Liborgate

Liborgate, despite the brief interlude provided by the chaff from the DFS over Standard Chartered, rumbles on.

The BBC reports that seven banks (HSBC, Royal Bank of Scotland Barclays, Citigroup, Deutsche Bank, JPMorgan and UBS), are to be questioned in the US for alleged Libor manipulation.

The US authorities will look to see if there is sufficient evidence to support a criminal prosecution.

The coming weeks will see much behind the scenes haggling between the banks, the regulatory authorities and governments, in order to avoid this going to court.

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Scrap Libor

Martin Wheatley has called for Libor to be scrapped, and for the fictitious Libor rates be replaced with "reality".

What an excellent recommendation!

Read his full report below:

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The BBA Tries To Rewrite History

Zero Hedge have revealed that the hopeless, hapless and despised British Bankers' Association (BBA) has attempted to rewrite history, and is trying to pretend that it had no regulatory role wrt Libor.

Specifically, as per Zero Hedge, here is an extract of the BBA's current governance documentation:

"There is a named individual at each bank responsible for submitting the daily bbalibor rates to Thomson Reuters and this will be the person responsible for the bank's cash - usually their title is 'treasurer' or similar. There is written guidance on what information that person should take into account when calculating that day's rates for his or her bank. As all contributor banks are regulated, they are responsible to their regulators, rather than BBA LIBOR Ltd. or the FX&MM Committee, for maintaining appropriate procedures for contributing, including the maintenance of internal chinese walls."

This is the "same" paragraph a few weeks ago:

"BBA LIBOR Ltd. receives the fixings and underlying contributor data at the same time as all other live data recipients and monitors all submissions into the fixing process. Any anomalous rates are queried with the submitting bank, and a log of these queries is kept and given to the FX&MM Committee on a periodic basis, who may choose at their discretion to follow up these queries in line with established governance and scrutiny procedures."

Now that the arrest warrants are being prepared, the BBA is doing everything it can to distance itself from Liborgate.

Too little too late!

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LIEBORGATE The Oncoming Storm

The roll of distant thunder coming across the Atlantic has hit the shores of Britain.

The Washington Post reports that the Bank of England was warned by Timothy Geithner (then President of the Federal reserve bank of New York) in 2008 that Libor needed to be fixed:

"While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way a critical global benchmark called the London interbank offered rate, or Libor, is calculated, according to a June 1, 2008, e-mail obtained by The Washington Post.

Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and establishing a “credible reporting procedure.”

'We would welcome a chance to discuss these and would be grateful if you would give us some sense of what changes are possible,' Geithner wrote."

Here is a link to a copy of the email and the Bak of England's response: Geithner email.

The New York Fed is set to release a treasure trove of documents Friday morning (EST) detailing its response to concerns raised as early as 2007 about Libor, which helps set the standard for $10 trillion worth of corporate bonds, credit cards, mortgages and other loans around the world.

The storm is coming, the Bank of England and others had best batten down the hatches!

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Bob Diamond To Receive "Only" £2M

"Good" news everybody, Barclays has agreed a payoff for Bob Diamond.

Diamond has agreed to waive his share awards (worth around £20M) and will walk away with "only" £2M, being 12 months' salary, pension allowance and other benefits.

Diamond is estimated to have earned well over £100m during his career at Barclays.

Here is a statement released by Barclays to confirm Bob Diamond's pay-off arrangements:

"Mr Diamond has voluntarily offered to waive all of his unvested deferred bonus awards and long term incentive share awards.This is in addition to his previous decision to forgo any consideration for an annual bonus this year. The Board has accepted this offer, and all of Mr Diamond's outstanding unvested deferred bonus awards and long-term incentives will lapse, with no compensation made in respect of the lapsed awards.

The Board has asked Mr Diamond to support the transition to the new Chief Executive as necessary, and he has agreed. Consistent with his contract of employment, Mr Diamond will receive up to 12 months' salary, pension allowance and other benefits; and he has agreed to forgo his contractual entitlement to tax equalisation going forward. The Board has agreed with Mr Diamond that he will not receive any future bonus or incentive awards; nor will he receive any further compensation payment in connection with the termination of his employment.

Marcus Agius, Chairman, said: "The Board deeply regrets the circumstances that led to Bob resigning his positions at Barclays. Despite having no personal culpability, he recognises more than anyone the negative attention that they have generated and has taken characteristically strong action to address that. These circumstances do not detract in any way from the tremendous legacy that Bob has left at Barclays, and his actions are clear indications of his commitment to the institution to which he has contributed so much."

Bob Diamond said: "For the past 16 years I've had the honour of working at Barclays. The wrongful actions of a relative few should not detract from the outstanding work that Barclays employees carry out each day on behalf of clients and customers around the world. It is my hope that my decision to step down and today's agreement on my remuneration will help close this chapter and allow Barclays to move forward and prosper."

In other news, Farepak savers after a six year wait have been advised that they will receive 50p for every £1 they saved with the company.

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The Diamond and Tucker Emails Obtained By Sky

Mark Kleinman of Sky has just Tweeted this:

"EXCLUSIVE: I've obtained emails between Bob Diamond, Paul Tucker and Jeremy Heywood ahead of TSC session this afternoon. Full story soon."

More:

"Email from ‪#Tucker‬ to ‪#Diamond‬ in Oct 08: “struck that your [government guaranteed] bond was issued at around 140 over gilts… That’s a lot”."

Also Faisal Islam is tweeting:

"Email Oct 22 2008: from Paul Tucker to Bob Diamond, and Jon Varley: Subject: "Cld I talk to one or other of you about libor pl...


Email from Tucker to Diamond/ Varley: cont: "Sorry to bother you but I think mark d is away. Its a slightly sensitive point Thanks Paul...


So having read the emails, 1. clear that Tucker had serious concerns about libor from 22nd and Barclays funding from 23rd/24th oct 08.


2. Intriguing that Bob Diamond and not CEO Varley replies to Tucker when concerns first expressed


3. On 24th Oct 08 (week before Abu Dhabi capital inj) Tucker asks for meeting to understand where Barclays got its pre crisis funding from."

To remind Barclays and others who intend to commit fraud of what I advised some days ago, if you are intending to commit fraud do not communicate your intentions to others via email, texts or other electronic media.

SFO To Investigate LIBORGATE

The Serious Fraud Office (SFO) has announced that it will hold an investigation into LIBOR rate fixing.

It will not say which companies and individuals it is investigating:

"The SFO Director David Green QC has today decided formally to accept the LIBOR matter for investigation."

An SFO spokesperson has confirmed to the BBC that a dedicated case team had now started work.

The Serious Fraud Office is a government department responsible for investigating and prosecuting serious and complex fraud. The SFO is headed by the Director (David Green QC) who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act (1987). 

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LIEBOR - The Essential Truth

There is much hoopla going on in the media about this afternoon's bunfight at the Treasury Select Committee hearing, where Bob Diamond will be the guest star.

All attention and focus (thanks to deft media manipulation by Barclays) is on the alleged phone call from Paul Tucker (Deputy Governor of The Bank of England) on 29 October 2008:

"Bob Diamond received a call from Paul Tucker, the Deputy Governor of the Bank of England. The substance of that call was captured by Bob Diamond via a note prepared at the time. A copy of that note is appended to this document; it was circulated to John Varley, then Barclays Chief Executive, and Jerry del Missier, then President of Barclays Capital.

Subsequent to the call, Bob Diamond relayed the contents of the conversation to Jerry del Missier. Bob Diamond did not believe he received an instruction from Paul Tucker or that he gave an instruction to Jerry del Missier. However Jerry del Missier concluded that an instruction had been passed down from the Bank of England not to keep LIBORs so high and he therefore passed down a direction to that effect to the submitters ."

This is all very well, and has given Barclays the veneer of an "excuse"; wherein it can imply that it was asked to fiddle the rates. It has also given the Tories an opportunity to unleash the hounds, and castigate various Labour ministers of the day.

However, let us not forget the essential truth, Barclays were fiddling the LIBOR rates long before the alleged phone call took place.

For why?

To make a profit for their own greedy ends, not to save the country or the bank from financial ruin.

Let us not forget that!

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Barclays Is Not Alone - Watch The Ducks Be Lined Up!

The FSA says that Barclays not alone in Libor case.

This will be an "interesting" week, watch as all the ducks are lined up in a nice neat little row!

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Barclays Shuts The Stable Door

Barclays has now begun to realise that a simple fine from the FSA will not be quite enough to rebuild its shattered reputation. Therefore in order to atone it has sacrificed its chairman Marcus Agius, who has resigned.

Ironically the surname Agius means "a very old and wise person".

Agius is indeed very wise allowing himself to be removed from the eye of the storm in this manner. He might also care to consider his position with the British Bankers' Association (BBA), which only last week expressed "shock" at Barclays actions.

What is Agius's position within the BBA?

Why he is their chairman!

What was it the BBA said last week?

"The British Bankers’ Association is shocked by yesterday’s report about LIBOR." 

Don't the other members of the BBA ever talk to their chairman?

For good measure, in order to further appease the baying crowd, Barclays have launched an audit of its business practices. This will be conducted by an independent body and report to the new deputy chairman, Sir Michael Rake.

Barclays has promised:

• a "root and branch review" of its "flawed" past practices 
• a public report of the audit's findings 
• a new mandatory code of conduct for all staff

This presumably is being done in the hope that it doesn't have to sacrifice Bod Diamond, the CEO, who will appear before the Treasury Committee on Wednesday.

Bob and Barclays need to understand two things:

1 Shutting the stable door after the horse has bolted is too late, and

2 Diamonds are not forever!

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Diamonds Aren't Forever!

Despite saying that he won't resign, the smart money is on Bob Diamond resigning from Barclays within a matter of days.

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Osborne's Statement on Barclays Fraud

I see that the Treasury state that George Osborne is to make a statement on the Barclays fraudulent manipulation of LIBOR:

"HM Treasury ‏@hmtreasury

The Chancellor will be making a statement to Parliament at around 1215 about the FSA investigation into bank borrowing rates, known as LIBOR"

You will observe that they have politely avoided using the word "fraud".

Whilst the avoidance of the word "fraud" may suit the sensibilities of those in Whitehall I suspect that, once people who owe Barclays money (eg mortgages, personal loans etc) wake up to the fact that the rates that they paid were based on the fraudulent manipulation of LIBOR, the word "fraud" will be liberally peppered across the myriad of class action suits that are bound to arise.

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Barclays Fined $450M for Libor Manipulation - Dude I Owe You Big Time!

Barclays will pay at least $450M to US and British authorities to settle a probe into the manipulation of Libor.

Page 15 FSA Report:

"On 26 October 2006, an external trader made a request for a lower three month US dollar LIBOR submission. The external trader stated in an email to Trader G at Barclays 

“If it comes in unchanged I’m a dead man”. Trader G responded that he would “have a chat”. Barclays’ submission on that day for three month US dollar LIBOR was half a basis point lower than the day before, rather than being unchanged. 

The external trader thanked Trader G for Barclays’ LIBOR submission later that day: 

“Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger”.

Libor is the benchmark for about $360 trillion worth of financial contracts worldwide. 

The fine of course may be but the tip of the iceberg, if victims of this manipulation (eg mortgage holders) were to sue Barclays via a class action.

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Snouts In The Trough - Bogus PPI Claims

The Financial Ombudsman has, according to the BBC, stated that nearly 6,000 people submitted bogus compensation claims for mis-sold Payment Protection Insurance (PPI) on policies that they had never taken out.

The problem has been exacerbated by the activities of certain claims firms, who appear to be less than honest/ethical.

This rather proves the old saying "what goes around, comes around", as companies that unethically sold these useless policies are now on the receiving end of equally unethical treatment/practices.

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Greece Mortgages Its Future and Shafts Its Pensioners

Approximately Euro19BN in Greek government bonds, managed by the Greek central bank on behalf of pension funds and other state organisations, will be included in Greece's debt swap plan.

Thus shafting the pension of Greek public sector workers.

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The Greek Tragedy Laid Bare!

As Greece struggles to find the extra Euro325M to fill the black hole in its austerity "plan", here comes a timely reminder of where they could have found the money from (based on a discussion that Nina Maria Potts had with a Greek protester):

Nina-Maria Potts @NinaMariaPotts

"Greece ridiculed for not finding 325 mill to cut-the price our gvt paid to Goldman Sachs to hide size of public debt.

325 mill paid to Goldman Sachs to hide our public debt was signed by Papademos himself.Now my mother has to cut 15% of a 850 euro pension."

I am sure that if Goldman Sachs were asked nicely, they would return the fee!

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The Movable Feast That is The Papademos Meeting

The much vaunted, much postponed, meeting between Greek Prime Minister Papademos and the leaders of his political "allies"/"supporters" wherein they will allegedly agree to the Troika's demands has become something of a movable feats.

Originally scheduled to resume yesterday, it was postponed to this afternoon.

An hour or so ago the major news networks were stating that the meeting wpould be around 1pm, that was then moved to 4pm.

The latest "guestimate" is that the meeting (if it ever occurs) will be at 8pm.

Incidentally, there are rumours that as today is a general strike in Greece, Papademos's driver hasn't shown up to work. As such lets us trust that the meeting is at his house, otherwise he may well be late!

Stay tuned, I guarantee that there will be more theatrics and that his meeting will be postponed again.

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The Greek Tragedy Continues II

Earlier today I wrote:

"A second round of talks is scheduled for today, as domestic unrest within Greece increases.

Don't hold your breath in the expectation of a clear and decisive solution being found or agreed upon."

On Sunday I wrote:

"As noted yesterday, and the day before yesterday, if it can go wrong it will go wrong!

Rest assured, this meeting will continue to be postponed."

Well, as sure as eggs are eggs, Greek politicians have once again failed to step up to the plate. Today's meeting of Greek political leaders has been postponed to Tuesday (until it is announced tomorrow that it will be again postponed to Wednesday).

No reason has been given for the postponement. However, it doesn't take much political savvy to see that Papademos has failed to secure support for the Troika's demands.

Papademos will hold talks with the Troika later today, doubtless to try to buy more time and renegotiate the Troika's demands.

With Greece, if it can go wrong it will go wrong!

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Michael Woodford Says Sayonara To Olympus and Japan

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EU Bullshit

"For the fourth year in a row, the EU's annual accounts have received a clean bill of health from its external auditors."

Source EUROPA

The reality is of course entirely different.

There was an estimated “error rate” of 3.7% in payments from the 2010 Euro 122BN budget.

"In the Court’s opinion, because of the significance of the matters described in the basis for adverse opinion on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2010 are materially affected by error."

Source ECA

This is why the EU is destined to fail.

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