pap Posted 2 July, 2012 Share Posted 2 July, 2012 Actually not too surprised that there isn't a thread for this already, mostly because many, myself included, don't understand the full ins and outs of the scandal. My understanding is that banks (at least one) have been manipulating the LIBOR rate (the rate at which banks lend money to each other) for personal or institutional gains. Beyond that, I'm a bit hazy. I suspect most people are. One of the reasons that the banks were manipulating rates was to present their financial situations as better than they actually were. Another alleged practice is mis-reporting the LIBOR rate to loan customers to justify increases in the cost of borrowing. The main business of the day was to deal with the deepening crisis. And questions were raised about what we, in one of the bank's sales teams, could be doing to earn our wages. The answer was fire-fighting. Helping the corporate bank with clients – predominantly explaining why the customer's loan was being moved from base rate to Libor and why their interest margin was increasing sharply. It wasn't easy for the corporate bankers. They were under orders from the credit committee, and powers at the top, to change a client's borrowing rate to Libor and increase the margin if any covenant was breached, no matter how small. We accompanied the relationship managers to meetings to explain what was happening in the economy – why base rate lending could not be sustained, why margins had to increase, and of course to explain the general economic backdrop. As part of that, we had to explain the "dislocation of Libor from itself". As the trader put it, everyone knew that we couldn't borrow at Libor, you only needed to look at the price of our credit default swaps – effectively survival insurance for the bank – to see that. What that meant was that even though Libor may have been, for example 2pc, the real Libor rate the bank was paying was more like 5pc or 6pc. So in fact, we needed to be lending money at Libor plus 3pc or 4pc just to break even. That is what we were telling clients Like I said, I'm no expert. Was hoping that some more clued up people could weigh in on this serious business Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 2 July, 2012 Share Posted 2 July, 2012 I have always thought that the LIBOR was agreed between the banks so in a sense they have always 'fixed' the rate. I think that the fuss is because some traders have been manipulating it for their own personal gain. As far as we are concerned we just have to pay whatever has been agreed and get on with it whoever has set the rate, be it individual banks or the Bank of England. Maybe someone will please explain all the intricacies for us in full detail. Link to comment Share on other sites More sharing options...
dubai_phil Posted 2 July, 2012 Share Posted 2 July, 2012 Seen a lot of comments on this on news feeds. Biggest is that the major banks could get rammed hard by fines and many execs face Criminal charges not only here but also in US. Most advice was along the lines of move to Co-op Bank or any old fashioned Building Societies still left Good blog on it here http://www.ianfraser.org/the-wages-of-sin-bankers-on-the-fiddle/ Link to comment Share on other sites More sharing options...
trousers Posted 2 July, 2012 Share Posted 2 July, 2012 What about.....nah, forget it... ;-) Link to comment Share on other sites More sharing options...
pap Posted 2 July, 2012 Author Share Posted 2 July, 2012 Seen a lot of comments on this on news feeds. Biggest is that the major banks could get rammed hard by fines and many execs face Criminal charges not only here but also in US. Most advice was along the lines of move to Co-op Bank or any old fashioned Building Societies still left Good blog on it here http://www.ianfraser.org/the-wages-of-sin-bankers-on-the-fiddle/ Thanks, dubai_phil - feel slightly less thick now Pretty serious then. Could well see the naughty banks being made a "proper" example of. Link to comment Share on other sites More sharing options...
Gemmel Posted 2 July, 2012 Share Posted 2 July, 2012 I was listening to an article where private individuals in the US are taking legal action against the banks, which if one person won, would spell the end for Barclays. No idea how true that is or not Link to comment Share on other sites More sharing options...
dune Posted 2 July, 2012 Share Posted 2 July, 2012 I think most of us are bored with it all now. Link to comment Share on other sites More sharing options...
The Cat Posted 2 July, 2012 Share Posted 2 July, 2012 So the taxpayers bail them out and then they go and shaft them again by fixing interest rates. Brilliant. It would be great to see some bankers in prison over this. The politicians (all of them) need to take the blame for the lack of banking regulations which has given the bankers powers to pretty much do what they want. Read something yesterday about Ed Balls going on a visit to an arm of an investment bank a few years ago. He asked the executive showing him around what job a particular group of bankers were doing and the executive didn't know. The advice about moving banks is the best. People will moan about certain banks screwing them over but then continue to give them their custom when all they need to do is fill in a form and move current accounts to co-op or a building society. Link to comment Share on other sites More sharing options...
badgerx16 Posted 2 July, 2012 Share Posted 2 July, 2012 I think most of us are bored with it all now. Not at all. Every day brings more condemnation of the casino capitalists, and more shame upon politicians of all hues who were blinded by the easy money that slavish devotion to Mammon appeared to deliver. Link to comment Share on other sites More sharing options...
dubai_phil Posted 2 July, 2012 Share Posted 2 July, 2012 I think most of us are bored with it all now. As the blog says. Potentially $10 trillion in loans to consumers and companies and $350 trillion in derivatives in dodgy priced loans. The claims for damages on that could ruin any of the banks. IF you were fraudulently overcharged for something and were liable to claim compensation I assume like everyone else on the planet you would. And while bored if they ALL go down at the same time over the damages claims, ain't no way UK Gov can guarantee ALL of the cash deposited in ALL of the banks - so yeah be bored but you could also be broke. A LOT of loans in the US were based on these rates. So they are liable for claims in the US. We all know that their courts don't award ambulance chaser amounts when it comes to punitive damages Link to comment Share on other sites More sharing options...
dune Posted 2 July, 2012 Share Posted 2 July, 2012 Not at all. Every day brings more condemnation of the casino capitalists, and more shame upon politicians of all hues who were blinded by the easy money that slavish devotion to Mammon appeared to deliver. The thing is we have to tread carefully. If we come down too hard on them we'll end up shooting ourselves in the foot and lose out to more obliging overseas financial centres. As much as we might not like it, in situations like this we must not let our hearts rule our heads. Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 2 July, 2012 Share Posted 2 July, 2012 So the taxpayers bail them out and then they go and shaft them again by fixing interest rates. Brilliant. It would be great to see some bankers in prison over this. The politicians (all of them) need to take the blame for the lack of banking regulations which has given the bankers powers to pretty much do what they want. Read something yesterday about Ed Balls going on a visit to an arm of an investment bank a few years ago. He asked the executive showing him around what job a particular group of bankers were doing and the executive didn't know. The advice about moving banks is the best. People will moan about certain banks screwing them over but then continue to give them their custom when all they need to do is fill in a form and move current accounts to co-op or a building society. Did Barclays receive any government money? Link to comment Share on other sites More sharing options...
trousers Posted 2 July, 2012 Share Posted 2 July, 2012 Did Barclays receive any government money? Nope. They were offered but declined. Went for a private 'bailout' instead - Middle East investors IIRC Link to comment Share on other sites More sharing options...
saint1977 Posted 2 July, 2012 Share Posted 2 July, 2012 The level of corporate fraud in the UK is really become astonishing. At the moment, I've already got action ongoing to retrieve PPI monies obtained fraudulently from my wife's previous mortgage and I'm just considering some on an energy company helping itself to something it shouldn't have and not putting its house in order. Now it appears I'll have to investigate whether my current mortgage was fraudulently set by my bank too. Just what I want to be doing my spare time. Am I the only person working in a UK organisation that actually cares about the quality of my work and the impact it has on others? The upshot is this - markets need much tighter national, European and global regulation and controls to stay free. Contradiction? Not at all, the market is unable right itself any longer and the taxpayer cannot continue to bail out corrupt private organisations. Only then can markets be free for the people that really count - consumers and business start-ups. Yet at this time, we've got Liam Fox speaking at the Taxpayers Alliance about us leaving the EU. What planet is the man on? Link to comment Share on other sites More sharing options...
pap Posted 2 July, 2012 Author Share Posted 2 July, 2012 Did Barclays receive any government money? Barclays didn't take any bail out money, but this is just the beginning. A lot of banks are going to come under scrutiny, some of them taxpayer-owned. RBS has been mentioned. It really does depend on how much is uncovered in the coming months. Funny thing is that this isn't the first time I'd heard of LIBOR. They were talking about it back when banks "weren't lending to each other". I wonder if a big part of that was down to banks knowing they were over-selling their positions. Getting to the point now where these people and this system honestly do not deserve the efforts being thrown at it. While Barclays are currently the only outfit in the frame, the investigation is still nascent. I suspect that we may see more evidence rolling in now that the story has surfaced. Can't see this being a Barclays only problem. Link to comment Share on other sites More sharing options...
bridge too far Posted 2 July, 2012 Share Posted 2 July, 2012 My mortgage rate with a smallish building society mirrored the US LIBOR rate. I wonder if I have been overcharged? It's paid off now but I wonder if I will have a claim for compensation? However, I'm proud to say my bank won't be implicated Link to comment Share on other sites More sharing options...
dune Posted 2 July, 2012 Share Posted 2 July, 2012 My mortgage rate with a smallish building society mirrored the US LIBOR rate. I wonder if I have been overcharged? It's paid off now but I wonder if I will have a claim for compensation? However, I'm proud to say my bank won't be implicated Coutts? Link to comment Share on other sites More sharing options...
trousers Posted 2 July, 2012 Share Posted 2 July, 2012 Coutts? Oi...Language! Link to comment Share on other sites More sharing options...
JPTCount Posted 2 July, 2012 Share Posted 2 July, 2012 don't feel stupid, even a professor in macro economics cant explain how it works. if u are interested in the recent economic crisis and it's fall out check out what N N Taleb has to say about it, there a few videos in youtube of him on Bloomberg and his books, fooled by randomness & black swan, are well worth a read. everyone will think ur reading a story about a lesbian ballet troupe tho. Link to comment Share on other sites More sharing options...
CB Saint Posted 2 July, 2012 Share Posted 2 July, 2012 Don't forget the traders were pushing the libor rate down as well as up, so some lendees would have done alright out of it. I could understand how the banks screwed up the first time, blinded by apparent profits on packaged sub prime loans, which they never fully understood. This however is infinitely worse as this is outright fraud. Any trader guilty needs to face a long stretch inside (we should grease the extradition process to assist if needs be) but also we should confiscate their assets as In my opinion they are proceeds of criminal activity Link to comment Share on other sites More sharing options...
pedg Posted 2 July, 2012 Share Posted 2 July, 2012 http://www.newstatesman.com/blogs/voices/2012/07/real-cost-libor-scandal Link to comment Share on other sites More sharing options...
Verbal Posted 2 July, 2012 Share Posted 2 July, 2012 The worst of it is the Libor scandal was the result of manipulation by derivatives traders - the same derivatives that brought the credit crunch down on our heads. Link to comment Share on other sites More sharing options...
dubai_phil Posted 2 July, 2012 Share Posted 2 July, 2012 Nope. They were offered but declined. Went for a private 'bailout' instead - Middle East investors IIRC Abu Dhabi Sovereign Wealth fun. Oh how us Dubaieans are lol'ing at them now... Ok well actually we're checking the local Government deposit guarantee scheme to see if it's any safer moving our Company account from Barclays & mine from HSBC into local accounts But in other news the 50% plunge in Barclays share price in the last year could mean they are more careful about what they pump into Citeh. Perhaps we (Saints) will overtake them this season after all.... Link to comment Share on other sites More sharing options...
dubai_phil Posted 2 July, 2012 Share Posted 2 July, 2012 My mortgage rate with a smallish building society mirrored the US LIBOR rate. I wonder if I have been overcharged? It's paid off now but I wonder if I will have a claim for compensation? However, I'm proud to say my bank won't be implicated Yes but depends if you join a class action in the US quickly enough (see that blog post link) more than UK libor was affected according to that hence class actions already starting in the US Link to comment Share on other sites More sharing options...
pap Posted 2 July, 2012 Author Share Posted 2 July, 2012 Practice widespread. FSA apparently tolerated it. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9370668/Britains-regulators-may-have-fostered-Libor-rigging.html Link to comment Share on other sites More sharing options...
pedg Posted 2 July, 2012 Share Posted 2 July, 2012 As the article I linked to above says the result of all this is not so much that people before had paid significantly more as the ups and downs tended to cancel each other out its the upcoming rates set against the LIBOR where lenders will add a bit more because of lack of confidence in the figure and interest rates on savings etc will be lower as the institution cuts the rate a bit, again because of lack of confidence in the accuracy of LIBOR. Link to comment Share on other sites More sharing options...
Glasgow_Saint Posted 2 July, 2012 Share Posted 2 July, 2012 Does anyone on here work for Barclays? Link to comment Share on other sites More sharing options...
pedg Posted 3 July, 2012 Share Posted 3 July, 2012 Does anyone on here work for Barclays? Well Bob Diamond does not work for them any more now. Link to comment Share on other sites More sharing options...
trousers Posted 3 July, 2012 Share Posted 3 July, 2012 http://www.bbc.co.uk/news/uk-politics-18685286 Posted 6.59am: The BBC has seen documents which show that ministers in the last Labour government held discussions with banks about policies which would allow the Libor rate - the inter-bank lending rate - to fall. The documents, which have also been seen by the Daily Mail, do not provide any evidence that politicians knew about, let alone condoned, the manipulation of the rate by bankers at Barclays or at other banks. The evidence may, however, lead some to suggest that a climate was created in which banks believed they were under pressure from Gordon Brown's government to cut Libor. They reveal discussions about how the credit guarantee scheme - a government scheme created in 2008 to help get credit to small and medium-sized businesses - would "allow Libor to fall quicker" than it otherwise would. These discussions were led by Baroness Vadera, a former investment banker who advised Gordon Brown. Link to comment Share on other sites More sharing options...
Glasgow_Saint Posted 3 July, 2012 Share Posted 3 July, 2012 well bob diamond does not work for them any more now. hcdajfu? Link to comment Share on other sites More sharing options...
badgerx16 Posted 3 July, 2012 Share Posted 3 July, 2012 From BBC Question Time, "Are bankers human?" http://www.bbc.co.uk/news/uk-politics-18642323 Link to comment Share on other sites More sharing options...
pap Posted 3 July, 2012 Author Share Posted 3 July, 2012 From BBC Question Time, "Are bankers human?" http://www.bbc.co.uk/news/uk-politics-18642323 Great link. Shame he didn't have a cunning plan to sort it all out Link to comment Share on other sites More sharing options...
The Cat Posted 3 July, 2012 Share Posted 3 July, 2012 I guess his resignation means he won't have to face the Treasury Select Committee tomorrow. Convenient coincidence? Link to comment Share on other sites More sharing options...
buctootim Posted 3 July, 2012 Share Posted 3 July, 2012 http://www.bbc.co.uk/news/uk-politics-18685286 Not sure what you are hoping people will infer Trousers, but there is a huge difference between consulting on which government policies might reduce a key interest rate during a sharp recession and fraudulent manipulation by a bank hoping to boost its profits. Link to comment Share on other sites More sharing options...
trousers Posted 3 July, 2012 Share Posted 3 July, 2012 Not sure what you are hoping people will infer Trousers, but there is a huge difference between consulting on which government policies might reduce a key interest rate during a sharp recession and fraudulent manipulation by a bank hoping to boost its profits. I guess the key line from Nick Robinson in that piece was: "The evidence may, however, lead some to suggest that a climate was created in which banks believed they were under pressure from Gordon Brown's government to cut Libor." The suggestion (from Robinson) being that the Government at the time helped engender a culture where bankers might have felt more inclined to 'manipulate' (fraudulenty or otherwise) interest rates. I think the suggestion being made is that it's unhealthy for politicians to be seen to be influencing how the banks were operating. Not trying to political point score here as I'm sure the Tories would have been in the same boat had they been in power at the time. Link to comment Share on other sites More sharing options...
mightysaints Posted 3 July, 2012 Share Posted 3 July, 2012 My partner works for Barclays, the day the Yanks took over the atmosphere changed for the worse. Barclays made good money and was well run before the Yanks took over. Ask most Barclays staff if they are happy that the top management team have gone and the answer will be a resounding yes Link to comment Share on other sites More sharing options...
pap Posted 3 July, 2012 Author Share Posted 3 July, 2012 My partner works for Barclays, the day the Yanks took over the atmosphere changed for the worse. Barclays made good money and was well run before the Yanks took over. Ask most Barclays staff if they are happy that the top management team have gone and the answer will be a resounding yes I work with a lot of Americans. Optimistic to a fault. They believe everything is achievable. Europeans tend to start at the other end. Assume that it's going to be total failure and then remove each danger until it'll probably work More pragmatic, I feel Link to comment Share on other sites More sharing options...
trousers Posted 3 July, 2012 Share Posted 3 July, 2012 I work with a lot of Americans. Optimistic to a fault. They believe everything is achievable. Europeans tend to start at the other end. Assume that it's going to be total failure and then remove each danger until it'll probably work More pragmatic, I feel And by logical deduction there are no American Saints fans.... Link to comment Share on other sites More sharing options...
scotty Posted 3 July, 2012 Share Posted 3 July, 2012 If that lazy tw*t granty would just check his online banking, I wouldnt be restricted to 3 posts a day and looking at ad popups. Link to comment Share on other sites More sharing options...
buctootim Posted 3 July, 2012 Share Posted 3 July, 2012 (edited) I work with a lot of Americans. Optimistic to a fault. They believe everything is achievable. Europeans tend to start at the other end. Assume that it's going to be total failure and then remove each danger until it'll probably work More pragmatic, I feel Americans say "the situation is serious but isnt hopeless", Brits say "the situation is hopeless but isn't serious" Edited 3 July, 2012 by buctootim Link to comment Share on other sites More sharing options...
Thedelldays Posted 3 July, 2012 Share Posted 3 July, 2012 Just been on the news tht this scandal is starting to reach members of the last labour government Oh dear Link to comment Share on other sites More sharing options...
buctootim Posted 3 July, 2012 Share Posted 3 July, 2012 I guess the key line from Nick Robinson in that piece was: "The evidence may, however, lead some to suggest that a climate was created in which banks believed they were under pressure from Gordon Brown's government to cut Libor." The suggestion (from Robinson) being that the Government at the time helped engender a culture where bankers might have felt more inclined to 'manipulate' (fraudulenty or otherwise) interest rates. I think the suggestion being made is that it's unhealthy for politicians to be seen to be influencing how the banks were operating. Not trying to political point score here as I'm sure the Tories would have been in the same boat had they been in power at the time. Fair enough, I hadn't picked that up. The issue seems to be centred around the fact that Barclays were charging at the higher end of the libor range and there may have been some questions from both politicians and BoE as to why that was so - and whether that questioning constitutes undue pressure or signals tacit green lighting. I didnt even know libor had a range so I guess Im out of sensible thought.... Link to comment Share on other sites More sharing options...
trousers Posted 4 July, 2012 Share Posted 4 July, 2012 Diamond just about to be grilled by the Treasury Select Committee...... http://www.bbc.co.uk/news/business-18704239 Link to comment Share on other sites More sharing options...
Verbal Posted 4 July, 2012 Share Posted 4 July, 2012 Diamond just about to be grilled by the Treasury Select Committee...... http://www.bbc.co.uk/news/business-18704239 And the 'expected' expose of manipulation from the BoE and/or the government did not emerge. It was all, said Diamond, 'rogue traders' within Barclays, who made him 'sick'. Link to comment Share on other sites More sharing options...
pedg Posted 4 July, 2012 Share Posted 4 July, 2012 And the 'expected' expose of manipulation from the BoE and/or the government did not emerge. It was all, said Diamond, 'rogue traders' within Barclays, who made him 'sick'. Playing it straight from the NOTW playbook. Link to comment Share on other sites More sharing options...
trousers Posted 4 July, 2012 Share Posted 4 July, 2012 And the 'expected' expose of manipulation from the BoE and/or the government did not emerge. It was all, said Diamond, 'rogue traders' within Barclays, who made him 'sick'. Diamond was trying to preserve his chance of getting a knighthood.... Link to comment Share on other sites More sharing options...
Pugwash Posted 4 July, 2012 Share Posted 4 July, 2012 Diamond was trying to preserve his chance of getting a knighthood.... Not a 'real' one of course - him being one of our colonial cousins. Link to comment Share on other sites More sharing options...
trousers Posted 6 July, 2012 Share Posted 6 July, 2012 http://www.bbc.co.uk/news/business-18742140 The Serious Fraud Office (SFO) has confirmed that it has formally launched an investigation into the rigging of the inter-bank lending rate, Libor. Earlier this week, it said it was considering whether criminal prosecutions would be possible. An SFO spokesperson confirmed that a dedicated case team had now started work. Its involvement follows an investigation by US and UK regulators into the manipulation of Libor. Link to comment Share on other sites More sharing options...
pedg Posted 6 July, 2012 Share Posted 6 July, 2012 Link to comment Share on other sites More sharing options...
Whitey Grandad Posted 6 July, 2012 Share Posted 6 July, 2012 Like :-) Link to comment Share on other sites More sharing options...
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