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The LIBOR Scandal





Mr_Howl
Infographic

Once again we've got bankers wrecking things. It's a good thing we've continued to trust them. Rolling Eyes

I just hope nothing bad comes out of this for me; some of my student loans are tied to LIBOR.
johans
Mr_Howl wrote:
Infographic

Once again we've got bankers wrecking things. It's a good thing we've continued to trust them. Rolling Eyes

I just hope nothing bad comes out of this for me; some of my student loans are tied to LIBOR.


hmmm smells fishy...
deanhills
Think it is high time that people revolt against those large banking corporations. Talk about dictatorship and that's a classic one. Not only are they allowed to get away with it all, but they get bailed out to when they go short on funds!
cfvergara
Can anyone please, please, pretty please, explain to me in layman's terms how is this not fraud? I'm unable to grasp that from any account I've read of this issue.
Insanity
It's a very complicated issue, but I think it's worth reading over. You'll get it.
cfvergara
Huh?

No, really. There's an underlying price fixation scheme at the bottom of it, along with bank employees chatting about intentionally manipulating an index that's theoretically supposed to be used as an index to calculate interest rates for interbanking.

I just don't get why this is NOT fraud. Could you please be kind to this programmer and explain that to me?
bluepig83
The issue with LIBOR inherently is that since it measures the cost of borrowing for banks, it requires banks to self-report the figures. In essence, there is not really a check and balance. Since the number is reported every day, it becomes unrealistic for an outside observer to come and say, "Well, really, is that your cost of borrowing today?"
ocalhoun
Well, yep, they don't learn.

"Hey, what should we do after various bank malpractice and fraud led most of the world into an economic crash... Hm... I know! Let's to more fraud! Why? Because I can retire on these fat earnings before anybody notices!"

For a capitalist economy to work, fraud and dishonest practices must be strictly suppressed, and above all, no one must be allowed to profit from it. Otherwise, it inevitably leads to repeated failure... and in a capitalist economy as widespread and interconnected as ours, it leads to repeated failure on a very damaging scale.
capricornis
give a man a bank and he will rob a country
Baznik
I've read every major market is similarly rigged, for instance there is evidence of massive strategic naked short selling of paper gold (GLD etc.) to make the dollar seem stronger than it is, etc. etc.
deanhills
Baznik wrote:
I've read every major market is similarly rigged, for instance there is evidence of massive strategic naked short selling of paper gold (GLD etc.) to make the dollar seem stronger than it is, etc. etc.
I've heard the same. Ever since the big banks and pension managers have become involved in stocks, there are so many million transactions happening so VERY FAST during every second of the day around the clock, that anything can be artfully and LEGALLY manipulated. Everything is possible for your large investors and your little guy doesn't really stand a chance, unless he pays 24 hour around the clock attention to the markets.
KurtAlden
cfvergara wrote:
Huh?
I just don't get why this is NOT fraud. Could you please be kind to this programmer and explain that to me?


Hello. It IS fraud, Barclays had several criminal fines from the FSA. What I find staggering is that they basically got away with it with, getting fined under 10% of their pre-tax profits. There is currently a review of legislation though as I think this has shaken a lot of people up. I do wonder though how many people are really aware of this and what a massive financial impact it had.
deanhills
KurtAlden wrote:
cfvergara wrote:
Huh?
I just don't get why this is NOT fraud. Could you please be kind to this programmer and explain that to me?


Hello. It IS fraud, Barclays had several criminal fines from the FSA. What I find staggering is that they basically got away with it with, getting fined under 10% of their pre-tax profits. There is currently a review of legislation though as I think this has shaken a lot of people up. I do wonder though how many people are really aware of this and what a massive financial impact it had.
That banks got away with much more during the last meltdown in 2008. Nothing surprises me any longer.
Da Rossa
What is the part that smells fishy?
The only not-so-trustworthy part of that infographic was item 2 under "What Barclay's Did". Too vague.
Quote:
Certain traders at Barclays coordinated with other banks to alter their rates as well.


But according to the initial explanation, the LIBOR would be an average value among a handful of banks. How difficult is it to coordinate a scheme involving too many people across institutions, from different paygrades?

I just wonder...
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