The London Interbank Offered Rate, or LIBOR, scandal is growing by
the minute and is shaping up to be one of the largest, if not the single
largest, financial scandals of all time. This has the potential to make the massive conflicts of interest at the Federal Reserve and the $16 trillion in “emergency loans” given out by the Federal Reserve look reasonable.
For the uninitiated, as it were, the scandal centers on British financial institution Barclays, the former CEO of which testified yesterday before the British Parliament.
Bob Diamond’s testimony on July 4, 2012 was almost painful. Diamond fell back on the incredibly tired excuses used by the criminals in the financial sector which were accurately summed up as “a long version of ‘It was awful, but don’t blame me.’”
LIBOR is, to put it in a crudely simple fashion, is the fluctuating rate at which banks can borrow from each other. However, this isn’t just a rate which affects UK banks.
Indeed, the LIBOR is used as an indicator for many of the world’s various fluctuating rates spanning a wide range of so-called “financial products.”
This is because the LIBOR is used as a rough indication of the level of confidence between one bank and another, with high rates indicating a low level of confidence and uncertain financial stability.
One of the most important, although hardly surprising, aspects of the scandal surrounds an email from October 29, 2008 written by Diamond to then-CEO John Varley
The email allegedly details a conversation between Diamond and deputy governor of the Bank of England, Paul Tucker, held just earlier that day in which Tucker actually encouraged Diamond to artificially lower LIBOR rates.
A Barclays’ memo to the Treasury Select Committee released by the Telegraph on July 3 also reveals, “Subsequent to the call, Bob Diamond relayed the contents of the conversation to Jerry del Missier [then head of markets at BarCap].”
However, the memo also claims, “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.”
For the uninitiated, as it were, the scandal centers on British financial institution Barclays, the former CEO of which testified yesterday before the British Parliament.
Bob Diamond’s testimony on July 4, 2012 was almost painful. Diamond fell back on the incredibly tired excuses used by the criminals in the financial sector which were accurately summed up as “a long version of ‘It was awful, but don’t blame me.’”
LIBOR is, to put it in a crudely simple fashion, is the fluctuating rate at which banks can borrow from each other. However, this isn’t just a rate which affects UK banks.
Indeed, the LIBOR is used as an indicator for many of the world’s various fluctuating rates spanning a wide range of so-called “financial products.”
This is because the LIBOR is used as a rough indication of the level of confidence between one bank and another, with high rates indicating a low level of confidence and uncertain financial stability.
One of the most important, although hardly surprising, aspects of the scandal surrounds an email from October 29, 2008 written by Diamond to then-CEO John Varley
The email allegedly details a conversation between Diamond and deputy governor of the Bank of England, Paul Tucker, held just earlier that day in which Tucker actually encouraged Diamond to artificially lower LIBOR rates.
A Barclays’ memo to the Treasury Select Committee released by the Telegraph on July 3 also reveals, “Subsequent to the call, Bob Diamond relayed the contents of the conversation to Jerry del Missier [then head of markets at BarCap].”
However, the memo also claims, “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.”