A wrap-up of stories and posts you might have missed or overlooked -- the ones below the fold.
Update: The Way in which the LIBOR benchmarks are calculated was simplified in this post, as pointed out by "BritishBankers" in the comments.
Thomson Reuters is the designated calculation agent for BBA LIBOR. Data submitted by panel banks into the bbalibor process is received and processed by Thomson Reuters and the data is calculated using guidelines provided by the FX&MM Committee.
It's been a bit surprising to witness the conspicuous lack of pitchforks and torches, what with all the hubbub about the Libor having been rigged. It's not as if it's headline news though. The media, if they mention it all, has given it a requisite plug between Tom and Katie's break up and the weather. If it makes it past the cutting room floor, it's being downplayed as inconsequential and unimportant. They're describing it as an inter-bank interest rate, rolling their eyes and sloughing it off as something that only affects those financial geniuses on Wall Street. True, the definition does lend itself to that assumption. From Wikipedia: The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks. Move along, nothing to see here.
So here's what you need to know if you don't read past the next few paragraphs: As Matt Taibbi puts it in an interview on Eliot Spitzer's Viewpoint, "Libor is the Sun at the center of the financial universe ... this is like finding out the world is built on quicksand." Libor, Spitzer clarifies, affects every interest rate in the world.
More importantly, Libor is the standard interest rate used to determine consumer interest rates on credit cards, adjustable rate mortgages, interest-only mortgages, and a majority of small business loans. Lenders earn money by offering consumers loans based on the Libor rate. For example: "LIBOR +1" or the "LIBOR rate + one percent." Meaning that as Libor moves up or down, it can change the amount you pay every month to service your debt. If you have a small business, own a home, finance a car, have a credit card, Libor is in your life.
Every morning the British Bankers Association would call around to the 16 big banks and get a number -- what their interest rate was for the day. The four highest and four lowest numbers got thrown out, the remaining eight are, for all intents and purposes, averaged out and voila: the Libor rate for the day is determined. The problem, in Taibbi's assessment, is that the banks were lying about their numbers, essentially faking their own credit scores and as a result screwing us out of trillions of dollars one percentage point at a time. Incidentally, Libor was also used to establish the base price for credit-default swaps, the financial instrument of mass destruction at the heart of the 2008 financial crisis.
That being said, the deafening silence and apathy is astounding. "If some guy had held up a bank and taken a percentage point from every customer in the bank, there'd be a nationwide manhunt," former Ohio AG Marc Dann said in a recent conversation, "This was not a hard crime to miss unless you believe the actors aren't cheaters." Dann currently has his own practice and has focused his efforts on defending homeowners in foreclosure.
Barclays Bank of England is at the center of the scandal and it hasn't been made too apparent by the press that nearly every major bank, such as Bank of America, Citigroup, UBS and JPMorgan Chase, were allegedly involved in fixing the rate as well.
State side there's the usual crew chiming in. Gretchen Morgenson, in her NYT piece, "The British, at Least, Are Getting Tough," looks at how the Brits are handling the scandal compared to our Congress and regulators. While the British government is taking this whole fiasco seriously and actually conducting investigations, our folks are, for the most part, submitting to the banks' pushback of more regulation and greater transparency.
With each new financial imbroglio, the gulf widens between Main Street's opinion of Wall Street and the industry's view of itself. When Mr. del Missier, the former Barclays chief operating officer, took over as chairman of the Securities Industry and Financial Markets Association last November, he said: "We will continue to work on maintaining and burnishing the level of confidence investors have in our markets, in our own financial institutions, and in the general economic outlook for the future.Given the Libor scandal, let's just say good luck with that.
In "Why is Nobody Freaking Out About the LIBOR Banking Scandal?" Taibbi shows his usual outrage at the lack of coverage on the part of the American press. Pointing out that the top stories in the midst of a story so big and relevant it's impossible to miss were instead, the healthcare ruling, which makes sense, the heat, Tom and Katie, how Katie can wear heels again now that she's not married to a short person, Joe Sandusky, and how fat Chris Christie is and why the hell he hasn't done the bypass surgery yet.
But to me what's missing from all of this is the "Holy F*#&ing Sh#t!" factor. This story is so outrageous that it shocks even the most cynical Wall Street observers. I have a friend who works on Wall Street who for years has been trolling through the stream of financial corruption stories with bemusement, darkly enjoying the spectacle as though the whole post-crisis news arc has been like one long, beautifully-acted, intensely believable sequel to Goodfellas. But even he is just stunned to the point of near-speechlessness by the LIBOR thing.
I'm still amazed that Taibbi didn't make Joshua Brown's "The 25 Most Dangerous People in Financial Media" list. I'm hoping it was an oversight.
In England and most of Europe, the press is having a field day and people are understandably outraged. Get this: Even government officials are freaking out. Yves Smith wrote:
Yves: The Guardian quotes Mervyn King, Governor of the Bank of England:"It is time to do something about the banking system...Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal."
Yves: Could you imagine Ben Bernanke saying that? And consider this remark from a Guardian article by Will Hutton:
"Investment banking is an organized scam masquerading as a business. It is defined by endemic conflicts of interest, systemic amoral behavior and extreme avarice. Many of its senior figures should be serving prison sentences or disgraced - and would have been if British regulators had been weaned off the doctrine of "light touch" regulation earlier and if the Serious Fraud Office's budget had not been emasculated by Mr Osborne. It is a tax on wealth generation and an enemy of honest endeavor - the beast that is devouring British capitalism."
Try getting comments like that from our media or elected officials. Congress and the media seem to be okay with letting this one just slide by, while England's MPs are going hard and fast at the Bank Deputy Governor for his role in the rigging. From the Harwich and Manningtree Standard:
... the fierce debate over banking ethics will rage on as Labour leader Ed Miliband delivers a speech on his vision for the sector. He will point to the Libor rate-fixing scandal as vindication of his much-criticised attack last year on "predatory" capitalism and promise wide-ranging action.
It's as if millions of Americans getting ripped off to the tune of trillions of dollars is really no big deal, much less a surprise to anyone and that's what makes this particular incident disgusting. The whistle blower law firm of Labaton and Sucharow conducted a survey of 500 senior executives in the United States and the UK about unethical and illegal conduct in the financial market.
According to the survey, 24 percent of respondents reported a belief that financial services professionals may need to engage in unethical or illegal conduct in order to be successful, while 26 percent of respondents indicated that they had observed or had firsthand knowledge of wrongdoing in the workplace. Particularly troubling, 16 percent of respondents reported that they would commit a crime--insider trading--if they could get away with it.
Earlier this week the GOP tried again for the 31st time to repeal the healthcare bill that will give millions of Americans access to affordable healthcare and place us among the rest of the civilized countries that actually take care of their citizens instead of forcing them to bend over, grab their ankles, and get ready for another financial institution or corporation to stick it to them.
Here's an idea: How about holding the financial masters of the universe accountable for this little Libor thing and using that to pay for healthcare and pay down the deficit everyone seems so worried about?
Follow Richard Zombeck on Twitter: www.twitter.com/zombeck
at the corporations' door,.. aah,.. because it's "not personal",.. "just business". Silly me,..
for thinking that community responsibility might start with our greatest power in supporting
community banks and the rest of our community institutions instead of sending ALL our
money out of town and then moaning about the tax base erosion.
LIBOR scandal is just more cover up for the deeper issue:
There was no legal initial mortgage debt contract to begin with as there was:
· No Consideration...i.e. no money....no loan: …..can only be considered a purported loan/ Has Fictitious or Illusionary Consideration; (see Montgomery vs. Daly)
· An interest bearing Mortgage Contact can not possible be fulfilled by everyone because of usury ( Where does the interest come from if there was only one mortgage contract in the world.) therefore it is Civilly Void and Unenforceable;
· False statements are signed by the borrower. i.e A False Document
· Part of a Bait and Switch; The bankers and lawyers string you along into signing these false documents thinking you have a loan and are the borrower when in fact you are the creditor and have GIVEN them or they HAVE STOLEN your credit.
I have researched and picked apart various causes for the economic crisis we are in: the high rate of unemployment, increasing foreclosures, poverty, war, bankruptcies, resources being abused, and plutocracy. I have concluded that our current debt-based monetary system is based on dishonesty and fraud with very little transparency... therefore the need for honest public banking!
Here is where the LARGER FRAUD started. I call it the DECEPTION AT CONCEPTION!
Read it here;
http://www.opednews.com/articles/The-REAL-secret-of-the-fra-by-David-Snieckus-120710-406.html#comment384045
As far as regular people getting up in arms, those that do are derided as malcontents that need to just "get a job". Occupy wall st has been ineffective at generating the amount of interest and support needed to make policy change, but this kind of rigged economy has been on thier agenda from day one.
Look how american families sat back and watched as the banks raised their interest rates on credit cards during the worst financial crisis in history.
The power elite want obedient peaceful workers. The last group to stand up and challenge the system was vilified, pepper sprayed and arrested.
Call me pessimistic if you like but until there is a world wide uprising in lines of the French Revolution nothing will change.
Note the similarities to today...
http://www.sparknotes.com/history/european/frenchrev/summary.html
SparkNotesÂ: The French Revolution (1789-1799Â): Summary of Events
"No one factor was directly responsiblÂe for the French RevolutionÂ. Years of feudal oppression and fiscal mismanagemÂent contributeÂd to a French society that was ripe for revolt. Noting a downward economic spiral in the late 1700s, King Louis XVI brought in a number of financial advisors to review the weakened French treasury. Each advisor reached the same conclusion—that France needed a radical change in the way it taxed the public—and each advisor was, in turn, kicked out.
Finally, the king realized that this taxation problem really did need to be addressed, so he appointed a new controller general of finance, Charles de Calonne, in 1783. Calonne suggested that, among other things, France begin taxing the previously exempt nobility. The nobility refused, even after Calonne pleaded with them during the Assembly of Notables in 1787. Financial ruin thus seemed imminent.
The Estates-GeÂneral
In a final act of desperatioÂn, Louis XVI decided in 1789 to convene the Estates-GeÂneral, an ancient assembly consisting of three different estates that each representeÂd a portion of the French populationÂ. If the Estates-GeÂneral could agree on a tax solution, it would be implementeÂd. However, since two of the three estates—thÂe clergy and the nobility—wÂere
tax-exemptÂ, the attainment of any such solution was unlikely..Â."
predators need "Max-ed" out!
o Senator Sherrod Brown
o Senator Al Franken
o Representative Marcy Kaptur
And a few others
How much is enough?
just kidding, trick question.
People tend to not protest when they still have something more to lose. It's only when they have lost most to all of what they have, that the pitchforks come out. This how the ultra rich are able to dominate.
The powers that be have manipulated news into to stark and disparate corners, it's either "debt forgiveness" by the lunatic progressive wing of the democrat party, or "get a job" by the insufferable republican neo cons.
In the middle, where MOST americans actually live and breathe, resonates a more reasonable position, "Can I get a interest rate reduction if I am lowering my debt every month?"