In the absence of effective regulatory oversight and objective restraint, the financial insiders rigged the market, not incidentally, but systemically and flagrantly over a long period of time.
Market manipulation is no obscure theory, not some secular transgression committed on the periphery by rogue traders, but a pervasive feature of the Anglo-American banking system that stubbornly resists reform through the accumulated power of a credibility trap.
A credibilty trap is a situation where the regulatory, political and informational functions of a society have been thoroughly taken in by a corrupting influence and a fraud so that one cannot even begin to discuss the situation honestly without implicating, at least incidentally, a broad swath of the power structure and the status quo who at least tolerated it, if not profited directly from it. Who will reform the reformers?
As I had hoped, the exposure of the LIBOR fixing scandal is proving to be a watershed moment, even though the common person outside the City of London hardly understands the implications of it yet. It may not gain traction without another collapse, in times such as these, but it is an irrefutable landmark.
Jesse
Administrator says:
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
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2nd July 2012 at 8:46 pm
AWD says:
The Liebor scam is probably the biggest scam in the history of mankind, involving as much of $300 trillion in cash flow involved. Mind boggling. Didn’t hear much about it in the MSM, imagine that.
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2nd July 2012 at 8:50 pm
Muck About says:
Nah! The CDS scam is right up there with the LIBOR. Trillions of dollars of unbacked debt are hanging there just waiting to cascade down when the first counter party fails to cover a loss.
Doomed……. There will not be a single fiat currency standing after this fiasco is finished.
MA
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2nd July 2012 at 8:56 pm
Administrator says:
On Lie-borgate: “Everyone Knew, And Everyone Was Doing It”
Submitted by Tyler Durden on 07/02/2012 08:54 -0400
“I wish I could say that this was an isolated case… You will hear more on this in due course” is how the UK FSE’s Director of enforcement described Lie-borgate to Reuters this weekend. It seems incredibly that the US regulators and investing public alike are shunning this interest rate rigging scandal as the UK goes to DEFCON 1 with more than a dozen other banks being investigated in the long-running global probe. The Barclays Chairman quit over the weekend (and we assume will not be the last casualty) as The Telegraph notes the ‘dislocation of libor from itself’ – since banks could not be seen borrowing at higher rates for fear of liquidity repercussions, as widespread. According to the trader the BBA asked for a rate submission but there were no checks and “everyone knew” and “everyone was doing it”. What is incredible is the level of nonchalance that this illegal act had taken on with entire teams of people well aware as open discussion occurred (not clandestine blue-horseshoe-likes-low-libor-style). Indeed this widespread and well-known action of dislocating libor from itself (since in a trader’s words “everyone knew we couldn’t borrow at Libor, you only needed to look at CDS to see that… with real Libor rates 3 to 4 per cent higher than the BBA’s submitted Lie-bor”) has now led George Osbourne, as per the FT, to launch a ‘Leveson-style’ probe into standards in the banking industry – a full, public independent inquiry into the $504 Trillion market’s underlying integrity. Libor had dislocated with itself for a very good reason – to hide the true issues within the bank.
The Telegraph: Libor scandal: How I manipulated the bank borrowing rate
According to the trader, “everyone knew” and “everyone was doing it”. There was no implication of illegality. After all, there were 20 to 30 people in the room – from management to economists, structuring teams to salespeople – and more on the teleconference dial-in from across the country.
The discussion was so open the behaviour seemed above board. In no sense was this a clandestine gathering.
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.
Looking back, I now feel ashamed by my naivety. Had I realised what was going on, I would have blown the whistle. But the openness alone suggested no collusion or secrecy. Management had been in the meeting, and so many areas of the Treasury division of the bank represented, that this was clearly no surprise or secret.
Libor had dislocated with itself for a very good reason – to hide the true issues within the bank.
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2nd July 2012 at 9:33 pm
IndenturedServant says:
It’s not illegal if there is no rule of law right? Merely a typographical error with decimal points or some shit. Fuck! It is beyond me how they can keep this shell game going so long. Seems like everyone is either complicit or in favor of it.
I_S
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2nd July 2012 at 3:22 am
Bob says:
Indentured Servant says “It is beyond me how they can keep this shell game going so long.” I think we all have that feeling, I_S. I believe this is playing out like a death from chronic, debilitating illness. Dragged out longer than any expectation, with a sudden, jarring ending somewhere out there in the near future. We’re all waiting for the financial system as we know it to croak, and it is pulling out all the stops, clinging to its flickering life.
It’s been quite a spectacle, and it’s not quite over.
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2nd July 2012 at 11:26 am
Mary Malone says:
First love Leonard Cohen. Hate the coorption tho.
I wonder if homeowners with ARMs whose interest rates are based on Libor plus x can file lawsuits charging their loans are fraudulent and Libor fix violates US federal and state consumer fraud statutes and regs?
If everybody knows, why let this crisis go to waste?
File pro se and see what happens. Or file a class action lawsuit on behalf of all homeowners with ARMs.
The courts and the law -at least what’s left of it can be used as a weapon against the cronies.
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2nd July 2012 at 11:50 am
TeresaE says:
MM, the libor lawsuits have me thinking.
I’m going to guess, that with our intellectually challenged justice system, plus the facts that these same banks OWN the government(s), that these lawsuits wouldn’t work out the way we would think.
If it is determined that the rates were being artificially lowered, versus increased, over where they “should” be. Which would might mean that I could sue, pay an attorney and then losing my house because I can’t come up with the “repayment” of underpaid interest.
Clawbacks are occurring in everything from retirement funds, to bankruptcies, to fill in the blank.
The research you have presented here over the past couple years pretty much proves that heads the banks/gov win, tails we lose.
Why would this be any different?
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2nd July 2012 at 2:26 pm
Mary Malone says:
Gee, I don’ t know if including Libor fraud claims will be wildly successful but I do think we should try.
There are a number of judges who are finding for homeowners on all sorts of claims – even in NJ.
Manipulating the Libor and knowingly pegging homeowner interest payment to it is fraud.
You could make a very strong case that the contract was fraudulent from the start and ask the judge to rule that it is a nullify. No contract, no mortgage.
I understand how the corruption demoralizes people. But if we refuse to exercise our rights – including property rights we lose by default. We essentially surrender.
We have figured out the legal system as it applies to helping homeowners get real relief in the courts.
We have uncovered the TBTF vulnerabilities and are actively exploiting them and we are winning. One homeowner at a time.
If you don’t want to hire an attorney go pro se. MI and all states legal aid societies have templates and specific instructions on how to file a contested answer in foreclosure or sue under the state and federal consumer fraud acts.
Yes it’s hard – but you’re smart and resourceful. You could do it. And you could win.
Anything can happen once you get your valid claim into the judicial system. You could find a judge who’s been dying to take it to TBTF. Or your adversary could simply not show up and you could win by default.
One things for sure – if we don’t fight we will surely lose.
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2nd July 2012 at 2:52 pm
Administrator says:
Mary
You sure have spunk.
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2nd July 2012 at 2:59 pm
Mary Malone says:
Thanks Admin. Love the visual too.
I ‘ ve been thinking. How would you like to take our exploitation of TBTF mortgage/MBS fraud for a ride?
I can send you a template for Qualified Written Request letter you could mail to the servicer of your NJ condo loan. In 30 days the servicer must provide you with all the evidence you request on the identity of your creditor.
If they fail to answer in the 30-day period, you can recover $4,000 fine in federal court. We can help you with that too.
We are getting very interesting responses. Enlightening really. A homeowner can send a QWR letter whenever they believe there may be an issue with their mortgage under RESPA. Dodd-Frank actually strengthened homeowners rights here.
We contacted Barney Frank’ s office to ask how we collect the $4k when the QWR is not answered. His senior aide didn’t t know what a QWR letter was – heh. No surprise there, since Barney and company didn’t write the bill.
So we researched it and found the answer ourselves.
The lesson is you never know the name of the alleged investor until you ask.
Could be fun. Wadda ya say?
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2nd July 2012 at 3:23 pm
Administrator says:
Mary
Its too late. I just refinanced the condo. Annual savings of $4,000 was too much to pass up. Life is about cashflow. I will put my savings to good use – buying precious metals and preparing for the ugly winter ahead.
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2nd July 2012 at 4:01 pm
IndenturedServant says:
Mary, my brother would send one to his mortgage bank in a hot minute if you want to send a template.
I_S
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2nd July 2012 at 4:02 pm
Mary Malone says:
Admin sounds like a great deal. Good for you.
Indentured Servant – I can post the template along with mailing instructions when I get home tonight.
Does that work?
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2nd July 2012 at 4:39 pm
Administrator says:
Mary
I’ll post a draft template and anything you think is relevant.
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2nd July 2012 at 5:45 pm
IndenturedServant says:
Sounds great to me Mary. Thank you and thank you admin for offering to post it. Maybe all TPB’ers should do this. If we all end up with $4k we can meet up somewhere and TBP can go live for a weekend! Just don’t let big bro know about it lest we all end up in the nearest FEMA re-education camp!
I_S
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2nd July 2012 at 8:54 pm
Mary Malone says:
Thanks, Admin. I emailed a post with the QWR letter to you late last night.
I_S Hope it’s helpful!
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2nd July 2012 at 7:25 am
sensetti says:
. “If we all end up with $4k we can meet up somewhere and TBP can go live for a weekend!” I_S
Now that would be a drunken brawl I would gladly pay to see LMAO.
It would not last one hour and the cops would show up and haul everyone off
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2nd July 2012 at 8:02 am
Administrator says:
Sensetti
I think Stuck and KB would be the life of the party.
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2nd July 2012 at 8:16 am