Thing One: King Of Pain: If there were a buck-passing event in the London Olympics, Bank of England chief Mervyn King would be the favorite to win the gold.
King, appearing this morning before a parliamentary panel investigating charges that some of the world's biggest banks manipulated Libor, one of the world's most important interest rates, deftly tossed responsibility for the debacle to the Four Winds. Neither he nor England's Financial Services Authority had any responsibility for policing Libor, King shrugged, according to the Wall Street Journal's live blog of his testimony. Nothing could be done, oh well. Incredibly, King even claimed he had no evidence that banks were manipulating Libor until just a couple of weeks ago, when he read about the Barclays $450 million settlement in the newspaper just like every other chump.
Are we really supposed to believe that? This is the same Mervyn King, recall, that got a six-point memo from Tim Geithner way back in 2008 suggesting changes to the Libor process that might gently discourage banks from manipulating Libor. It was the absolute least Geithner could do, literally, but did King think Geithner did it for his own health? Did rampant Libor-rigging, which people on both sides of the Atlantic had suspected for years, happen under King's nose without his knowledge? If so, then he is the Mr. Magoo of global finance.
Parliamentary testimony in the case has been fraught with contradiction already. Yesterday, the former Barclays chief operating officer said former CEO Bob Diamond flat-out told him that the Bank of England had instructed the bank to manipulate Libor, directly contradicting Diamond's earlier testimony that he gave no such instruction. Meanwhile, the under-fire FSA says it is investigating seven UK banks for Libor manipulation. One of those is almost certainly the Royal Bank of Scotland, which is bucking a request from Canadian regulators to release data in the case. This fun ride has only gotten started.
Thing Two: Meet The New Boss: Marissa Mayer, come on down: You're the next contestant in "Who Wants To Be A Yahoo CEO?" Mayer, 37, will be the sixth Yahoo CEO in the past five years, including interim chiefs, and will be tasked with trying to make the company relevant again and "brighten the user experience," whatever the hell that means. Mayer comes from Google, where she was employee No. 20 and played a key role in designing the search page and other user interfaces, but she appeared to have climbed as high as she could in that company. There are questions about her lack of experience running a company, particularly a company as troubled as Yahoo, which has been a mass graveyard for CEOs. Oh, and for extra degree of difficulty, she's pregnant. Anyway, she's also now the 20th woman running a Fortune 500 company, a record. Wish her luck.
Thing Three: HSBC's Friends In Low Places: HSBC accounts have been used for laundering the money of Mexican drug lords, Saudi banks with terrorist ties and Iranians trying to dodge international sanctions, according to a 335-page Senate report released yesterday. And, naturally, bank executives and regulators looked the other way, according to the report. In HSBC's defense, everybody is doing it, sort of like Libor manipulation.
Thing Four: Global Warning: The International Monetary Fund yesterday cut its forecast for global growth this year and warned the global economy could end up in far worse shape if policy makers don't take action soon. The report came on a day when the U.S. reported a shocking drop in retail sales, pointing to sluggish GDP growth in the second quarter. Fed Chairman Ben Bernanke is due to appear before Congress today and tomorrow to talk about the economy. If he is not thinking seriously about taking more action to help the economy, and if he does not push the braying jackasses in Congress to lend a hand, then he is doing it wrong.
Thing Five: Plugging The Leaks: The U.S. Labor Department has taken steps to plug the leaks of its important economic data. That gives Bloomberg and high-frequency traders a giant sad, but maybe makes the playing field just a smidgen fairer for the rest of us.
Thing Six Investors Still Not In Love With Banks: For some reason, investors think big banks are risky investments, according to a new Moody's Analytics report. Go figure! "For big U.S. and European banks, the cost of credit default insurance, a measure of investor fear, is still nearly 20 times as high as it was in early July 2007 before the failure of two Bear Stearns hedge funds."
Thing Seven: The New Dust Bowl: America has not been this dry since 1956, according to a new National Oceanic and Atmospheric Administration report, with drought affecting 55 percent of the land mass of the 48 U.S. states in North America. The parched conditions are ruining corn, soybean and other crops, threatening to drive global food prices higher.
Thing Seven And One Half: Linsanity's End: Remember Linsanity? Seems like it was not even six months ago that Jeremy Lin's sudden stardom had brought new life to the habitually hapless New York Knicks. But the power of the Knicks to shoot themselves in the foot cannot possibly be overstated, so now Jeremy Lin is probably headed to Houston, and shelfloads of Lin merchandise are rapidly becoming worthless. Well played, Knicks.
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Calendar Du Jour:
8:30 a.m. ET: CPI for June
9:15 a.m. ET: Industrial Production for June
10:00 a.m. ET: NAHB Housing Market Index for July
Before Market Open:
Johnson & Johnson
After Market Close:
Heard On The Tweets:
@CaseySoftware: Marissa Mayer joining Yahoo? Bravo. It's great seeing accomplished people take leadership positions with non-profits.
@moorehn: Unfortunately, this means Marissa Mayer will not be Mitt Romney's VP pick.
@BCAppelbaum: Estimates of Q2 GDP are dangerously close to dropping below the rate of population growth. Which is bad.
-- Calendar and tweets rounded up by Khadeeja Safdar.
The UK bank has been at the centre of a very public storm since U.S. and British authorities fined it more than $450 million last month for its part in manipulating Libor. The ensuing backlash cost chief executive Bob Diamond and chairman Marcus Agius their jobs. The pair have appeared before a parliamentary committee to testify about what went on at the bank, in a scandal which has drawn in British central bankers and government ministers.
BANK OF AMERICA
Bank of America is among the banks being investigated, a person familiar with the matter told Reuters last year. The bank did not comment in its 2011 annual report. It is one of 11 banks accused of conspiring to manipulate Libor in two lawsuits filed by discount brokerage and money manager Charles Schwab.
The Swiss Competition Commission said in February that Bank of Tokyo-Mitsubishi UFJ was among those it was investigating on suspicion of conspiring to manipulate rates. The Japanese bank did not comment on any probes in its 2011 annual report. This month, the group suspended two London-based traders as a result of a probe into manipulating interbank lending rates, but the bank said that was not to do with their conduct at BTMU. They had previously worked at Dutch lender Rabobank.
Citigroup said its subsidiaries had received requests for information and documents as part of investigations in various jurisdictions. The U.S. bank said it was cooperating. The bank is also subject to a number of private lawsuits filed in the U.S. against banks that served on the Libor panel. In December, Japan's financial regulator said it would penalise the Japan securities units of Citigroup and UBS after finding that an individual who worked at UBS and then moved to Citi had, along with his boss at Citi, attempted to influence the Tokyo interbank offered rate (Tibor).
Credit Suisse is one of 12 banks being investigated by the Swiss Competition Commission about alleged collusive behaviour among traders to influence the bid ask spread for derivatives tied to Libor and Tibor as well as the rates themselves. Credit Suisse said it was cooperating fully.
The German bank said it was cooperating with investigations in the United States and Europe in connection with setting rates between 2005 and 2011. It has had civil actions filed against it in the United States related to the setting of Libor. Germany's market regulator has launched a probe into the bank over suspected manipulation of interbank lending rates, sources have said. Results are expected in mid-July. German magazine Der Spiegel reported, citing no sources, that two Deutsche Bank employees have been suspended after external auditors examined whether staff were involved in manipulating rates.
Lloyds said it was cooperating with investigations. It has also been named in private lawsuits in the U.S. related to the setting of Libor. It said it 2011 annual report that it could not predict the ultimate outcome of investigations or lawsuits. In May, the bank said two derivatives traders had been suspended following an investigation into possible interest rate manipulation.
HSBC has said it received demands from regulators for information in connection with Libor investigations and it was cooperating. It has also been named in lawsuits related to Libor in the United States. HSBC said in its 2011 annual report that it could not predict the outcome of the investigations and lawsuits.
The bank, now a subsidiary of Lloyds, said it was cooperating with investigations. It has also been named in private U.S. lawsuits related to the setting of Libor. HBOS said it in its 2011 annual report it was not possible to predict the scope, outcome or impact of the investigations and lawsuits.
JPMorgan said it was cooperating with regulators and government bodies investigating the setting of Libor, Euribor and Tibor rates, mainly in 2007 and 2008. It has also been named as a defendant in private U.S. lawsuits over Libor.
Rabobank said it was cooperating with investigations into possible manipulation of Libor rates. It has also been named as a defendant in a number of civil lawsuits in the United States. Rabobank said it was confident the claims would be held unfounded and was conducting its defence as such.
Canada's largest bank did not make any comment in its 2011 annual report on its involvement in regulatory probes into possible manipulation of interbank lending rates.
Royal Bank of Scotland said it was cooperating with investigators, who had requested information. RBS said members of its group had been named as defendants in a number of lawsuits in the United States. The bank said it had substantial defences to these claims. Following a newspaper report last month that it faced a 150 million pound fine, RBS said there could not be any certainty as to the timing or amount of any fine or settlement.
The Swiss bank said it had been granted leniency or immunity from potential violations by some authorities, including the U.S. Justice Department and Swiss Competition Commission, in return for its cooperation in the Libor manipulation probe. It did not specify what information it was providing. In December, Japan's financial regulator said it would penalise the Japan securities units of Citigroup and UBS after finding that an individual who worked at UBS and then moved to Citi had attempted to influence Tibor. It has also been the subject of U.S. lawsuits.
The German bank was among those being investigated, a person familiar with the matter told Reuters in March last year. The bank made no mention of the probes in its 2011 annual report. In July last year it was dropped, at its request, from the panel of banks contributing to daily fixings of Libor for U.S. dollars.
The Japanese bank did not mention the investigations into possible Libor manipulation in its 2011 annual report. In April last year it was one of 12 banks sued by Vienna-based asset manager FTC Capital, accused of conspiring to manipulate Libor.