Ramanisblog

Tag: LIBOR

  • Linked Connecticut Shooting Libor Banks Rate Fixing Hearing?

    Connecting Shooting which killed children among others is now rumored to be linked to the Libor Scandal by The Banks.

    There is a hearing in the US Senate and the father of the killer of the innocent is reportedly linked to the Libor Scandal and the Testimony.

    Robert Holmes ,father of  the killer James Holmes, is a high level executive of the Financial Rating Company Figo

     The Father of another killer is an executive of a Bank.’GE Financial‘

    There are the other theories such as Drug Addiction and broken homes.

    Most importantly Gun Control issue in the United States.

    Either the Libor scandal  or the Anti Gun Control Lobby might have been the main reason.

    Truth is yet to emerge.

    If it is proved that Libor is the root cause, rest assured that nothing may come out of the investigation

    Financial Institutions, of late  are found to have been indulging in skullduggery, from manipulation of markets to laundering Drug money.

    One remembers Goldman Sachs and HSBC, the latter has been filed heavily for laundering drug money and curiously no executive was arrested(please read my blogs on Goldman Sachs and HSBC money laundering, its escape, filed under Banks.

    At times like these I am tempted to believe the presence of a killer Cartel that is manipulating the World Governments(my blogs on this subject will give  some inputs)

    What is The Libor Scandal?

    Bank of America.
    Bank Of America

    ‘The Libor scandal is a series of fraudulent actions connected to the Libor (London Interbank Offered Rate) and the resulting investigation and reaction. The Libor is an average interest rate calculated through submissions of interest rates by major banks in London. The scandal arose when it was discovered that banks were falsely inflating or deflating their rates so as to profit from trades, or to give the impression that they were more creditworthy than they were.[3] Libor underpins approximately $350 trillion in derivatives. It is controlled by the British Bankers’ Association (BBA).[4]..

    The Wall Street Journal reported in March 2011 that regulators were focusing on Bank of America Corp., Citigroup Inc. and UBS AG in their probe of Libor rate manipulation.[33] A year later, it was reported in February 2012 that the U.S. Department of Justice was conducting a criminal investigation into Libor abuse.[34] Among the abuses being investigated were the possibility that traders were in direct communication with bankers before the rates were set, thus allowing them an unprecedented amount of insider knowledge into global instruments.[35] In court documents, a trader from the Royal Bank of Scotland claimed that it was common practice among senior employees at his bank to make requests to the bank’s rate setters as to the appropriate Libor rate, and that the bank also made on occasions rate requests for some hedge funds.[36] One trader’s messages from Barclays Bank indicated that for each basis point (0.01%) that Libor was moved, those involved could net “about a couple of million dollars”.[35

    On 27 June 2012, Barclays Bank was fined $200 million by the Commodity Futures Trading Commission,[5] $160 million by the United States Department of Justice[6] and £59.5 million by the Financial Services Authority[7] for attempted manipulation of the Libor and Euribor rates.[38] The United States Department of Justice and Barclays officially agreed that “the manipulation of the submissions affected the fixed rates on some occasions”.[39][40][41]

    Barclays manipulated rates for at least two reasons. Routinely, from at least as early as 2005, traders sought particular rate submissions to benefit their financial positions. Later, during the 2007–2012 global financial crisis, they artificially lowered rate submissions to make their bank seem healthy.[6]…..

    By 4 July 2012 the breadth of the scandal was evident and became the topic of analysis on news and financial programs that attempted to explain the importance of the scandal.[47] Two days later, it was announced that the U.K. Serious Fraud Office had also opened a criminal investigation into manipulation of interest rates. The investigation was not limited to Barclays.[48][49] It has been reported since then that regulators in at least seven countries are investigating the rigging of the Libor and other interest rates.[50] Around 20 major banks have been named in investigations and court cases.[51]…

    Early estimates are that the rate manipulation scandal cost U.S. states, counties, and local governments at least $6 billion in fraudulent interest payments, above $4 billion that state and local governments have already had to spend to unwind their positions exposed to rate manipulation.[52] An increasingly smaller set of banks are participating in setting the LIBOR, calling into question its future as a benchmark standard, but without any viable alternative to replace it.[53]9Wiki)

    List of Banks involved in the Libor Scandal.

    The American banks included in the panel surveyed by the BBA for U.S. dollar fixing are:

    • The Bank of America
    • JP Morgan Chase
    • Citibank, NA

    There are 16 non-U.S. banks surveyed for U.S. dollar fixing in London. These banks are:

    • Bank of Nova Scotia
    • Bank of Tokyo-Mitsubishi UFJ Ltd
    • Barclays Bank plc
    • BNP Paribas
    • Credit Agricole CIB
    • Credit Suisse
    • Deutsche Bank AG
    • HSBC
    • Lloyds TSB Bank plc
    • Rabobank
    • Royal Bank of Canada
    • Société Générale
    • Sumitomo Mitsui Banking Corporation
    • The Norinchukin Bank
    • The Royal Bank of Scotland Group
    • UBS AG

     

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  • Barclays Bank Attempts to Manipulate Borrowing Rate

    Bye Barclays Bank II
    Bye Barclays Bank II (Photo credit: George Rex)

    Barclays are caught in the act.

    Others are not.

    Gold price also has the similar story.

    ‘Ours is not to reason why’ -but to suffer.

    ‘The British and US authorities said they had found evidence Barclays had attempted to manipulate a key borrowing rate for years, meaning that home owners could have paid millions more in mortgage payments than they might otherwise have had to.

    Traders at the bank were discovered to have engaged in regular attempts to determine the London Interbank Offered Rate (Libor) from as early as 2005.

    The manipulation of Libor saw the bank make submissions to the setters of the rate that they knew to be wrong as they attempted to influence the level at which it was fixed.

    Barclays also attempted to suppress Libor, which means that savers could have potentially lost out on millions in interest due to the rate being lower than it should otherwise have been.

    Barclays chief executive Bob Diamond is to forgo his bonus after the bank was fined a total of £290m.

    Andrew Tyrie MP, chairman of the Treasury Select Committee, said: “This was a serious breach. I am very concerned about it. The price setting mechanism of Libor is crucial to the integrity of the markets. This appears to have been put at risk. From the information I have, it looks inexcusable.”

    The US Commodity Futures Trading Commission (CFTC) handed the bank a $200m (£128m) penalty for “attempted manipulation of and false reporting concerning Libor and Euribor benchmark interest rates”, while Barclays has agreed to pay a $160m penalty as part of an agreement with the US Justice Department.

    David Meister, the CFTC’s director of enforcement, said: “The American public and our markets rely upon the integrity of benchmark interest rates like LIBOR and Euribor because they form the basis for hundreds of trillions of dollars of transactions and affect nearly every corner of the global economy.

    “Banks that contribute information to those benchmarks must do so honestly. When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports that result from senior management orders to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined. The CFTC launched this investigation to protect the markets and the public from such illegal conduct, and today’s action demonstrates that we will bring the full force of our authority to bear as we carry out that mission.”

    The UK’s Financial Services Authority has imposed its largest ever penalty of £59.5m.

    The CFTC found that finds that “Barclays attempted to manipulate and made false reports concerning two global benchmark interest rates, Libor and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period, commencing as early as 2005”.

    Libor is used to price more than £200 trillion of financial products around the world, including everything from home loans to the most complex credit derivatives. Euribor measures the cost of borrowing in the European Union.

    In a statement, Mr Diamond said that he and three other senior managers would hand back their bonuses for 2012 in light of the fines: “The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business.’

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9359362/Bob-Diamond-forgoes-bonus-as-Barclays-fined-for-Libor-manipulation.html