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Old 08-11-2012, 09:56 AM #1
Umami
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Massive Private Banking Fraud

I know Paul Ryan's handsome and everything, but why isn't there a thread about Libor?

To sum it up, Libor is the interest rate set by the private British Banker's Association that determines what interest rate banks borrow from each other at. Apparently Barclays and other institutions have been rigging the rate for years.

Quote:
"I can see no reason [why] they would have condoned manipulation of the rate for the profit of particular banks in particular transactions," Herring says of regulators. "Their concern about overall confidence in the banking system in the depth of the crisis, however, makes it plausible that regulators would have been pleased to see LIBOR decline and perhaps [were] not tempted to ask very probing questions."

Schwarz adds that regulators had a lot of other things going on at the time and "probably did not think that this was the most pressing problem. Also, regulators had no easy tools to address this. It is, in particular, hard to see what U.S. regulators could have done in real time to deal with a rate produced in London."

This is not, however, a case of no harm, no foul. Borrowers such as homeowners would have benefitted if an artificially low LIBOR kept their payments below what they should have been. But that would have occurred at the expense of lenders and their shareholders. "If they charge the wrong rate, it's just not fair to one party or the other," says Siegel.

Because changes in LIBOR also govern returns on various types of investments, it is clear that pension funds, mutual funds, municipalities and other investors are likely to have been hurt as well. A string of lawsuits has been filed by investors and, though the cases may take years to resolve, some analysts predict the major banks will pay out billions in damages, which will not please their shareholders.
http://knowledge.wharton.upenn.edu/a...articleid=3056

Anyone still want to argue the private sector is somehow more trustworthy than the public sector?
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Old 08-11-2012, 10:20 AM #2
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I think it's because 1) this forum is mostly conservative, and this pretty much destroys the conservative underpinnings of modern economics, and 2) this is fairly dense, foreign stuff, and this forum is pretty ignorant of world issues.

The only people that would bring it up would be people like you, me or LTK, and we can only do so much here.

Speaking for myself, I'm actually despairing a little that anything can really be done to fix issues like this. I mean huge fines are being levied but they pale in comparison to the profits gained, so there is no real punishment.

I'd have to guess that the only way bankers around the world are going to ever pay for their crimes is with a concerted campaign of progressive banking reform. That probably can only ever happen with a progressive US government in power.

The closest we can get this cycle is Obama winning a 2nd term, then he can cut a little looser politically without concern for his electoral future. Not sure he has it in him to actually do this, but once he is no longer beholden to his wall street donors, he might just do a little more of the right things.
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Old 08-11-2012, 10:27 AM #3
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Many bad ideas floating around related to big business...

The market can regulate itself!

people should have the choice to put their social security into the stock market

corporations are people too!

Thank you conservative ideologue army.
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Old 08-11-2012, 11:05 AM #4
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It's true Ford, and when you bring up those points everyone thinks you're a partisan jerk.

Paul Ryan IS handsome though...
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Old 08-11-2012, 11:31 AM #5
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Ya, I mentioned this a while ago and no one seemed to want to talk about it. I can't believe this hasn't gotten more attention than it has on this forum or even in the media. It's kinda huge news.
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Old 08-11-2012, 11:48 AM #6
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It's baffling, I have been reading up on it a lot but it hasn't made its way to television. I think no one wants to even address it, as if everyone is used to financial fraud. I'm not going to sit here and say banking is evil but when you have a system as tempting as the way LIBOR is set up, how do you not expect some players to manipulate the rate in their favor, given the autonomy and lack of oversight?
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Old 08-11-2012, 12:12 PM #7
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I think the reason it isn't bigger news is that it pertains to the financial meltdown and isn't a new thing on its own per say. The specifics are also probably kind of convoluted for many people.
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Old 08-11-2012, 12:12 PM #8
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I just don't have much to add.

It will be interesting to see how this opens them up to lawsuits.
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Old 08-11-2012, 12:14 PM #9
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The LIBOR process was always strange to me.
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Old 08-11-2012, 01:22 PM #10
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Quote:
Originally Posted by Umami View Post
I know Paul Ryan's handsome and everything, but why isn't there a thread about Libor?

To sum it up, Libor is the interest rate set by the private British Banker's Association that determines what interest rate banks borrow from each other at. Apparently Barclays and other institutions have been rigging the rate for years.



http://knowledge.wharton.upenn.edu/a...articleid=3056

Anyone still want to argue the private sector is somehow more trustworthy than the public sector?
Nobody here knows anything but mainstream college propaganda economics, this is beyond them, in other news.....

Quote:
The part that got my attention was just after the 8 minute mark in part 1.

"The nations must give up sovereignty and must become subservient to the banks."


http://www.silverdoctors.com/the-rat...er/#more-11251


They talk about LIBOR in part 1@ 9 min mark
Also this video below should have it's own thread, they have presented this evidence to the UN and governments worldwide.....

http://moneymappress.com/pro/Pyramid...DMMR49EAD MMP

Last edited by yesme : 08-11-2012 at 01:31 PM.
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Old 08-12-2012, 08:43 PM #11
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I'm afraid I can't accept your premise. Just because you have provided one, albeit very interesting and dense, example of financial fraud does not mean that the public sector should be considered more "trustworthy" (I'm not exactly sure what you intend to mean by trustworthy) than the private sector. Obviously there have been other recent instances of private sector fraud, but the public sector has had a less than stellar track record as well.

Instances of this nature in the past have only strengthened our approach to auditing and controls. I think you only need to look as far as Enron to understand that cooperation by both the private and public sector is necessary to prevent future cases of fraud. The PCAOB couldn't possibly inspect every audit and the other choice of having governments intervene in every circumstance is no better. How could you convince me that if the government was responsible for interdependently verifying LIBOR that it would still not be subject to corruption by the few individuals who control it? In this case both private and public sector are checks and balances to prevent situations of this nature.

LIBOR is very complicated and to understand how fraudulently adjusting LIBOR would affect a derivative like an interest rate swap is not only difficult but requires knowledge of what a derivative is in the first place. Honestly I would be willing to state that the people posting in this thread (including myself) don't truly understand what the effects would be seeing as how they affect quite a variety of financial instruments held by very large number of companies (and as the article states even structures such as municipalities).
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