Libor banking scandal continues

This video is called Record fine for UBS.

By Andre Damon in the USA:

UBS Libor-rigging settlement exposes pervasive bank fraud

20 December 2012

UBS, the largest bank in Switzerland, announced Wednesday it had agreed to a $1.5 billion settlement with regulators in three countries, admitting that between 2005 and 2010 it intentionally manipulated the London Interbank Offered Rate (Libor), the most important global interest rate.

A report issued by the British Financial Services Authority (FSA) on the settlement provides voluminous documentation, in the form of emails and instant message exchanges, of the falsification on virtually a daily basis of UBS’ submissions to the British Bankers’ Association (BBA), which oversees Libor.

The settlement comes six months after a $450 million deal between regulators and Barclays, the fourth-largest global bank, to settle charges that it similarly manipulated Libor.

UBS and Barclays are among some 20 major financial institutions under investigation for colluding to manipulate the benchmark rate, including HSBC, Royal Bank of Scotland, Deutsche Bank, Credit Suisse, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui, JPMorgan Chase, Citigroup and Bank of America.

The Libor scandal has laid bare the rampant criminality in the operations of the world’s major banks and exposed the fact that the so-called “free market” is rigged by the most powerful banks and corporations for their own profit.

The Libor rate, which is set daily in London under the auspices of the BBA, a private banking lobby, is supposed to reflect the average cost of loans between major banks. An estimated $800 trillion in financial products are linked to Libor. These include $10 trillion in mortgages, student loans and credit cards. About 90 percent of US commercial and mortgage loans are linked to the index.

Between 2005 and 2007, Barclays, UBS and other banks systematically inflated their borrowing cost estimates to the Libor board in order to drive up the Libor rate and increase their profits on derivatives linked to it. After 2007, when the global financial crisis intensified, the banks lowballed their submissions to Libor in order to mask their financial weaknesses and lower their borrowing costs.

By manipulating the rate upward, the banks robbed countless millions of people of billions of dollars in inflated loan costs. By manipulating the rate downward, they deprived states, cities, pension funds and retirees with fixed investments of untold billions in revenues from bond holdings.

The settlements with both Barclays and UBS—expected to be followed by similar deals with other banks under investigation—enable the banks to pay a small fraction of their revenues and avoid any criminal charges. Not a single leading executive at either bank has been named or indicted for his or her role in defrauding the world.

In the case of UBS, the US Justice Department made a point of not criminally charging UBS itself, instead obtaining a guilty plea only from its Japanese subsidiary. Only two mid-level UBS employees have been criminally charged.

On June 30, the co-chairman of Deutsche Bank, Anshu Jain, suddenly resigned, supposedly voluntarily. It has since become clear that Jain was forced out due to his involvement in the criminal manipulation of the Libor lending rate, which was uncovered in the summer of 2012: here.

USA: Libor manipulation cost Fannie Mae and Freddie Mac more than $3 billion, according to an estimate by a government watchdog, who recommends the government-owned mortgage giants sue the big banks: here.

A US judge has dismissed most of the claims against a group of banks including Bank of America, Royal Bank of Scotland, JP Morgan Chase and Barclays in civil lawsuits over the rigged Libor interest rate.

Ex-Goldman Sachs trader faces fraud charge after surrender to FBI: here.

Anti-fraud agency hints at inquiry into Libor scandal: here.

CITY trader Tom Hayes has been found guilty of rigging global Libor interest rates. He has been sentenced to 14 years in prison. His defence was that everybody was doing it: here.

Bank of England implicated in illegal Libor rigging: here. And here. And here.

Related articles

• UBS faces $1 billion day of reckoning over interest rate rigging (hangthebankers.com)
• Libor: a new penalty, against a backdrop of business as usual (pubcit.typepad.com)
• UBS Libor-fixing fine may reach $1.5 billion (rawstory.com)
• Central banks seeking a role in Libor after the scandal (independent.co.uk)
• RBS fined £390m over Libor scandal (bbc.co.uk)
• Banks let off the hook for Libor antitrust allegations (tv.msnbc.com)
• LIBOR Scandal: Affects Homeowners and Consumers (defendyourhomefightforeclosure.wordpress.com)