Max
and Stacy talk about why nobody is freaking out about the LIBOR
banking scandal
Keiser Report: Fraud & 60
Orgasms
In
this episode, Max Keiser and co-host, Stacy Herbert, discuss why
nobody is freaking about LIBOR in America, while JP Morgan caught
doing an Enron on US energy markets and GlaxoSmithKline pays 10% of
their ill-gotten gains for bribing doctors and scientists across
America. In the second half of the show Max talks to Kevin Sara of
the TuNur solar export project of Tunisia about solar exports from
the Middle East and toxic derivatives exports from the City of
London.
Why
is Nobody Freaking Out About the LIBOR Banking Scandal?
By Matt Tabibi
7
July, 2012
The
LIBOR manipulation story has exploded into a major scandal overseas.
The CEO of Barclays, Bob Diamond, has resigned
in disgrace;
his was the first of what will undoubtedly be many major banks to
walk the regulatory plank for fixing the interbank exchange rate. The
Labor party is demanding a
sweeping criminal investigation. Mervyn King, Governor of the Bank of
England, responded the
way a real public official should (i.e. not like Ben Bernanke),
blasting the banks:
It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.
The
furor is over revelations that Barclays, the Royal Bank of Scotland,
and other banks were monkeying with at least $10 trillion in loans
(The Wall
Street Journal is
calculating that that LIBOR affects $800 trillion worth of
contracts).
The
banks gamed LIBOR for two semi-overlapping reasons. As noted
here last week,
there were instances of Barclays traders badgering the LIBOR
submitters to "push down" rates in order to fatten their
immediate bottom lines, depending on what they were trading or
holding that day. They also apparently rigged LIBOR downward in order
to produce a general appearance of better health, essentially
tweaking their credit scores a few ticks upward.
Most
intriguingly, or perhaps disturbingly, there were revelations last
week that Bank of England deputy Governor Paul Tucker had
a conversation with
Diamond at the peak of the crisis in 2008. The conversation
reportedly left Diamond, and subsequently his traders, with the
impression that the bank had carte blanche to rig LIBOR downward in
order to help allay spiraling public fears about the banks’ poor
financial health.
British
officials, and Tucker individually, deny that Tucker gave Diamond
permission to rig rates. But a report by British regulators did
conclude that the two were talking about Barclays LIBOR submissions
on October 29, 2008, and that as a result of that conversation,
Diamond came away with a “misunderstanding.” The Daily
Mail quotes
the Financial Services Authority report:
However, as the substance of the telephone conversation was relayed down the chain of command at Barclays, a misunderstanding or miscommunication occurred.
This meant that Barclays’ submitters believed mistakenly that they were operating under an instruction from the Bank of England (as conveyed by senior management) to reduce Barclays’ Libor submissions.
That
is explosive stuff. Members of Parliament will be grilling Tucker
tomorrow about those events in what is sure to be a far more
combative and entertaining legislative inquiry than the Jamie
Dimon dog-and-pony
show we
just went through here in the states in recent weeks.
The
implications of that part of the story should be particularly
chilling to Americans, who in recent years have been party to a
number of revelations about strange and seemingly inappropriate
contacts between senior regulatory officials and big bankers during
the heat of the crisis.
We
know that American officials in 2008-2009 were extremely concerned
about the appearance of weakness in the financial markets, so much so
that they may
have resisted pursuing criminal prosecutions against
big banks, and we also know that they spent a lot of time
commiserating with Wall Street figures before and during the crisis.
If
Bob Diamond and Paul Tucker were having these talks about LIBOR, is
it fair to wonder what else Hank Paulson and Lloyd Blankfein were
talking about in the 24
discussions they had in
the six days following the AIG disaster? When Paulson had a secret
meeting with the entire board of Goldman Sachs in,
of all places, his hotel suite in Moscow, in June of 2008? Or what
other material nonpublic information was exchanged when Paulson met
with a gang of hedge fund chiefs at
the offices of Eton Park management in July 2008, and laid out for
them a possible scenario for putting Fannie and Freddie into
receivership?
Anyway,
the LIBOR story is leading the front pages of most of Britain’s
dailies, it’s on
TV,
and it’s producing blistering editorials and howls of outrage
amongst politicians and activists. But as compadre Yves Smith
at Naked
Capitalism put
it, where’s
the outrage here in
America?
The
big story on our shores in the last few weeks has been the health
care ruling, which makes sense, but then after that… what?
The heat?
Tom and Katie? (There’s actually a story about how Katie
can wear heels again,
now that she’s not married to a short person). Joe
Sandusky? Nightline’s
big story tonight, which is already
being hyped on
the net, is about how fat Chris Christie is and why the hell he
hasn’t done the bypass surgery yet:
New Jersey Gov. Chris Christie opened up about his weight problem in an interview with ABC News and stressed he is "trying" to lose weight, a battle he's waged for 30 years, but said he's never considered gastric bypass surgery because it's "too risky."
"I mean, see, listen, I think there's a fundamental misunderstanding among people regarding weight and regarding all those things that go into, to people being overweight," Christie said in an interview that will air Tuesday on "Nightline."
Glad
to be informed! The New
York Times, meanwhile,
did chime in with a house
editorial yesterday,
and it was appropriately somber. And there has been some coverage in
the financial press.
But
to me what’s missing from all of this is the “Holy Fucking Shit!”
factor. This story is so outrageous that it shocks even the most
cynical Wall Street observers.
I have a friend who works on Wall Street who for years has been trolling through the stream of financial corruption stories with bemusement, darkly enjoying the spectacle as though the whole post-crisis news arc has been like one long, beautifully-acted, intensely believable sequel to Goodfellas. But even he is just stunned to the point of near-speechlessness by the LIBOR thing. “It’s like finding out that the whole world is on quicksand,” he says.
I have a friend who works on Wall Street who for years has been trolling through the stream of financial corruption stories with bemusement, darkly enjoying the spectacle as though the whole post-crisis news arc has been like one long, beautifully-acted, intensely believable sequel to Goodfellas. But even he is just stunned to the point of near-speechlessness by the LIBOR thing. “It’s like finding out that the whole world is on quicksand,” he says.
So
as far as the stateside press goes, I’ve got to assume the cavalry
is coming soon. But when?
No comments:
Post a Comment
Note: only a member of this blog may post a comment.