For years, traders at Deutsche Bank AG, UBS AG, Barclays, RBS and other banks colluded with colleagues responsible for setting the benchmark and their counterparts at other firms to rig the price of money, according to documents obtained by Bloomberg and interviews with two dozen current and former traders, lawyers and regulators. UBS traders went as far as offering bribes to brokers to persuade others to make favorable submissions on their behalf, regulatory filings show.
Members of the close-knit group of traders knew each other from working at the same firms or going on trips organized by interdealer brokers, which line up buyers and sellers of securities, to French ski resort Chamonix and the Monaco Grand Prix. The manipulation flourished for years, even after bank supervisors were made aware of the system’s flaws.
“We will never know the amounts of money involved, but it has to be the biggest financial fraud of all time,” says Adrian Blundell-Wignall, a special adviser to the secretary-general of the Organization for Economic Cooperation and Development in Paris. “Libor is the basis for calculating practically every derivative known to man.”
It’s the biggest financial fraud of all time, yet the general public finds it it too boring? complex? to really give it the attention it deserves. So let’s put this story on our reading lists today.
Update: Heidi’s newest column is about how nobody cares about Libor:
…there is literally no one in the United States who has ever pounded a dinner table in outrage over government complacency, yelling, “But if we’re so tough on financial crime, why haven’t we thrown those obscure Asian bureaucrats of a foreign bank into the slammer for fixing a London-based interest rate?!”
No. What US consumers wanted was the prosecution of American banks, for American crimes. Insider trading. Mortgage fraud. Foreclosure abuses. Unjust, overdone compensation for executives and managers who failed to uphold ethical business standards.
In response to AIG’s post-bailout fuck you (PBFY), Heidi N. Moore takes a look back at the “post-bailout thank you (PBTY)” advertisement. (“This genre requires stirring music, lots of pictures of noble municipal statuary in big cities, and weighty reminders of the ineffable beauty of the American embrace of progress.”)
‘How many billions of dollars do you have to launder for drug lords before somebody says, we’re shutting you down?’
Senator Elizabeth Warren does it again: “If you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life. But apparently, if you launder nearly a billion dollars for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night. Every single individual associated with this. And I think that’s fundamentally wrong.”
Yesterday Senator Elizabeth Warren sat on her first Banking Committee Hearing. Awesome. At least this seven minutes was, minus the part when anyone talks but her. She asked a bunch of regulators when the last time they took Wall Street banks to trial. No one answered properly. (“We have not had to do it as a practical matter to achieve our supervisory goals.”). Warren asked a few more people a few other ways, still got no answer (“I can look that up”) and then followed up with this:
“There are district attorneys and U.S. attorneys who are out there everyday squeezing ordinary citizens on sometimes very thin grounds and taking them to trial in order to make an example, as they put it. I’m really concerned that too big to fail has become too big for trial. That just seems wrong to me.”
Killed it. Killllleeeedddddd it. (Killed it.)