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Barclay’s Scandal Widens, UK Regulators Implicated

Barclay’s Scandal Widens, UK Regulators Implicated

 

The financial scandal that brought down Barclay’s CEO Robert Diamond is growing to include British banking regulators and other investment banks, threatening the very credibility of the Libor benchmark interest rate.

In advance of testimony before Parliament on Thursday, Diamond released an internal email from 2008, documenting a conversation between Diamond and Bank of England deputy governor Paul Tucker. In the email, Diamond indicates that Tucker essentially told Barclay’s to underreport Libor rates, indicating that other banks were doing the same.

The Libor rate tracks the rate at which banks in London loan money to each other. The rate serves as an index for assets totaling $360 trillion dollars, including many adjustable-rate mortgages in the United States.

Barclay’s manipulation of Libor in 2008 was tied to that year’s banking collapse; lower Libor rates were seen as indicative of a healthier system. The misreported rates may have helped lessen pressure for London officials to aggressively investigate and regulate the banking system.

Barclay’s is not just accused of reporting lower Libor rates during 2008. From 2005 to 2007, Barclay’s allegedly manipulated the rates they reported in order to boost their profits on internal trades.

The manipulation of Libor creates a crisis of confidence in the benchmark rate. Libor is calculated by Thomson Reuters for the British Banking Association and is based on self-reporting by banks.

Barclay’s has already paid $450 million in penalties to U.S. and U.K. regulators. It remains to be seen whether other banks or officials will be dragged into the scandal and what the fallout will be.

 

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3:41AM PDT on Jul 12, 2012

OMG! LMAO!

11:34PM PDT on Jul 10, 2012

@David F. Who did corporate America think was going to purchase all the products , once they out sourced manufacturing to off shore concerns?

When the banksters around the globe were selling these gimmicky loans and forging documents to make them go through what did they think would happen? THey KEW what would happen, which is why they created those toxic securities then placed huge wagers on Wall Street KNOWING they would go bad.

With all this thieving going on I just don't get how you (@David F) support electing a party that wants to do away with ALL the rules against thieving.

If all that had ever happened was some folks who could not afford their loans went bust, it would not have come near to making the problem we have.

I don't expect you to become a Democrat (I'm an independent) , I get to dislike them both, but republicans have sold their soul to the devil.

12:50PM PDT on Jul 9, 2012

Again @David F. tries to take a global issue born of the global financial industry affecting countries around the planet and package it in copy-n-paste partisan swaddling of but one country and even in that propaganda echo chamber not once to date can man up to his party having any involvement.

Those corporations were not compelled by law to package toxic securities. Those corporations were not compelled by law to manipulate interest rates around the globe. Those corporations were not compelled by law to effect fraudulent financial ratings of their firms.

Many of these issues would not be topics of discussion at all with proper regulation, but given the GLOBAL evidence of GLOBAL abuse by these "too big to fail"/"too big to regulate" entities one party and it's drones chatter on about the concept of removing regulations governing what is basically theft will cut down on thieving.

Does @David F. have the ability to make a salient position born of logic or are his intellectual abilities limited to but copy-n-paste pablum and bumper sticker slogans?

10:09AM PDT on Jul 9, 2012

Anyone that would call Robert Reich a communist isn't deserving of a response.

Your article doesn't do anything to knock down my arguments. The CRA, although it contributed to it, is not responsible for the mortgage meltdown. Regulators, particularly during the Bush Administration, are far more responsible for the housing bubble than the CRA.

The real culprit that made this a world wide crisis was the greed and fraud of major financial institutions through the use of ethereal financial instruments and derivatives. Believe it or not we could have dealt pretty handily with an ordinary housing value bust but derivatives made the losses hundreds of times greater.

This is it, David. No more responses from me on this issue. You lose. Poor people did not cause the mortgage crisis because they were low character and lazy minorities as the GOP would have us believe. It was Wall Street greed and criminality. Deregulation encouraged this. The "free market" isn't a piece of holy scripture. The markets must be regulated. Believing in regulation doesn't make one a communist. End of story.

11:02AM PDT on Jul 8, 2012

The following is a timely article. Don't think the fraud has ended. The fraud will only end when some of these fraudsters are in prison for decades.

http://www.nationofchange.org/wall-street-scandal-all-scandals-1341753800

10:58AM PDT on Jul 8, 2012

Thanks

10:48AM PDT on Jul 8, 2012

"You cannot currently send a star to Dr because you have done so within the last week."

10:47AM PDT on Jul 8, 2012

From the article: "Community Reinvestment Act loans outperformed other "subprime" mortgages, and GSE mortgages performed better than private label securitizations."

So, the claim that the Community Reinvestment Act is responsible for the mortgage crisis is laughable. But how many times have you heard Republicans on TV say it, never to be challenged by our inept or complicit media.

Republican deflection consists of repeating the following mantra, "Freddy Mac and Fanny May. Barney Frank and the Community Reinvestment act FORCED banks to make loans to poor minority borrowers." How many times have you heard it? But it is only a well crafted lie.

Masters of propaganda but little else.

10:16AM PDT on Jul 8, 2012

@Don H. Of course while @David F. perpetuates his fiction, we are supposed to ignore that banks around the globe in OTHER countries were getting bailouts for their hooliganism and as this article demonstrates are still active in organized crime world wide.

We are supposed to ignore that these banks constitute the 9th largest known funding sources for the republican candidate with Barclays in raising already a million dollars and Mitt Romney still having more fund raisers over seas with those same banking interests that brought the world economy to it's knees.

Yet @David F. will continue to toss his credibility down the out house hole with a world view that blames the opposition party here in the states instead of coming out of the republican propaganda echo chamber and admitting it is those very globe trotting corporations he worships and their political ministers of his party who are out of touch with reality.

9:55AM PDT on Jul 8, 2012

Readers of Care2, do not be sucked in by the posts of David F. His mission here is to remove the blame from the actual perpetrators and place it on poor home buyers.

The Community Reinvestment Act did not tell the banks to lend to buyers that had no collateral. This is pure fiction. The banks did this knowing they could bundle and securitize these mortgages and make billions of dollars whether there was a default or not. And the ratings agencies were corrupted through outright bribery. This was a massive scheme to defraud both the home buyer, the small investor and the tax payer of the United States.

All over the internet you will find right wing propagandists peddling the false story we hear from David. Do not be taken in by it.

The really big crime remains the fact that none of the criminals have been brought to justice.

Read about it here, if you are interested in the truth of the matter and not GOP fairy tales.

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

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