Tue Jan 29, 2013, 10:42 PM
n2doc (43,050 posts)
The Biggest Financial Fraud Of All Time
Libor Lies Revealed in Rigging of $300 Trillion Benchmark
By Liam Vaughan & Gavin Finch - Jan 28, 2013 4:54 PM ET
Bloomberg Markets Magazine
Every morning, from his desk by the bathroom at the far end of Royal Bank of Scotland Group Plc’s trading floor overlooking London’s Liverpool Street station, Paul White punched a series of numbers into his computer.
White, who had joined RBS in 1984, was one of the employees responsible for the firm’s submissions for the London interbank offered rate, or Libor, the global benchmark for more than $300 trillion of contracts from mortgages and student loans to interest-rate swaps. Behind him sat Neil Danziger, a derivatives trader who had worked at the bank since 2002.
On the morning of March 27, 2008, Tan Chi Min, Danziger’s boss in Tokyo, told him to make sure the next day’s submission in yen would increase, Bloomberg Markets magazine will report in its March issue. “We need to bump it way up high, highest among all if possible,” Tan, who was known by colleagues as Jimmy, wrote in an instant message to Danziger, according to a transcript made public by a Singapore court and reported on by Bloomberg before being sealed by a judge at RBS’s request.
Danziger typically would have swiveled in his chair, tapped White on the shoulder and relayed the request to him, people who worked on the trading floor say. Instead, as White was away that day, Danziger input the rate himself. There were no rules at RBS and other banks prohibiting derivatives traders, who stood to benefit from where Libor was set, from submitting the rate -- a flaw exploited by some traders to boost their bonuses.
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The Biggest Financial Fraud Of All Time (Original post)
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Response to n2doc (Original post)
Wed Jan 30, 2013, 12:00 AM
Octafish (55,739 posts)
5. Ask any bankster: It's OK if a billionaire does it.
Look at this guy, making a case to sweep LIBOR under the rug:
The LIBOR Scandal: Not that Big a Deal?
The Business Desk, PBS.org
One of the biggest business scandals of 2012 was the the manipulation of LIBOR, the London Interbank Offering Rate, on which so many other interest rates depend. LIBOR is determined by the banks themselves and, it turns out, was rigged -- for years. Traders were in cahoots with "submitters" from the banks responsible for "reporting" the rates banks were offering to charge one another in the London market -- the "interbank offering rate." But the submitters were incentivized -- and only too happy, it seems -- to accommodate the traders by customizing their submissions for the profit of all.
The Economist published some particularly juicy emails from the ongoing investigation:
"One banker at UBS, in asking a broker to help manipulate submissions, promised ample recompense:
But Doug Dachille, our man in the pits (figuratively speaking), thinks it's easy to make something of the LIBOR scandal that it is not: a conspiracy that screwed the global economy. Doug was the head of proprietary trading at JP Morgan until the merger with Chase, and then co-head thereafter. He's been featured on this page before: here, here and here.
Here is his take on LIBOR:
"While everyone focuses on the market manipulation of LIBOR, for which it is unclear there was any material impact on the rate setting itself, or whether any institution was able to specifically profit, no one is focusing on the real market manipulation that is done knowingly to boost profits and enhance compensation -- mis-marking of trading and accrual positions...."
Doug went on to explain the issue of mis-marking -- a little wonky for this page, though if there's an upswell of requests, we'll be happy to publish the rest, with Doug's permission.
CONTINUED (A must read for those who want to document the problem with thinking one class is immune from criminality)...
Like, uh, Banned from Kos used to say: "Let us look forward."