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The Libor Scandal - The Rotten Heart Of Finance


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#1 FCP Bob

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Posted 07 July 2012 - 02:35 AM

LIBOR stands for the London Interbank Offering Rate and it's a borrowing rate that is set daily by a panel of banks for ten currencies and for 15 maturities. It is used as a benchmark to set payments on about $800 trillion-worth of financial instruments, ranging from complex interest-rate derivatives to simple mortgages. The number determines the global flow of billions of dollars each year.And it has been rigged by the banks involved to make them money on their trades.This has the potential to result in hundreds of billions of dollars of liabilities for banks and could involve almost all of the big banks worldwide in one way or another.I wonder if anybody will actually go to jail this time.Excellent article from The Economist explaining what went on, what Libor is and the whole situation.The LIBOR scandal - The rotten heart of finance - A scandal over key interest rates is about to go global
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#2 Balloon guy

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Posted 07 July 2012 - 10:25 AM

I once built a photo wall for LIBORman, which was a superhero figure with the face cut out for people to put their face in and snap a picture.I hope I am not indited as a co-conspirator.It would be about normal for me to be the scapegoat for another banking scam..again
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#3 InternetExplorer

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Posted 09 July 2012 - 05:11 PM

when the concept of libor was explained in one of my finance classes, the immediate first question was, how is libor not exploited endlessly by insiders? my prof was like, yeah it's no different from any other device in finance.this was pretty funny
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#4 JustDoIt

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Posted 10 July 2012 - 05:47 PM

View PostInternetExplorer, on 09 July 2012 - 05:11 PM, said:

when the concept of libor was explained in one of my finance classes, the immediate first question was, how is libor not exploited endlessly by insiders? my prof was like, yeah it's no different from any other device in finance.this was pretty funny
This thing could have serious legs. Scandal that could ruin banking giants: U.S. lawyers prepare to sue financial firms for hundreds of BILLIONS over global interest rate-fixing

http://www.dailymail...s-BILLIONS.html


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#5 InternetExplorer

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Posted 10 July 2012 - 06:47 PM

dailymail thoughruining the banking giants is hardly what anyone wants right now, as fashionable as it is to hate on them.
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#6 FCP Bob

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Posted 11 July 2012 - 09:03 AM

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#7 FCP Bob

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Posted 11 July 2012 - 09:25 AM

The LIBOR Mess Could Be the Biggest Financial Fraud in History
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#8 mrdannyg

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Posted 11 July 2012 - 10:25 AM

what the **** is that? "Banks were lending money in the open market at lower interest rates and collecting less profit in return." So, the argument is that banks were stealing by making less profit, since bank's profits benefit other people and not the bank.I am quite sure Banks were manufacturing LIBOR, doing it for selfish reasons, and profiting off that, even if the main "profit" just meant falsely propping up their share prices by disguising their weakness/lack of liquidity. Oh, and the fraud probably extended to the highest levels of government in several countries and regulatory boards.On first glance, that graphic appears to completely insane. Probably not a bad approximately of what republicans think goes on in the mind of democrats on quite a few issues actually.
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#9 Balloon guy

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Posted 11 July 2012 - 11:15 AM

You are missing that the governments are using bank vehicles that are based on bank profits made from the borrowing and lending of money. These vehicles had lower incomes because the banks fudged the numbers to meet requirements set upon them by the Obama administration.....
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#10 QED

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Posted 11 July 2012 - 02:36 PM

I watched some of Bob Diamond's evidence to the parliament select committee in the UK last week and it was pretty hilarious. Going by his evidence he has no idea what is going on at the bank he was running, didn't ask anyone what was going on at the bank he was running and no one at the bank he was running told him what was going on. Presumably he just sat in his office browsing the internet all day like everyone else.

#11 mrdannyg

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Posted 11 July 2012 - 07:28 PM

View PostBalloon guy, on 11 July 2012 - 11:15 AM, said:

You are missing that the governments are using bank vehicles that are based on bank profits made from the borrowing and lending of money. These vehicles had lower incomes because the banks fudged the numbers to meet requirements set upon them by the Obama administration.....
Except that governments are net borrowers, so lowered rates would've been beneficial, not harmful. Also, the banks involved had little, if anything, to do with requirements set on them by American administrators.
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#12 Balloon guy

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Posted 11 July 2012 - 07:42 PM

View Postmrdannyg, on 11 July 2012 - 07:28 PM, said:

Except that governments are net borrowers, so lowered rates would've been beneficial, not harmful. Also, the banks involved had little, if anything, to do with requirements set on them by American administrators.
But depositors, money marker account holders etc are all getting paid based on the interest rates...which are being pushed low in order to make their books look good.
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#13 AmScray

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Posted 11 July 2012 - 11:19 PM

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#14 mrdannyg

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Posted 12 July 2012 - 11:48 AM

View PostBalloon guy, on 11 July 2012 - 07:42 PM, said:

But depositors, money marker account holders etc are all getting paid based on the interest rates...which are being pushed low in order to make their books look good.
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#15 FCP Bob

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Posted 13 July 2012 - 10:37 AM

Phone Call Transcripts Show NY Fed Knew About Libor Lies Before Financial Crisis
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#16 InternetExplorer

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Posted 13 July 2012 - 04:04 PM

this is absolutely outside of the fed's jurisdiction.
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#17 InternetExplorer

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Posted 15 July 2012 - 07:57 PM

there's probably a better place for this, but someone mentioned that the statute of limitations on the stuff that went down in 2008 is pretty soon. if you think for a moment that Obama wouldn't ream these people to the maximum extent possible for political points, you're kind of crazy. yes, there will be big fines for all the big institutions for many years to come, but nobody's going to prison over the meltdown because this stuff was (1) inherent in the concept of investing and more importantly (2) disclosed in most cases. goldman getting fined for setting up a product solely for the purpose of allowing paulson to bet against it is a perfect example of what I'm talking about here. it feels like someone ought to have gone to prison for it, but they were merely fined.
QUOTE (Spademan @ Thursday, April 5th, 2012, 2:03 PM) <{POST_SNAPBACK}>
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#18 FCP Bob

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Posted 16 July 2012 - 04:39 AM

I agree that if anybody was going to prison it would have happened by now for 2008 stuff.I think the Libor rigging could have some people going to Club Fed or the equivalent in the UK.
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#19 FCP Bob

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Posted 16 July 2012 - 05:57 AM

William Wright@Williamw1Fascinating context for Libor: in 13th century financier Richard Lyons was imprisoned and then beheaded for rate rigging... @BBCRadio4
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