Barclays Bank - Lying About Libor

Описание: http://www.wealthwatch.tv

Don't you just love our banks? Not only do they treat their customers with contempt. Not only do they insult us with below 1% interest on many accounts. Not only did their casino gambling on securitised sub prime mortgages bring about the global credit crisis. But now we discover that they are rotten to the core.
At least that seems to be the case with Barclays. When the LIBOR rate fixing crisis first blew up last year, the full extent of it quickly became known and both CEO Bob Diamond and Chairman Marcus Agius fell on their swords. So what is LIBOR?
It's the London Inter Bank Offered Rate. This is the rate at which banks in London lend money to each other for the short-term in a given currency. A new Libor rate is calculated at the start of each day by financial data specialists Thomson Reuters based on interest rates provided by members of the British Bankers Association. The European equivalent is called the Euribor. Literally trillions of pounds worth of business are transacted every day based on this rate, so even a tiny adjustment could have a massive bottom line impact for a rogue bank that could manipulate the rate in its favour.
The FSA discovered that, between 2005 and 2009, there were two hundred and fifty seven requests from Barclays derivative traders to fix the Libor or the Euribor. And if you want to get a feel for the true depth of the cancer destroying the integrity of our major financial institutions, look no further than a conversation between a senior Barclays treasury manager and a member of the British Banking Association.
The manager admitted that Barclays had not been reporting accurately. But he defended the bank, saying it was not the worst offender: "We're clean, but we're dirty-clean, rather than clean-clean."
The response from the British Banking Association representative? "No one's clean-clean." It seems that Barclays was understating its Libor submissions so that it could hide how weak its financial position was by seeming to be no different to the other banks. There were lots of conversations, including with Mervyn King at the Bank Of England, but it wasn't until the end of 2009 that Barclays had any formal procedures in place to separate the derivates trad3rs from the team that made submissions to the Libor rate.
It was three years later, in June 2012, that Barclays finally admitted any wrong doing and was fined a total of £290 million by UK and US regulators. Giving evidence to MPs the day after his resignation, Bob Diamond said that the behaviour of the LIBOR manipulators made him sick, but the Treasury Committee was unimpressed and said that his evidence fell short of their expectations.
The following month the Serious Fraud Office set up an enquiry into the whole sorry affair. Its findings have spread the net well beyond Barclays, to include UBS, Deutsche Bank, Rabobank, HSBC and others. Three men have so far been arrested and the first trial, of former UBS trader Tom Hayes, began in October at Southwark Crown Court. Now, a care home provider, Guardian Care Homes, is taking Barclays to court claiming it lost money because its interest rate swap was based on a manipulated Libor rate. The result of this case should be known by the end of November and could result in more fines and more bad PR for Barclays.
Is it any wonder we have so little confidence in our financial system when we learn what these centuries old financial institutions have become? At my recent Wealth Summit event I encouraged the audience to be paranoid and trust no one. That's fine as far as it goes. But none of us can deal with a system that's rotten to the core. This is the financial equivalent of political despots rigging an election result. OK, nobody got shot. But I believe something died. If there was a sliver of integrity left in the UK banking system, we lost it when we discovered that executives at the highest level of the bank knew this was going on and either encouraged it or turned a blind eye to it.
As a wise man once said to me, your integrity is like your virginity, you can only lose it once.
Be careful out there!