While it may seem like yesterday, it was nearly five years ago that the Libor scandal first broke, and with it brought scandalous suggestions that none other than the Bank of England was implicated.
As we first reported in July 2012, according to Barclays then CEO Bob Diamond, it was high level individuals at the BOE who may (or may not) have been aware that Libor had been “manipulated” and were (or were not) also active in the setting process:
Just days after Hillary Clinton is found to have negligently broken laws but faced no charges, four former Barclays bankers appear to have been scapegoated over their libor-rigging. 45-year-old Jay Merchant was the hardest hit – sentenced to 6 1/2 Years in prison.
As Bloomberg reports,
Four former Barclays Plc traders were sentenced to as many as 6 1/2 years in prison for manipulating the Libor interest-rate benchmark as U.K. judges continued meting out tough punishments for white-collar crime.
Jay Merchant, 45, was sentenced to 6 1/2 years in prison.
Peter Johnson, 61, and Jonathan Mathew, 35, received four years in prison.
Alex Pabon, 38, will serve two years and nine months in jail.
The convictions are a “major victory” for the UK’s Serious Fraud Office, which conducted the investigation.
In 2007, more than a dozen of the world’s largest banks colluded to deliberately depress the rate at which they paid out on investments. This rate is known as the London Interbank Offered Rate (LIBOR), which is the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks.
Financial institutions, mortgage lenders, and credit card agencies around the world, set their own rates relative to it, and at least $350 trillion in derivatives and other financial products are tied to the LIBOR. These mega banks suppressed LIBOR, during the beginning of the collapse, to boost earnings and make their bottom lines appear healthier.
– LIBOR Scapegoat Found Guilty, Sentenced To 14 Years (ZeroHedge, Aug 3, 2015):
Update: Hayes has been sentenced to 14 years in jail.
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Tom Hayes, the former UBS trader standing trial for his role in manipulating LIBOR, was found guilty on eight counts in a London court. The jury, which deliberated for a week, was unanimous in its decision. To wit, from Bloomberg:
Former UBS Group AG and Citigroup Inc. trader Tom Hayes, the first person to stand trial for manipulating Libor, was found guilty of eight counts of conspiracy to rig the benchmark rate.
– Deutsche Bank “Loses” LIBOR Chat Records; Will Try Hard To Find Them (ZeroHedge, July 31, 2015):
Back in April, Deutsche Bank agreed to pay $2.5 billion (or around $25,475 per employee) to the DoJ, the CFTC, the NY Department for Financial Services, and the UK’s FCA in connection with the bank’s role in the global conspiracy to rig LIBOR (and EURIBOR, and TIBOR, but who’s counting). The fine marked the largest LIBOR-related settlement thus far but as usual, regulators stopped short of insisting that the actual human beings responsible for the manipulation of a benchmark upon which trillions in financial assets are based be put behind bars. In other words, no people were held accountable.
That said, we got a faint glimmer of hope on the accountability front when, late last month, FT reported that the German financial watchdog BaFin was looking into whether (former) co-CEO Anshu Jain lied to the Bundesbank about when he first learned that his traders and submitters might have been involved in fixing the LIBOR fixes.
– Deutsche Bank Stunner: An Inside Look At Former CEO’s Role In Liborgate (ZeroHedge, July 16, 2015):
“Mr. Jain created an environment by the physical and functional restructuring of the business GFFX division in the year 2005, involving also a change in the seating order of the trading floor in London which he initiated in which conflicts of interest between traders and submitters arose or were strengthened. There is suspicion that Mr. Jain might have knowingly made incorrect statements in his IBOR related Interview with the Deutsche Bundesbank.”…
– UBS Had Libor-Rigging Instruction Manual, Former Trader Claims (ZeroHedge, June 19, 2015):
Just like in the case of Goldman’s first of its kind MBS settlement which unleashed over $200 billion in legal charges against the US banking system (an IRR of about 1% relative to the criminal gains) and which in turn cast all the blame on the infamous Fabrice Tourre who was the solitary scapegoat for all of Goldman’s Abacus transgressions, so when it comes to Libor rigging at one of the biggest culprits, Swiss bank UBS, all the senior executives are trying to put all the blame on 35-year old Tom Hayes who is the centerpiece of the prosecution’s case against Libor manipulator.
The only problem: Hayes won’t go down without a fight and unlike Tourre who may well have been promised a Swiss bank account with many zeroes in it on the other side, Hayes is fighting back and making it very clear that it wasn’t just him who was rigging Libor. It was everyone. And everyone knew about it, from the traders on to the very top.
His proof: a Libor “manipulation” manual, presented as evidence in court.
To all those wondering if everything is rigged, we have a very simple answer: Yes.
– The Rigging Triangle Exposed: The JPMorgan-British Petroleum-Bank Of England Cartel Full Frontal (ZeroHedge, Dec 30, 2014):
The name Dick Usher is familiar to regular readers: he was the head of spot foreign exchange for JPMorgan, and the bank’s alleged chief FX market manipulator, who was promptly fired after it was revealed that JPM was the bank coordinating the biggest FX rigging scheme in history, as initially revealed in “Another JPMorganite Busted For “Bandits’ Club” Market Manipulation.” Subsequent revelations – which would have been impossible without the tremendous reporting of Bloomberg’s Liam Vaughan – showed that JPM was not alone: as recent legal actions confirmed, virtually every single bank was also a keen FX rigging participant. However, the undisputed ringleader was always America’s largest bank, which would make sense: having a virtually unlimited balance sheet, JPM could outlast practically any margin call, and make money while its far smaller peers were closed out of trades… and existence.
Added: Mar 30, 2014
http://usawatchdog.com/zero-prosecuti… Fraud expert and former regulator Professor William Black says, “Even today, we are well into 2014, and the Department of Justice record is intact. There have been zero prosecutions of the elite officers who led the epic epidemic of fraud. It was the most destructive in world history, zero of them even unsuccessfully prosecuted, much less prosecuted.”
What is the result of massive rampant unprosecuted fraud? Professor Black says, “If you don’t have any accountability, you not only make certain that there is going to be a next blow-up, but it will be worse. . . . We have effectively removed the criminal laws for a particular elite class of frauds.”
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Professor William Black of UMKC.
Dr. Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.
YouTube Added:Jan 20, 2014