The LIBOR Scandal

[ballmich]

I know this isn't exactly new, but I didn't see a lot of discussion of it, and it really is a pretty big deal. I dont' want to see it buried by news of TomKat or what-have-you, because this legitimately affects the vast majority of people in the "civilized" world.

Here is a bit from Elliot Spitzer with Taibbi which was decent:

[ballmich]

The sickening part of this, is that the Federal Reserve, Bank of England, and probably most of the world's central banks were complicit and involved with this scandal.

At some point, people will have to wake up, YOUR government is conspiring with the Banks to commit fraud at your expense. And when they are caught, the penalties are minimal fines, no penal time for the executives who are guilty, and the fines go to the government and not to the people who got screwed.

[chasfh]

And so the solution would be -- what? It couldn't be to do away with all government regulation of banks under the notion that banks should police themselves and the marketplace will effectively punish wrong-doers -- could it?

[chasfh]

The sickening part of this, is that the Federal Reserve, Bank of England, and probably most of the world's central banks were complicit and involved with this scandal.

At some point, people will have to wake up, YOUR government is conspiring with the Banks to commit fraud at your expense. And when they are caught, the penalties are minimal fines, no penal time for the executives who are guilty, and the fines go to the government and not to the people who got screwed.

Actually, I just had to giggle at this statement, since it is governments which are getting ripped off in this scandal in the first place.

[ballmich]

First things first, people have to be outraged. YOUR governments, banks, and money printers are conspiring against you. They are stealing from you. They are killing your dreams of prosperity. Doesn't that make you want to see those responsible punished for their crimes? If people continue to avoid penalty, their behavior will never change.

Second thing is, no, regulation is needed. That is a debate in and of itself, but I don't know anyone that says no regulation is needed. It's a question of what regulation and how much. I don't think more is necessarily better, if they don't address the problems, like Frank-Dodd. I've stated many times, Glass-Stegall was good regulation and we need it re-enacted.

Third is, for those who really want a real solution, you have to come to the realization that the essential building blocks of our current system are corrupt and flawed. You can't use some patchwork to fix this. We need a fundamentally new way to facilitate commerce. Fractional reserve banking. Federal Reserve Notes. Central Bank existance and interventionism. If we don't get rid of this garbage, we will never solve these problems.

[chasfh]

First things first, people have to be outraged. YOUR governments, banks, and money printers are conspiring against you. They are stealing from you. They are killing your dreams of prosperity. Doesn't that make you want to see those responsible punished for their crimes? If people continue to avoid penalty, their behavior will never change.

Of course I want to see them punished. Who among us doesn't? Like you say, though, they are being enabled by federal government and regulators through the great American institutions of lobbying and the Big Revolving Door. Ever wonder why a millionaire businessman would spend a big part of his fortune to become a $174,000 a year congressman? It's because it has come to his attention that he can make way, way more money -- serious, crazy loot that will change life for him and his family for generations -- on the inside than he can as a piddling millionaire businessman on the outside.

I agree that people should be outraged, and they would be, if they understood the practical ways in which they themselves are losing out as a result of the LIBOR criminal enterprise. But that part is simply not being communicated to them very well in the simplified one-note news vehicles they rely on. As far as they're concerned, this LIBOR thingamabob is just one more layer in some nebulous banking uberscandal that they just don't understand and makes their eyes glaze over, anyway. How can you be outraged about something you don't get?

And besides, there's other things for people to be outraged about, like Obama bowing to Saudi princes and Obama as Apologizer-In-Chief. You know, stuff they see on the news. That's the stuff that works them into a rabid lather, because that's the stuff they get.

Second thing is, no, regulation is needed. That is a debate in and of itself, but I don't know anyone that says no regulation is needed. It's a question of what regulation and how much. I don't think more is necessarily better, if they don't address the problems, like Frank-Dodd. I've stated many times, Glass-Stegall was good regulation and we need it re-enacted.

Glad to hear that you think government actually does have a role in regulating this marketplace, and that the debate is about the degree.

The issue regarding regulation is not about more versus less -- it's about strength versus weakness. Dodd-Frank was a great concept for a strong set of regulations protecting investors and consumers in financial dealings with institutions. Predictably, it got watered down and delayed so long by the banks working in cahoots with their stooges in Congress -- the Eric Cantor Republicans that steamrolled the thing, the surrender monkey Democrats who gave up fighting them -- that it never had a chance.

Third is, for those who really want a real solution, you have to come to the realization that the essential building blocks of our current system are corrupt and flawed. You can't use some patchwork to fix this. We need a fundamentally new way to facilitate commerce. Fractional reserve banking. Federal Reserve Notes. Central Bank existance and interventionism. If we don't get rid of this garbage, we will never solve these problems.

Do you have an idea of the practical way in which the situation you describe could get fixed? By which I mean, what do you think would have to happen in the real world to effect the changes you think are necessary? Because a lot of very powerful people who have mega-billions of dollars tied up in the current system think things are just ****ing dandy.

[screwball]

Just having these types of conversations is a good and positive thing.

Follow the money.

[TheCouga]

Thanks for starting a thread about this...it's about time.

I haven't really had time lately to delve into the details of this yet, but I hear a lot of US municipalities got screwed by this, and some are thinking of suing. There hasn't been a lot of noise made about it, but this is why a lot of cities are bankrupt. They're not spending any more money than usual...but a lot of pension funds took a huge hit from Wall Street/High Street fraud. These lawsuits take a long time to develop, but if there's a couple of settlements well into the billions, it could act like mini economic stimulus.

It's sad to see this kind of greed and corruption costing middle-class people their jobs, but the notion of these lawsuits taking place is kind of exciting, because my #1 goal right now is to do plaintiff's side securities litigation. It's hard to get into that field, especially as a recent grad, but I've been networking and have a few connections. It's patently clear that the government isn't going to do crap about this, so the next best thing is private litigation.

[TheCouga]

Good god...that was the best 9 minutes of TV I've seen in years.

Dennis Kelleher should know what he's talking about. He worked for years for Skaaden Arps, probably the most powerful law firm in the world at defending banks. Good to see he's on the right side of things now.

[Mr. DNA]

All the anti-abortion, anti-gay, screw-the-moochers rhetoric from the right is just a cover for this kind of massive banking fraud. Who the hell can explain the derivatives market? Any moron, however, can comprehend "these lazy ________ are getting all these benefits at my expense", so that's where our public discourse is at. And that's where it will stay.

Fact is, though, the right wing white guy in Texas who died from colon cancer because he's uninsured is pretty much in the same boat as the black Obama supporter on the south side of Chicago who died for the exact same reason. Only the stupid culture wars keep them from uniting and throwing all these fraudsters in prison.

[screwball]

Nobody will go to jail. They will get a slap on the wrist, pay a fine, admit no wrong doing, and the rape and pillage will continue.

This scandal has many players, some we know well, others we don't. This morning I caught a little bit of CNBC and those lying sacks of poo were already covering up for Geithner (who was the head of the NY Fed at the time) trying to tell the sheep he was in front of this a long time ago.

B friken S. He knew about it and did nothing and at the the time HE was the regulator. Him and his buddy Chairsatan Bernanke should be in jail now for treason, lying under oath, securities fraud, and a host of other crimes on humanity.

Laws are only for us little people. The justice system is as corrupt as congress and the banksters.

[Deleterious]

Nobody will go to jail. They will get a slap on the wrist, pay a fine, admit no wrong doing, and the rape and pillage will continue.

This scandal has many players, some we know well, others we don't. This morning I caught a little bit of CNBC and those lying sacks of poo were already covering up for Geithner (who was the head of the NY Fed at the time) trying to tell the sheep he was in front of this a long time ago.

B friken S. He knew about it and did nothing and at the the time HE was the regulator. Him and his buddy Chairsatan Bernanke should be in jail now for treason, lying under oath, securities fraud, and a host of other crimes on humanity.

Laws are only for us little people. The justice system is as corrupt as congress and the banksters.

One of the many reasons I laugh and laugh and laugh at people when they bring up the need for more regulations.

This administration (and the previous one) has flat out refused to prosecute people. It doesn't matter what or how many laws/rules/regulations you have in place if nobody is willing to enforce them.

[screwball]

One of the many reasons I laugh and laugh and laugh at people when they bring up the need for more regulations.

This administration (and the previous one) has flat out refused to prosecute people. It doesn't matter what or how many laws/rules/regulations you have in place if nobody is willing to enforce them.

Indeed.

This is only part of the news this week/today. I'm sure you are following the JP Morgan earnings release today. The 2 billion and climbing Whale trade stinks more and more by the minute, and the entire derivatives mess that surrounds that stinks even more.

Morgan in so many words admits they don't know how much money they made or lost in the first quarter because of marks on the OTC derivative trades by the CIO in London, but their stock doesn't take a hit because golden boy Dimon and their balance sheet says they only lost X billions on the trade. Another case of "the loss wasn't as bad as we thought" or "better than expected" cra p we hear ad nauseum, but it's really just cooking the books Enron style.

This is the kind of crap Sarbox was suppose to fix. So much for that too.

And yet they wonder where the retail investor went?

We don't have free markets, we have criminal markets with criminals running them, criminals watching them, and more criminals enabling them.

[TheCouga]

One of the many reasons I laugh and laugh and laugh at people when they bring up the need for more regulations.

This administration (and the previous one) has flat out refused to prosecute people. It doesn't matter what or how many laws/rules/regulations you have in place if nobody is willing to enforce them.

Can't it be both? The solutions aren't mutually exclusive. There's plenty of destructive behavior that went on that was perfectly legal thanks to destructive deregulatory laws passed.

[Deleterious]

Can't it be both? The solutions aren't mutually exclusive. There's plenty of destructive behavior that went on that was perfectly legal thanks to destructive deregulatory laws passed.

No.

Until current laws and regulations are enforced, there is no point in discussing new regulations that wont be enforced either.

[Deleterious]

U.S. Gave Tens of Billions to Libor-Manipulating Banks … Even AFTER Learning about the Manipulation - Washington's Blog

[screwball]

Exactly. The crap is still going on today and has been since the damn thing blew up.

We get some Wells notices, some CFTC chatter and filings, same with the SEC, or the Fed does something to make it look like they are doing something (ha!), but at the end of the day maybe a lawsuit that slaps their wrist, gets them a fine (because they settle), admits no wrong doing, and off they go to do it again. The fine is a pittance of what they stole. There is no incentive to stop because nothing of significance happens.

There is enough evidence right now today as we speak to bring criminal charges to every major bank on Wall Street (and more), hedge funds, the ratings agencies, and everyone involved in this criminal enterprise.

They bring Jamie Dimon in front of congress and do nothing but kiss his butt, and even refuse to put him under oath. What a complete and utter joke (not that I expected anything to be accomplished anyway, knowing and having watched the financial committee's butt kissing ways over the years).

Not-gonna-happen.

It will continue this way until the entire thing blows up again - and it's not a question of IF - but WHEN.

[screwball]

A couple of reads on the matter of LIBOR.

Links only because of language. People in this industry like to cuss. Just the way it is (the traders call themselves "big swinging dicks." That should tell us something).

So How Much Did the Banksters Make on Libor-Related Ill-Gotten Gains?

This guy was in the industry. He has a little different take than most. I tend to agree with him in his conclusion.
Bloodletting

[chasfh]

No.

Until current laws and regulations are enforced, there is no point in discussing new regulations that wont be enforced either.

Your point about in ineffectuality of current regulations is well-taken. In a corrupt-to-the-core system, in which the institutions and their putative regulators are acting in concert to perpetrate a fraud on the people, the enacting of more regulations looks to be completely pointless. I'll grant you that.

But let's speak theoretically for a moment, and hypothesize a world in which regulations are enforced as written: Do you in all seriousness think that deregulating financial and trading institutions would lead to more virtuous behavior on the part of these institutions, and that more regulations would lead to less virtuous behavior?

[TheCouga]

Can't it be both? The solutions aren't mutually exclusive. There's plenty of destructive behavior that went on that was perfectly legal thanks to destructive deregulatory laws passed.

That's a load of malarkey. The correct answer is that you need both. If you only enforce current regulations, the fraud will not disappear...it will only migrate to the deregulated arenas. This is why the derivatives market got to be so big in the first place.

[Deleterious]

Your point about in ineffectuality of current regulations is well-taken. In a corrupt-to-the-core system, in which the institutions and their putative regulators are acting in concert to perpetrate a fraud on the people, the enacting of more regulations looks to be completely pointless. I'll grant you that.

But let's speak theoretically for a moment, and hypothesize a world in which regulations are enforced as written: Do you in all seriousness think that deregulating financial and trading institutions would lead to more virtuous behavior on the part of these institutions, and that more regulations would lead to less virtuous behavior?

Why are you asking that? Nobody claimed they need to be dergulated. I said current laws/regulations need to be enforced before you try to write new ones.

[chasfh]

Why are you asking that? Nobody claimed they need to be dergulated. I said current laws/regulations need to be enforced before you try to write new ones.

I'm asking because I'm interested in what you think. Do you think less regulation leads to more virtuous behavior, and vice versa?

[Deleterious]

I'm asking because I'm interested in what you think. Do you think less regulation leads to more virtuous behavior, and vice versa?

No. I think massive penalties that are strictly enforced encourage more virtuous behavior.

[chasfh]

No. I think massive penalties that are strictly enforced encourage more virtuous behavior.

Excellent. We're on the same page.

[screwball]

I'd be as happy as a pig in the mud if they enforced ANY of the current laws.

We don't need another 6 gazillion page law written by the people in congress who know nothing about the stuff they are trying to regulate to throw people in the Greybar Hotel for Fraud, lying under oath, and treason.

Those laws are already on the books, where are the indictments?

<crickets>

Even worse, when they ask how nobody has went to jail they say nobody did anything wrong. Unbelievable, just unbelievable.

And before someone says nobody broke any laws, then tell me how the Sam hell Jon Corzine is still walking the street (and I don't care what pathetic party they are affiliated with because I don't see criminality as party specific, and further I don't give one good hooey about either party).

I shall shut up now before I get myself worked up into a tizzy and go on a real rant.

[Deleterious]

Excellent. We're on the same page.

Well, we both know we probably are not on the same page.

[Deleterious]

I'd be as happy as a pig in the mud if they enforced ANY of the current laws.

We don't need another 6 gazillion page law written by the people in congress who know nothing about the stuff they are trying to regulate to throw people in the Greybar Hotel for Fraud, lying under oath, and treason.

Those laws are already on the books, where are the indictments?

<crickets>

Even worse, when they ask how nobody has went to jail they say nobody did anything wrong. Unbelievable, just unbelievable.

And before someone says nobody broke any laws, then tell me how the Sam hell Jon Corzine is still walking the street (and I don't care what pathetic party they are affiliated with because I don't see criminality as party specific, and further I don't give one good hooey about either party).

I shall shut up now before I get myself worked up into a tizzy and go on a real rant.

Amen. Enforce what we have currently and see where we stand. Hey, maybe after that we will need new regulations. But until things are enforced properly we don't have a clue what we do/don't need.

[TheCouga]

The problem with that view is that the majority of the problems we just experienced were in areas that were already deregulated. Derivatives based on drastically misguided and misrepresented value that were not technically fraud but still a load of garbage were the main cause of this crash.

[chasfh]

Well, we both know we probably are not on the same page.

Not even on that one thing? I could've sworn we were ...

[screwball]

The problem with that view is that the majority of the problems we just experienced were in areas that were already deregulated. Derivatives based on drastically misguided and misrepresented value that were not technically fraud but still a load of garbage were the main cause of this crash.

What about the stuff that is still going on? And since when is lying under oath not perjury? And how is selling boxes full of trash not fraud (there are some lawsuits filed on this to be fair)?

The list goes on and on and on.

[screwball]

This is too funny;

BANKERS BEHIND BARS - Petition To Put Bankers In Jail Passes 350,000 Signatures In Two Days

[Deleterious]

Not even on that one thing? I could've sworn we were ...

We agree how to encourage the behavior. We probably disagree on if it should be or not.

[TheCouga]

What about the stuff that is still going on? And since when is lying under oath not perjury? And how is selling boxes full of trash not fraud (there are some lawsuits filed on this to be fair)?

The list goes on and on and on.

The stuff that's still going on is a different story. I'm not denying that lack of enforcement is a problem.

Selling a box full of trash is not fraud in the derivatives market unless you can prove a 10b-5 violation -- which is a lot harder than proving a violation in the trading/selling regular publicly-traded stock. There's no requirements to disclose any information or register any securities in the derivatives market. It's basically one banker trying to screw another banker over, only on a massive, massive scale much larger than the US Government budget.

[chasfh]

We agree how to encourage the behavior. We probably disagree on if it should be or not.

Oh -- so, even though you think massive penalties that are strictly enforced encourage more virtuous behavior, you don't think those penalties should be implemented to encourage that behavior? Do I have that straight?

[screwball]

The stuff that's still going on is a different story. I'm not denying that lack of enforcement is a problem.

Selling a box full of trash is not fraud in the derivatives market unless you can prove a 10b-5 violation -- which is a lot harder than proving a violation in the trading/selling regular publicly-traded stock. There's no requirements to disclose any information or register any securities in the derivatives market. It's basically one banker trying to screw another banker over, only on a massive, massive scale much larger than the US Government budget.

Sorry, no sale. Selling lies to investors is fraud any way you slice it. That is why there are lawsuits filed already.

[screwball]

Amazing, what do we have here? Not LIBOR related, but PFG Best the futures broker.

PFG Head Arrested

While unable to successfully kill himself, it appears the CEO of PFGBest is even less successful at evading the police. As just reported,

*PFGBEST'S WASENDORF ARRESTED IN IOWA
*FED PROSECUTORS CHARGE IOWA FIRM CEO W/ LYING TO REGULATORS:AP
*PEREGRINE CHIEF WASENDORF CHARGED BY FEDERAL PROSECUTORS (with making false statements to the CFTC)
*WASENDORF FRAUD AT PEREGRINE LASTED 20 YEARS, PROSECUTORS SAY

What is probably more concerning to him now is the fact that he was not a Presidential bundler - as the Big House is definitely calling...

Where's Corzine?

[ballmich]

I've seen some reports that this affected at a minimum of $800 trillion in financial products. 50bps says the banks owe people, corporations, municipalities and the like at least $4 trillion.

The fact is, this has been ongoing for a long, long time, so I tend to think it's a lot higher than $800 trillion.

And all the TBTF banks will settle for a few hundred million each. Paid to the government, not those affected.

[screwball]

The stuff that's still going on is a different story. I'm not denying that lack of enforcement is a problem.

Selling a box full of trash is not fraud in the derivatives market unless you can prove a 10b-5 violation -- which is a lot harder than proving a violation in the trading/selling regular publicly-traded stock. There's no requirements to disclose any information or register any securities in the derivatives market. It's basically one banker trying to screw another banker over, only on a massive, massive scale much larger than the US Government budget.

Here's one example - Oh, Handcuffs? Hmmmm This Makes Two!

What did the SEC do?

The SEC’s complaint charges Kissick with violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws. Without admitting or denying the SEC’s allegations, Kissick consented to the entry of a judgment permanently enjoining her from violation of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and from aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. Kissick also consented to an order barring her from acting as an officer or director of any public company that has securities registered with the SEC pursuant to Section 12 of the Exchange Act. Kissick also consented to an order prohibiting her from serving in a senior management or control position at any mortgage-related company or other financial institution or from holding any position involving financial reporting or disclosure at a public company. The proposed preliminary settlement, under which the SEC’s requests for financial penalties against Kissick would remain pending, is subject to court approval.

They slapped his hands. Big deal. This is only the tip of the iceberg, not including the foreclosure problems, the robo-signing, lying to congress, etc.

We'll just have to agree to disagree.

[Deleterious]

Oh -- so, even though you think massive penalties that are strictly enforced encourage more virtuous behavior, you don't think those penalties should be implemented to encourage that behavior? Do I have that straight?

I think penalties should be implemented on illegal activity.

[chasfh]

I think penalties should be implemented on illegal activity.

Excellent. We're on the same page.