The Global Banking Scandal
http://thedianerehmshow.org/shows/2012-07-09/global-banking-scandal
The deputy governor of the Bank of England Paul Tucker goes before the British Parliament today as part of a widening probe into bank manipulation of a key interest rate. He will be quizzed about whether banks were encouraged to lie about the LIBOR during the 2008 financial crisis. LIBOR is the acronym for London interbank overnight rate, used to set interest rates for trillions of dollars of contracts worldwide. The scandal has already cost Barclays Bank its top three officials. As part of a $450 million dollar settlement with U.S. and U.K. regulators, the British banking giant admitted to rigging the LIBOR as early as 2005. The probe has widened to most global banks. Joining Diane to discuss the fallout are University of Maryland School of Law professor Michael Greenberger, chairman of the Commodity Futures Trading Commission Gary Gensler, Francesco Guerrera of The Wall Street Journal and Andrew Palmer of The Economist.
Guests
Michael Greenberger
professor, University of Maryland School of Law, and former Director of Trading and Markets at the Commodity Futures Trading Commission
Gary Gensler
chairman, Commodity Futures Trading Commission
Francesco Guerrera
editor, Money & Investing, The Wall Street Journal
Andrew Palmer
finance editor, The Economist
Comments
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I will wait patiently for the first caller suggesting even more deregulation.
DEREGULATE - DEFRAUD - DENY....... Jail time,not Fox News excuses and lies.
How do we hit the undo button??? During your show today, please discuss the impact that rigging the libor rate may have had in exacerbating the foreclosures and its role in the collapse in the housing market. After all, some adjustable mortgage rates are tied to the libor rate and that the rate was found to be jimmied both down and up. If your guests agree that there were adverse impacts on the housing market and individual foreclosures then what recourse might be in store for those harmed?
"On Friday, U.K. regulators announced that Britain's Serious Fraud Office is launching a criminal investigation into bank manipulation of the key global interest rate known as Libor."
As oppose to the "un-serious fraud office"? What? Oh yeah, serious as in tens of billions lost not merely the trivial tens of millions. I get it....
And we are supposed to take Capitalism seriously? What a joke.
http://www.huffingtonpost.com/2012/07/05/barclays-criminal-probe-libor-m...
It's the darker side of human nature to create and exploit so called victimizers in order for the "victim" to feel justified in his or her own dishonest behaviors. What else could explain this new wave of stealing from the better off through taxation and financial punishment. Banks and corporations in the end usually pay for their misdeeds but governments do not. The housing/financial crisis was caused by governments not by banks.
"It is government's fault for offering a housing finance program without making an effort to maintain underwriting standards"
http://www.theatlantic.com/business/archive/2011/12/hey-barney-frank-the...
Nope, not the governments fault....actions at Freddie and Fannie "followed" not led the crisis.
http://www.nybooks.com/articles/archives/2011/oct/27/did-fannie-cause-di...
http://fabiusmaximus.wordpress.com/2011/11/15/30918/
Teece Bowman wrote: "Nope, not the governments fault"
As usual you did not read your own links. There is NOTHING in there that says government policies were not behind and a direct cause of the housing crisis. You offer a series of book reviews as evidence?
"The banks have made outrageous profits by capitalizing on their own misdeeds. They have already been paid several times over: first with taxpayer bailout money; then with nearly free loans from the Fed; then with fees, penalties and exaggerated losses imposed on municipalities and other counterparties under the interest rate swaps themselves."
http://www.ritholtz.com/blog/2012/07/the-big-losers-in-the-libor-rate-ma...
The housing crisis was caused by greed. Plain old simple greed.
Hey Teece: Have you not forgotten that George Soros brought down the Bank of England in 92? Currency Manipulation.
Housing prices were rising steadily, and buyers and lenders both expected it to continue. Both were wrong, all bubbles burst sooner or later.
I absolutely love the Arkus and Teece show. Do either of you realize that there is no way you are going to convince the other of your point of view? You both typically have good talking points that do a great job of convincing the persons already agreeing with you and nothing to address the concerns/beliefs of the other side. As for the undecided/uninformed they are not listening to news or talk radio so...
Diane,
If the problem Britain is now grappling with is private manipulation of interest rates to serve a few privileged interests, shouldn't we be even *more* concerned about the prospect of such manipulation here in the United States?
After all, our interest rates are set by the Federal Reserve System, which is privately owned and run for profit by its owners, none of whom are publicly known.
mnemecek wrote: "Do either of you realize that there is no way you are going to convince the other of your point of view?"
Or anyone else for that matter. It gets the brain cells working and in my own way I can participate in the sport of partisan politics, so I do it for myself.
"How Government Failure Caused the Great Recession"
http://www.american.com/archive/2010/december/how-government-failure-cau...
"I absolutely love the Arkus and Teece show. Do either of you realize that there is no way you are going to convince the other of your point of view? You both typically have good talking points that do a great job of convincing the persons already agreeing with you and nothing to address the concerns/beliefs of the other side."
I don't think that it's possible to convince anyone of anything and if you notice we both post articles that completely contradict one another. Which simply proves that on the internet you can find whatever you want to reinforce your point of view. I believe I am right and monte is wrong....he obviously believes the exact opposite. monte loves the greedy little men and wants them to have whatever they want. I on the other hand want my government to protect me from the greedy little men.
Two people couldn't possibly be further apart.
Bottom line, if my mortgage rate was determined by the LIBOR, and the LIBOR rate was improperly or illegally manipulated, who is at fault, and what do they owe me, and millions of other mortgagees? Who is going to make that happen?
These credit derivative swaps are the direct cause of financial collapse in Europe and many American cities NOT social programs. I'm wondering if those countries and cities can simply vitiate the contracts, cancel their debts and sue for their losses on the basis of fraud.
Teece Bowman wrote: "I on the other hand want my government to protect me from the greedy little men"
Government protects it's interests with guns and brute force, your personal interests are lost in a sea of short sighted politically correct stupidity.
"greedy little men" can largely be avoided with personal responsibility and self education.
"greedy little men" can largely be avoided with personal responsibility and self education.
Right.....history proves that time and again.
The reason we continue to have a debate regarding whether it was the government that caused the financial crisis or wealthy bankers, is becuase no attempt has been made to prosecute wrong doers.
Trials are designed to separate fact from fiction.
I hope we can all agree that laws were broken.
If so, where are the prosecutions of high level players? Lehman, Goldman, Wahcovia, Country Wide, Fannie & Freddie. and on and on. After an $800 billion bailout and an economy in shambles, it's business (robery) as usual at the banks. Rob from the middle class, give to the rich; rinse and repeat.
If any one of us could steal tens fo millions of dollars, and keep the money after you're caught because you're TOO RICH TO PROSECUTE, we would all be sorely tempted. I get it rich people.
This case is further evidence that global financial influences have transcended our nation's political structure. National interests are being trumped by global business interests. Global corporations are loyal to profits (as they should be), not governments or geographical interests. However, as a nation of people, we can not ignore our people or automatically assume policies good for global business are good for our people. A new political paradigm is desperately needed.
Human culture evolved from the family unit to the tribal unit to monarchies to nation-states. Perhaps we are seeing further cultural evolution and the death of the nation-state? What is the role of a nation in truly global economy? This case is evidence that something more is needed locally and globally.
Most all of us can avoid the greedy little men like monte, but it is the greedy elites colluding together and buying right wing and corrupt middle political activity we cannot avoid, because that is the nature of an oligarchical monopoly.
It is hard to accept the actuality of this injustice when we are programmed to embrace Capitalism and the Market. We want to believe when non-belief is punished. Chris Hedges discussed just this problem at Truthdig this morning. We are willfully blind when seeing hurts. Teece's partial vision is superior to the eternal night of kiss-ups to the rich who grovel for a dog biscuit.
These are not trivial matters, but concerns of mass life and death.
When "morality" is swayed by money payments and the deciders feel no pain we are doomed. The CFTC lacks adequate funding to investigate or prosecute
big operators with their codes of secrecy and court approved corporate personhoods.
Mike Greenberger has been through this before with Brooksley Born. As Gary Gensler says this is a magical casino 20 times the size of the "real" economy. It would not be allowed under normal conditions. This is Fascism.
Guns and brute force are the only methods? You seem to have completely forgotten about the court system (you know the Third Branch) and regulation. Neither of which require guns or brute force. One can make the argument that the legal system and the regulatory system is brutal, but that is separate from brute force.
Robert Reich's long daily think-piece is about this today.
Mike Sergeant wrote:
"Guns and brute force are the only methods? "
I think Arkus was referring to Defense against outside forces and physical danger of attack, not "greedy little men" in banks.
The problem is, yes, there are laws that attempt to control the "greedy little men" but they are tens of thousands of pages and the "greedy little men" will always find "greedy little ways" around them. Lawmakers think they are smart enough to outwit the "greedy little men". They aren't.
The country needs fewer broader, more succinct laws to control the "greedy little men".
An example of this in the recent unpleasantness was that of Glass-Steagall which I have written on before here, which built a wall between savings and investment in the banking industry. Its repeal, pushed by Republicans, signed by a Democrat, provided the fuel to the fire of the housing bubble. It was a simple law and it needs to be reinstated.
Again, simple, sweeping regulations of the banking and finance industry is what is needed. Everybody knows what they're SUPPOSED to be doing, but you can't make them stick to those things without clear, succinct law, not the spaghetti mess we have today. That, by the way would also greatly simplify prosecution under those laws. The swiss cheese of law that allows blame shifting and buck passing to the nth degree today is largely what is holding back prosecutions - not the unwillingness of the Holder AG's office to nail the "greedy little men".
Robert Reich's daily think-piece is about this today. It's very widely distributed; I read it on Huff Post. Go read it.
Pancake Rankin wrote:
"It is hard to accept the actuality of this injustice when we are programmed to embrace Capitalism and the Market."
You're either embracing markets or the Politburo, Pancake. I trust fair markets more than I do people.
The simple truth is, one or the other is gonna be in charge. It's not going to be you.
"Robert Reich's daily think-piece is about this today...Go read it."
I just did. I believe Bob and I agreeing on anything is one of the signs of the Apocalypse!
NPRs Morning Edition story on this last Friday has more detail about what actually happened IMO.
ecgberht,
In this we agree. We need ditch specific laws and go back to fewer, and broader laws. Problem is that the ones making the laws are mostly lawyers.
I guess what is hard for me to wrap my mind around is the difference between what Bernie Madoff did and what AIG did. One was prosecuted to the fullest extent of the law and the other was bailed out.
Where does $453 million dollars in fines go? If we could get this amount from all the crooked banks we could pay off the national debt in a week. My guess is the money goes in a slush fund to bail out crooked banks. The corporatocracy must take care of its own. Wouldn't it be stupendous if those dollars went to help start up alternative energy companies, or food programs, or schools, or, or... or. I'm putting my money under the mattress.
Mike Sergeant wrote: 'Guns and brute force are the only methods? You seem to have completely forgotten about the court system (you know the Third Branch) and regulation. Neither of which require guns or brute force"
A court decision is enforced with guns! If you do not comply with government regulations or refuse to pay taxes it comes down to brute force. If you do not pay your property tax for instance police will come to your house and remove you with guns drawn and your house will be sold to pay the taxes. If you refuse to comply with government regulations you will be escorted by armed police to jail.
No corporation or bank in the world has the these powers without the strong arm of government.