Government Complicity Provides Libor Defense
Neil Barofsky stopped by at Bloomberg to talk about the his new book and the Libor rigging scandal.
He had some interesting comments on the implications of Treasury officials knowing Libor was rigged but using it in TARP bailout funds anyway.
Video below.
Dude, I owe you big time!
Latest research by Ice Cap Asset Management.
Imagine a World where all bank tellers, bank voicemail messages, bank emails and even bank faxes all end with – “Dude, I owe you big time.”
“Thank you, have a nice day, sincerely yours, and do not hesitate to contact us” will all become niceties from the past.
As far as we are concerned, there have only been two dudes in the history of the World. The 1982 Hollywood hit Fast Times at Ridgemont High produced Jeff Spicoli as the World’s very first dude. It wasn’t until 16 years later we were gifted the dude of all dudes – Jeff Lebowski from The Big Lebowski.
Yet, today, for some strange reason the big banks feel the need to expand their World domination strategy and position themselves right next to the dude. And with that, the righteous title of dude will be tarnished forever more.
Of course, to understand the big banks sudden interest in becoming dudes, we have to step deep into the cryptic World of the London Interbank Offered Rate, or LIBOR for short, or soon to become LieBOR for everyone else.
At least three banks seen central to Libor rigging
With Draghi managing taking the focus away from the great LIBOR scandal, we shouldn’t forget about the LIBOR situation. As we all know, there can’t be only one bank involved in the scandal. Reuters brings some more clarity on the subject.
New details from court documents and sources close to the Libor scandal investigation suggest that groups of traders working at three major European banks were heavily involved in rigging global benchmark interest rates.
Some of those traders, including one who used to work at Barclays Plc in New York, still have senior positions on Wall Street trading desks.
Until now, most of the attention has involved traders at Barclays, which last month reached a $453 million settlement with U.S. and UK authorities for its role in the manipulation of rates. Now, it is becoming clear that traders from at least two other banks – UK-based Royal Bank of Scotland Group Plc and Switzerland’s UBS AG – played a central role.
Among them, the three banks employed more than a dozen traders who sought to influence rates in either dollar, euro or yen rates. Some of the traders who are being probed have worked for several banks under scrutiny, raising the possibility that the rate fixing became more ingrained as traders changed jobs. (Full article here).
Alien Bankers, Leave Earth Alone!
Max Keiser interviewing Rickards. On derivatives, US, China, currency wars, LIBORS and much more.
Must watch video.
Tim Geithner “Aided and Abetted” LIBOR Crimes: Jim Rickards
Rickards on the LIBOR scandal, Geithner and Fed. If $500 trillion of swaps are based on LIBOR and the rate was manipulated by 10 basis points over five years, that’s $2.5 trillion of fraudulent transactions — more than the combined capital of the nation’s five largest banks, Rickards explains. “Congress may have to step in to limit the damages because it would threaten the banking system.”
Full video below.
The Mess of Crisis Time LIBOR
Peter Tchir gives some interesting insight into the LIBOR vs CDS prices.
Here are the 3 month USD LIBOR submissions for some of the banks, along with where 1 year CDS was quoted at the time. The 1 year CDS data is not the best, but is indicative and certainly reflects what I remember as the relative safety perception. I’m also looking into CD rates, bonds, and stock prices, but I find a few things interesting here.
| Date | JPM | Citi | BofA | DB | HBOS | RBS | Barc | UBS | CS | Nor | BOTM | HSBC |
| 10/3/2008 | 100 | 345 | 105 | 114 | 228 | 235 | 189 |
171 |
91 | 77 | 55 | 52 |
| 10/3/2008 | 4.10 | 4.02 | 4.50 | 4.05 | 4.90 | 4.50 | 5.00 | 4.35 | 4.50 | 4.40 | 4.60 | 4.10 |
| 10/9/2008 | 103 | 400 | 113 | 102 | 181 | 246 | 149 | 191 | 83 | 104 | 78 | 45 |
| 10/9/2008 | 4.40 | 4.45 | 4.80 | 4.65 | 5.00 | 5.00 | 5.10 | 4.75 | 5.00 | 4.75 | 4.95 | 4.30 |
| 10/31/2008 | 68 | 174 | 81 | 95 | 113 | 98 |
110 |
108 | 104 | 137 | 65 | 68 |
| 10/31/2008 | 2.75 | 3.00 | 2.80 | 3.05 | 3.10 | 3.00 | 3.20 | 3.02 | 3.05 | 3.05 | 3.20 | 3.00 |
| 11/20/2008 | 98 | 369 | 104 | 112 | 146 | 143 | 156 | 146 | 125 | 94 | 98 | |
| 11/20/2008 | 1.85 | 2.10 | 2.15 | 2.20 | 2.15 | 2.23 | 2.40 | 2.14 | 2.25 | 2.18 | 2.20 | 2.10 |
Libor Is A Collusive Price Set By Collusive Banks
Chris Whalen, senior managing director at Tangent Capital Partners, talks with Bloomberg Law’s Lee Pacchia about the recent controversy surrounding Barclay’s settlement with regulators over allegations involving Libor manipulation. Whalen says there is a need to turn the rate into a “real market price” through a process that employs greater transparency as it is currently an “18th century process that has suddenly come running smack dab into the perception of 21st century investors and the public”.
Full must see video below.
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