Libor: Bank of England implicated in secret recording

worldtraveller

A secret recording that implicates the Bank of England in Libor rigging has been uncovered by BBC Panorama.

The 2008 recording adds to evidence the central bank repeatedly pressured commercial banks during the financial crisis to push their Libor rates down.

Libor is the rate that banks lend to each other and it sets a benchmark for mortgages and loans for ordinary customers.

The Bank of England said Libor was not regulated in the UK at the time.

Banks setting artificially low Libor rates is called lowballing.

The recording calls into question evidence given in 2012 to the Treasury select committee by former Barclays boss Bob Diamond and Paul Tucker, the man who went on to become the deputy governor of the Bank of England.

BBC News

michaels OLD BARCLAYS LIBOR THREAD from 5 years ago is now closed, but this matter was mentioned HERE at the time, when an "insider" at Barclays implied much the same in a Telegraph article.

michaels

So the boe realised that actual borrowing rates faced by the banks would push them and the economy down the pan...luckily when they asked the banks what they could do tthe banks said don't worry we have been manipulating the market for years, we can make libor whatever you want it to be...

stator

It's not clear whether the BoE was trying to get the Libor rate down or trying to get the banks to pretend the Libor rate was lower than it was.

padington

Heads must roll

worldtraveller

Tom Hayes, the former banker convicted for his role in rigging the London Interbank Offered Rate (LIBOR), says "traders like me should not be in prison" because the Bank of England pressured commercial banks to keep LIBOR low.

"The involvement of the Bank of England in lowballing LIBOR was a key plank of my defence."

"The prosecution did not give me the evidence I needed to prove it and my jury were misled. It is my view that there should be an urgent public inquiry into the real LIBOR scandal: where central banks, politicians and the British Bankers' Association colluded to get artificially low LIBOR rates."

"Traders like me should not be in prison - we were only requesting LIBOR submissions that reflected market conditions. I have now been in a high security prison for over 18 months but I swear that I did not know that requesting LIBOR rates that benefited my bank but which also reflected the market was wrong."

Business Insider UK

EdGasket

Does seem like some traders have taken the fall for this whereas the real culprits are higher up the food chain.

michaels

EdGasket wrote: »

Does seem like some traders have taken the fall for this whereas the real culprits are higher up the food chain.

Two seperate issues: 1) BoE trying to support the markets by making banks that were not credit worthy look credit worthy to prevent the liquidity crisis engulfing the entire system 2) Prior to this traders manipualting libor to enhance their own trading position (and thus bonus) - often in ways that cost the bank they worked for money overall. Both used the same tool - manipulaton of libor submissions, however to claim that (1) happening during the crisis justifies traders doing (2) befoer the crisis seems disengouous at best - however if I were in prison I know I would be conflating the two issues.....

davomcdave

michaels wrote: »

Two seperate issues: 1) BoE trying to support the markets by making banks that were not credit worthy look credit worthy to prevent the liquidity crisis engulfing the entire system 2) Prior to this traders manipualting libor to enhance their own trading position (and thus bonus) - often in ways that cost the bank they worked for money overall. Both used the same tool - manipulaton of libor submissions, however to claim that (1) happening during the crisis justifies traders doing (2) befoer the crisis seems disengouous at best - however if I were in prison I know I would be conflating the two issues.....

18 months, and counting, in a high security jail, for what is basically a victimless crime seems excessive to me.

Traders are a pretty venal bunch or at least were. Bankrupting them and sending them to live in a terraced house in Barnsley would be cheaper and probably more effective.

I'm not sure what to think about the BoE's actions really. If the BoE told me to call a particular price for pretty much any asset or liability then I'd probably do it as long as it was within the realms of possibility. If I thought it was 100 and they told me to say 98 or 99 then so be it. If I thought it was 100 and they wanted me to say 10 or 20 then I'd balk at that.

What do other people think? Apart from bankers...hanging's too good for 'em of course.

EdGasket

Well if rigging LIBOR is wrong which is what we have been led to believe and some peeps have gone to jail for it, then the BOE now saying oh it's OK really when found out doesn't really wash does it?

davomcdave

EdGasket wrote: »

Well if rigging LIBOR is wrong which is what we have been led to believe and some peeps have gone to jail for it, then the BOE now saying oh it's OK really when found out doesn't really wash does it?

To be fair I think it's more accurate to say 'person went to gaol' rather than 'people went to jail'. Fairest of all might be, 'scapegoat got treated like a metaphorical scapegoat, was lucky not to be treated like an actual scapegoat' (Google 'scapegoat' if you don't understand the 'joke').

I think the actual LIBOR related crime is lying about your banks' potential borrowing rate in order to gain from that which is fraud (obtaining pecuniary advantage by deception).

EdGasket

davomcdave wrote: »

To be fair I think it's more accurate to say 'person went to gaol' rather than 'people went to jail'.

What about these then?

http://www.bbc.co.uk/news/business-36737666