TheINQUIRER publishes daily news, reviews on the latest gadgets and devices, and INQdepth articles for tech buffs and hobbyists. The Biggest Price- Fixing Scandal Ever. Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything. You may have heard of the Libor scandal, in which at least three – and perhaps as many as 1. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it . Word has leaked out that the London- based firm ICAP, the world's largest broker of interest- rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 1. ISDAfix, a benchmark number used around the world to calculate the prices of interest- rate swaps. Interest- rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $3. 79 trillion market, meaning that any manipulation would affect a pile of assets about 1. United States federal budget. Hello, Uploading.com will be performing a service upgrade on Wednesday, September 5th, for about 45 minutes. We are conducting this upgrade to perform Hot Startup Theranos Has Struggled With Its Blood-Test Technology Silicon Valley lab, led by Elizabeth Holmes, is valued at $9 billion but isn’t using its. If you are an existing member of The Times and The Sunday Times enjoying the full benefits of thetimes.co.uk, then simply enter your Times+ login details. The following 143 journalists made campaign contributions from 2004 through the first quarter of 2007, according to Federal Election Commission records. Torture at Abu Ghraib American soldiers brutalized Iraqis. How far up does the responsibility go? It should surprise no one that among the players implicated in this scheme to fix the prices of interest- rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion- dollar settlements for anti- competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti- competitive scheme, detailed in Rolling Stone last year, to rig municipal- debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price- fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price- fixing hovering under the ostensibly competitive veneer of Wall Street culture. The Scam Wall Street Learned From the Mafia. Why? Because Libor already affects the prices of interest- rate swaps, making this a manipulation- on- manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price- fixing corruption. If you can imagine paying 2. California's trusted source for local news. Get breaking Los Angeles news by neighborhood and for all of greater L.A. The vulnerability of Clinton’s basement server is one of the key unanswered questions at the heart of a scandal that has dogged her campaign for the Democratic. PB& J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest- rate swaps are being manipulated at the same time, often by the same banks. In March, it also came out that two regulators – the CFTC here in the U. S. In that case, a federal judge accepted the banker- defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system. If true, that would leave us living in an era of undisguised, real- world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want. The banks found a loophole, a basic flaw in the machine. Across the financial system, there are places where prices or official indices are set based upon unverified data sent in by private banks and financial companies. In other words, we gave the players with incentives to game the system institutional roles in the economic infrastructure. Libor, which measures the prices banks charge one another to borrow money, is a perfect example, not only of this basic flaw in the price- setting system but of the weakness in the regulatory framework supposedly policing it. Couple a voluntary reporting scheme with too- big- to- fail status and a revolving- door legal system, and what you get is unstoppable corruption. Every morning, 1. London about how much they believe they would have to pay to borrow from other banks. The 1. 8 banks together are called the . What emerges, every morning at 1. London time, are the daily Libor figures. Banks submit numbers about borrowing in 1. This mountain of bank- submitted data is used every day to create benchmark rates that affect the prices of everything from credit cards to mortgages to currencies to commercial loans (both short- and long- term) to swaps. Gangster Bankers Broke Every Law in the Book. Dating back perhaps as far as the early Nineties, traders and others inside these banks were sometimes calling up the company geeks responsible for submitting the daily Libor numbers (the . Usually, the gimmick was the trader had made a bet on something – a swap, currencies, something – and he wanted the Libor submitter to make the numbers look lower (or, occasionally, higher) to help his bet pay off. Famously, one Barclays trader monkeyed with Libor submissions in exchange for a bottle of Bollinger champagne, but in some cases, it was even lamer than that. This is from an exchange between a trader and a Libor submitter at the Royal Bank of Scotland: SWISS FRANC TRADER: can u put 6m swiss libor in low pls?. PRIMARY SUBMITTER: Whats it worth SWSISS FRANC TRADER: ive got some sushi rolls from yesterday?. PRIMARY SUBMITTER: ok low 6m, just for u SWISS FRANC TRADER: wooooooohooooooo. Justice Department started burrowing into the befouled entrails of Libor. The documentary evidence of anti- competitive manipulation they found was so overwhelming that, to read it, one almost becomes embarrassed for the banks. Barclays got off with a relatively minor fine in the $4. UBS was stuck with $1. RBS was forced to give up $6. Apart from a few low- level flunkies overseas, no individual involved in this scam that impacted nearly everyone in the industrialized world was even threatened with criminal prosecution. Two of America's top law- enforcement officials, Attorney General Eric Holder and former Justice Department Criminal Division chief Lanny Breuer, confessed that it's dangerous to prosecute offending banks because they are simply too big. Making arrests, they say, might lead to . Instead, it flowed mindlessly into government coffers. So it was left to towns and cities like Baltimore (which lost money due to fluctuations in their municipal investments caused by Libor movements), pensions like the New Britain, Connecticut, Firefighters' and Police Benefit Fund, and other foundations – and even individuals (billionaire real- estate developer Sheldon Solow, who filed his own suit in February, claims that his company lost $4. Libor manipulation) – to sue the banks for damages. One of the biggest Libor suits was proceeding on schedule when, early in March, an army of superstar lawyers working on behalf of the banks descended upon federal judge Naomi Buchwald in the Southern District of New York to argue an extraordinary motion to dismiss. The banks' legal dream team drew from heavyweight Beltway- connected firms like Boies Schiller (you remember David Boies represented Al Gore), Davis Polk (home of top ex- regulators like former SEC enforcement chief Linda Thomsen) and Covington & Burling, the onetime private- practice home of both Holder and Breuer. The presence of Covington & Burling in the suit – representing, of all companies, Citigroup, the former employer of current Treasury Secretary Jack Lew – was particularly galling. Right as the Libor case was being dismissed, the firm had hired none other than Lanny Breuer, the same Lanny Breuer who, just a few months before, was the assistant attorney general who had balked at criminally prosecuting UBS over Libor because, he said, . Robert Wise of Davis Polk, representing Bank of America, told Buchwald that the banks could not possibly be guilty of anti- competitive collusion because nobody ever said that the creation of Libor was competitive. In a very theoretical, technical sense, the actual process by which banks submit Libor data – 1. British Bankers' Association offices in London once every morning – is not competitive per se. But these numbers are supposed to reflect interbank- loan prices derived in a real, competitive market. Saying the Libor submission process is not competitive is sort of like pointing out that bank robbers obeyed the speed limit on the way to the heist. It's the silliest kind of legal sophistry. But Wise eventually outdid even that argument, essentially saying that while the banks may have lied to or cheated their customers, they weren't guilty of the particular crime of antitrust collusion. This is like the old joke about the lawyer who gets up in court and claims his client had to be innocent, because his client was committing a crime in a different state at the time of the offense. Libor, she said, was a . Buchwald made this ruling despite the fact that both the U. S. But he did talk about the significance of the Libor case and other manipulation cases now in the pipeline. This is just based upon what they've been caught at. In the case of interest- rate swaps and the ISDAfix benchmark, the system is very similar to Libor, although the investigation into these markets reportedly focuses on some different types of improprieties. The story behind the 'Spotlight' movie. Here’s a list of the Globe staff members that appear in the movie, and the actors and actresses who play them.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. Archives
January 2017
Categories |