likely cost nobody their house directly. I have never heard of a normal mortgage being linked to LIBOR. They are usually linked to the BoE base rate or to the bank's own base rate.
- indirectly this may have cost people their home as business loans are usually linked to LIBOR. A failed business will often cost someone their home.
- everything I have read so far suggests that LIBOR was only pushed up in the earlier period (when it was manipulated to turn a profit rather than a false reassurance) rates seemed only to be moved by a basis point or 2 (0.01-0.02%). That might turn out to be higher once the truth is known, if it ever is.
- banks haven't been hoarding money for the hell of it. Regulators have told them have to hold higher cash reserves. That is counter-cyclical and why I have always maintained that Basle III, the Central Banks' agreement that reserves would be raised, was never likely to be enacted in full and on time as things stand.

This is an example of a few bankers having their fingers blatantly caught in the till and it chimes with the current mood that bankers are all a bunch of thieves. To be fair, it couldn't happen to a nicer bunch of people.

HAMISH_MCTAVISH

Generali wrote: »

This probably has cost the banks their political support.

Yes, I think so.

To clear up a couple of things:
- this has most likely cost nobody their house directly. I have never heard of a normal mortgage being linked to LIBOR. They are usually linked to the BoE base rate or to the bank's own base rate.

Agreed.

Although the post 2007 manipulation may well have caused some indirect losses to normal mortgages, more below.

- indirectly this may have cost people their home as business loans are usually linked to LIBOR. A failed business will often cost someone their home.

Also agreed.

- everything I have read so far suggests that LIBOR was only pushed up in the earlier period (when it was manipulated to turn a profit rather than a false reassurance) rates seemed only to be moved by a basis point or 2 (0.01-0.02%). That might turn out to be higher once the truth is known, if it ever is.

The post 2007 manipulation was far more serious though.

By rigging LIBOR on such a wide scale, the banks portrayed the crisis as being far less serious than it was for an extended period of time.

This may well have delayed government interventions that could have been far more effective had they not been too little, too late.

This may well have cost people their homes, and businesses, and jobs, etc....

- banks haven't been hoarding money for the hell of it. Regulators have told them have to hold higher cash reserves. That is counter-cyclical and why I have always maintained that Basle III, the Central Banks' agreement that reserves would be raised, was never likely to be enacted in full and on time as things stand.

No argument from me there. (But think you meant to say pro-cyclical)

This is an example of a few bankers having their fingers blatantly caught in the till and it chimes with the current mood that bankers are all a bunch of thieves. To be fair, it couldn't happen to a nicer bunch of people.

Sure, I can buy that.

It wasn't all that widespread, it didn't have that much of a direct impact, pre-2007 anyway, on retail banking customers.

But this is not about the act.... It's about the politics.

The people are angry that the banks are stifling the recovery.

They are angry they can't get a mortgage to move house, or a loan to expand their business.

They are angry that bankers make record high margins, while starving the economy of the credit it needs to thrive and prosper.

Politicians need to get re-elected, and they simply can't unless the people are a lot less angry. And that requires a significant recovery in the economy, which requires a significant recovery in lending.

Society has had enough of bank profiteering, and society has declared war on bankers.

And it won't end until the banks lend.

brit1234

HAMISH_MCTAVISH wrote: »

That isn't the point...

This is about the politicians turning on the bankers.

It is also means that LIBOR will become more honest and reflect better the true risk of lending between financial institutions, hence borrowing costs are likely to rise including mortgage rates.

What is more interesting is the collusion with the Bank of England, lets hope this is exposed and cleared out.

PaulF81

Barclays base their mortgage rate on Barclays Base Rate. Check out their mortgage page. I would be interested to see if this rate is linked to LIBOR as it states in T+Cs it is NOT directly linked to BOEBR.

Barclays Bank Base Rate typically follows the Bank of England Bank Rate but it is not guaranteed to do so. The Bank of England Bank Rate can go up or down and is announced by the Bank of England's Monetary Policy Committee every month

vivaladiva

Many sub prime loans/mortgages were linked to the FHBR. Does that figure in this anywhere? Or is someone trying to firmly jam the lid on that paricular can of worms? Barclays First Plus used to cite this rate when raising the interest rate on these loans. There was a lot of discussion on the loans board a few years back.

froggeroz

Generali wrote: »

This probably has cost the banks their political support.

To clear up a couple of things:
- this has most likely cost nobody their house directly. I have never heard of a normal mortgage being linked to LIBOR. They are usually linked to the BoE base rate or to the bank's own base rate.
- indirectly this may have cost people their home as business loans are usually linked to LIBOR. A failed business will often cost someone their home.
- everything I have read so far suggests that LIBOR was only pushed up in the earlier period (when it was manipulated to turn a profit rather than a false reassurance) rates seemed only to be moved by a basis point or 2 (0.01-0.02%). That might turn out to be higher once the truth is known, if it ever is.
- banks haven't been hoarding money for the hell of it. Regulators have told them have to hold higher cash reserves. That is counter-cyclical and why I have always maintained that Basle III, the Central Banks' agreement that reserves would be raised, was never likely to be enacted in full and on time as things stand.

This is an example of a few bankers having their fingers blatantly caught in the till and it chimes with the current mood that bankers are all a bunch of thieves. To be fair, it couldn't happen to a nicer bunch of people.

My mortgage is directly linked to the 3m libor. It was a self cert mortgage set up 9 years ago. I wonder how much extra we have or haven't paid due to the robbing gits at the banks.
I wonder if it's proven my payments were higher than they should have been, if I'd have a case to put civil action against them.

Generali

froggeroz wrote: »

My mortgage is directly linked to the 3m libor. It was a self cert mortgage set up 9 years ago. I wonder how much extra we have or haven't paid due to the robbing gits at the banks.
I wonder if it's proven my payments were higher than they should have been, if I'd have a case to put civil action against them.

I never knew that mortgages were set up at bbalibor (TM) but it appears that they were:

http://www.bbalibor.com/bbalibor-explained/my-mortgage-bbalibor

HAMISH_MCTAVISH

brit1234 wrote: »

It is also means that LIBOR will become more honest and reflect better the true risk of lending between financial institutions, hence borrowing costs are likely to rise including mortgage rates..

This ended years ago, so no Brit, mortgages won't rise.

HAMISH_MCTAVISH

froggeroz wrote: »

I wonder if it's proven my payments were higher than they should have been, if I'd have a case to put civil action against them.

Yes, very likely.

But the manipulations were so small you wouldn't be owed very much.

There's talk of a class action suit though.

froggeroz

HAMISH_MCTAVISH wrote: »

Yes, very likely.

But the manipulations were so small you wouldn't be owed very much.

There's talk of a class action suit though.

In the last 9 years my mortgage had fluctuated between £1500.00 and £500.00. I'll be calling a solicitor then....