You can’t make this shit up. Trust no one. Get your money out of the financial markets before they vaporize it.
Before I confess bank price fixing…let me say, I love your accent
The exchange takes place between a Barclays /quotes/zigman/301787 UK:BARC -0.83%official who isn’t named and Fabiola Ravazzolo of the New York Fed. Despite her Italian background — as detailed in a recent celebration of Italian entrepreneurs worldwide — Ravazzolo has a British accent, one the Barclays official very much appreciated.
“I’m glad you haven’t picked up an American accent yet,” he said.
“No, never,” she replied. She regaled how she’s still using British vocabulary, “like apartment, not flat.”
Ravazzolo, it should be said, wasn’t familiar with the intricacies of Libor, asking whether it was the borrowing or lending rate. This probably led to the extraordinary exchange, which starts on page five but really heats up on page six.
The Barclays official was noting when a Financial Times article showed the elevated rates Libor, the stock price at the U.K. bank dropped. So, the bank changed its attitude, as seen in this transcript.
The “:” is the unidentified official; FR is our New York Fed hero.
“: And so we just fit in with the rest of the crowd, if you like.
: So, we know that we’re not posting um, an honest LIBOR.
: And yet and yet we are doing it, because, um, if we didn’t do it
FR: Mm hmm.
: It draws, um, unwanted attention on ourselves.”
The official makes clear, it wasn’t just Barclays that was cheating.
“:And in fact, wha-what we’ve noticed is almost like um, a um, um perverse thing
where people that we know that are paying for money actually put in the lowest LIBOR
: So it, it’s almost to um, you know the ones that need cash the most put in the lowest,
FR: Mm hmm.”
Ravazzolo didn’t exactly rush to the Department of Justice with the information. (The New York Fed says she did alert her superiors, who did tell other agencies of the U.S. government within a month.)
“FR: It’s that you are penalized just because you are honest the way somebody else that is dishonest, eh, you know that’s an advantage so that’s why I was thinking in that direction
: Yeah, yeah.
FR: I understand. No, no and I completely understand the, the point is that ah you know, you, you, you always try to, to try and help for everybody you know, and this is so bizarre what is going on in the market
: It is bizarre. Yeah
FR: Because this is creating
: We felt very un-, very
: I mean we, it- it’s true words to
: Say we feel very
: Very uncomfortable with it.
FR: I understand now.
: But, the-the position we find ourselves in, is one where we can’t really fight it.
FR: I know, I know.”
– Steve Goldstein