Barclays Libor fix trail leads to senior managers … Senior Barclays managers were worried over negative headlines during the financial crisis and contributed to a culture that fixed key funding rates artificially low, U.S. and UK regulators said in reaching a settlement with the bank. The findings based on internal emails and other communications raise questions about how high up the Barclays management chain came instructions to submit lower rates, and who knew about the rate rigging. – Reuters
Dominant Social Theme: The corruption of these Western banks is terminal!
Free-Market Analysis: So Barclays resides at the "heart of darkness" which is LIBOR – various rates at which banks and the rest of can borrow. Something isn't quite right about this.
Bloomberg is busy setting up QIBOR in Qatar, and the putative explanation is that there is too much corruption in London. Now we have an example of corruption! Convenient? Right on time …
QIBOR is just like LIBOR and those involved will "set" the rate at which banks borrow after conversing with banks themselves. This is a US$ 90 trillion market and thus the movement of this facility from London to Qatar is no small event.
If one were interested in moving such a large market, charges of corruption would surely be helpful. And lo and behold, we are reading about them everywhere.
What is the big deal about financial corruption? It is simply a fact that the world's modern central banking is shot through with corruption. How could it be otherwise? It begins with central banks that fix the price of money and its volume and continues from there.
When a small group of people have the power to basically print as much money as they want – and do – then to act surprised that "corruption" permeates the entire system is somewhat, well … manipulative in our view.
This LIBOR "scandal" has a manufactured smell to it in our humble opinion. For one thing, the headlines are screaming about Barclays as if the bank was manipulating rates UP (and maybe they did). But this Reuters story indicates that rates were being set artificially low – because of a fear that Barclay's would be seen as a gouger. Here's more from the story
Barclays was fined $453 million on Wednesday for manipulating interbank lending rates over several years. These are known as Libor and Euribor, underpinning trillions of dollars of derivatives deals plus corporate and personal borrowing rates.
The U.S. Commodity Futures Trading Commission, the U.S. Department of Justice and the UK's Financial Services Authority settled with Barclays on a civil basis, while Canadian authorities said they still had an open investigation.
The Justice Department said it still had a criminal investigation in progress.
Barclays Chief Executive Bob Diamond, the investment bank unit's boss at the time of the rate fixings, and three of his key lieutenants, said they were giving up their 2012 bonuses in response.
Investigators faulted individual derivatives traders for fixing rate submissions for their own profit, while Barclays was slammed for regularly reporting lower borrowing rates than it was actually paying throughout the financial crisis.
Staff responsible for submitting rates in some instances told colleagues of "internal political" pressure to set these low, the FSA's report shows.
Barclays "senior management at high levels" became concerned over the media scrutinizing the bank's funding access early in the financial crisis, in August 2007.
"Senior management's concerns in turn resulted in instructions being given by less senior managers at Barclays to reduce Libor submissions in order to avoid negative media comment," the UK's FSA said in its report. "The origin of these instructions is unclear."
The U.S. CFTC said specific instructions to lower submissions came from "senior Barclays Treasury managers". They asked submitters to provide rates at a level where Barclays wouldn't be "sticking its head above the parapet."
We can see from this reporting, assuming it is accurate, that Barclays was setting rates to the advantage of borrowers. This is what central bankers do all the time – keep short interest rates at extremely low levels via their price-fixing authority.
While central bankers manipulate money all the time to try to "restimulate" economies that have been blown to bits by their previous manipulations, when Barclays does it in a somewhat timid fashion all hell breaks loose.
For Barclays, such matters suddenly constitute criminality. We would submit the criminal manipulations go a good deal higher and run all the way up to the power elite itself, which apparently controls about 150 central banks around the world.
Top central bankers can do basically whatever they want to – or so we can see in the modern day – but let Barclays try to offer information that would skew rates lower and you're suddenly talking about the depths of depravity.
It reminds us a little about the Murdochian phone-tapping saga going on in England today. The British Parliament has drawn up rules to obtain every single email and other kind of electronic communication in that long-suffering country but various News Corp. employees are being dragged through an endless investigation into phone tapping.
The public sector, or those who operate in the shadows behind the public sector, are immune to these sorts of criminal charges. This system worked especially well in the 20th century when people were less aware of those operating behind the "curtain."
But today, thanks to what we call the Internet Reformation, it is increasingly clear that the system is one two-track criminality. At the very top the laws do not apply. Elites are exempted based on "national security concerns" and worries about "economic contagion" that provides justifications for the most outrageous manipulations.
In this case, we would tend to believe that this perception of massive LIBOR criminality is at least somewhat manufactured. For one thing, LIBOR is the creation of banks that meet regularly to "set" (fix) lending rates. The process itself is criminal to begin with in the sense that it is a kind of open conspiracy.
As free-market types, we have no trouble with collusion generally, but these banks all partake of state privileges in one way or another. The larger banking process is chock-full of government privilege and exemptions. Most of the "money" banks use are now electronic digits in one way or another provided to them by designated central banks.
The second reason we are suspicious of the motivations surrounding this Barclays "affair" is that the powers-that-be are moving a good deal of financial activity to the Middle East. The elites are working hard to create an amalgam of Islamic and Western finance, and placing LIBOR in Qatar – as QIBOR – is just one more element of this larger plan, in our view. Bloomberg, as a corporation, is a designated instrument of this strategy.
There is plenty swirling in the background of all this. Criminality in this case, may surely be in the "eye of the beholder." And those who proclaim the most loudly to be "shocked" are perhaps the least surprised.