back to article How to screw LIBOR and alienate people

The financially illiterate arts graduates MPs who tried to question Bob Diamond last week never stood a chance of getting down to how it was possible in the first place to screw with the single most important set of numbers in finance. So if you know an MP or someone at the Financial Services Authority, pass this on to them. …

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Thanks for the explanation, Dominic. My time in Financial Services (never in banking, thank $DEITY) has left me knowing what LIBOR is and how it's calculated. In my naivety, however, I'd assumed that the rates submitted by the various banks had some basis in reality; that Bank X had really (or, at least, could have) borrowed money overnight from Bank Y at the rate they'd quoted. It turns out that they could and would just make up any old rubbish to suit their needs and submit that. I wonder if any of our esteemed political leaders were aware of this?

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They are buying and selling money - the price is the same made up number as buying and selling houses, gold, Van Gogh paintings or props from episodes of Star Trek.

You punt what you think people will pay, the only difference here is that there are only a few sellers and they all collude on the prices - just like LCDs, DRAM, CPUs, and everything else in computers.

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Anonymous Coward

buying and selling money

I think the trouble with the system is that banks and Governments treat money, as a commodity in it's own right to buy and sell for profit. Where their true role should be a guardians of capital and to purely administer an efficient system where money is a means of exchange, in accordance with the physical assets in an economy as a whole.

If you were to commoditise money as it stands today, it would be nothing more than the promise of a Government to exert labour out of existing and unborn generations of citizien workers. i.e. Debt to be paid off by future tax revenue. The way Government debt is accumulating today and when it is apparent that there is no guarantee that future generations will submit to this prior arrangement. Then whole system and the value of money will fail.

On a personal level I will always see money as "choice". i.e. The lotto winner saying "money doesn't bring you happiness" = an idiot that had too much choice and didn't use it wisely.

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Anonymous Coward

The curious thing about all this..

... is that the government then and now want lower LIBOR rates so as to make it easier for businesses and individuals to borrow and thus help in an economic recovery.

Barclays are accused of fixing the rate so that everyone's borrowing is cheaper.

Go figure.

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Re: The curious thing about all this..

I think the point you're missing is that Barclays weren't fixing the rate for the wider good, they were doing it to mask the impact of market mistrust, which then might arguably have avoided a run against them, and kept them in business without government intervention. You might still see that as a better outcome than a part nationalisation, but actually Wanklays still required government intervention to stay afloat - excepting that it was the government of Qatar that ponied up a big chunk of the cash (plus a few walk on parts for the likes of Abu Dhabi and others). You might still say that was beneficial to the UK tax payer, but of course our agents in government would simply have minted the cash out of thin air anyway, and regardless Barclays behaviour still amounts to fraud.

Look at it this way, if you lie materially about your income or outgoings on a mortgage application, that would be deception that could be punished under a variety of laws - and if it came to light the bank would probably reposess your house (as they would call in your debt, and other than by lying again you'd not get a new loan elsewhere). Potentially they'd report you, and you'd be prosecuted (I've seen mortgage fraud cases reported before).

Would you support different standards of honesty for overpaid City trading twats compared to yourself? All in some greater good, of course.

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Re: The curious thing about all this..

Isn't the analogy more like when you went to buy a car you said to the sales guy that a competitor was doing it cheaper and so convinced them to drop their sales price a bit. The fact that nobody had offered it to you cheaper is besides the point. It is not fraudulent to say that someone else is doing a better deal than they are.

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Re: The curious thing about all this..

'I think the point you're missing is that Barclays weren't fixing the rate for the wider good, they were doing it to mask the impact of market mistrust, which then might arguably have avoided a run against them, and kept them in business without government intervention.'

If Barclays suffered a run as a result of telling the truth about it's borrowing costs, we would all be much poorer as a result. Such a run would dwarf the Northern Rock run.

If it really were the case that Barclays lies prevented a run (and that is hardly proven), then I am in favour of the lies.

This will horrify the saints on these forums, but I believe self serving lies that happen also to prevent catastrophes are good lies.

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Anonymous Coward

Re: The curious thing about all this..

Just because the government *want* something though, it doesn't mean that people should be excused for breaking laws that coincide with the government's desire.

cf: Key figures might really like to see many NotW staff dead in a ditch, but they wouldn't let someone off for the murder if they were caught red handed.

The government and the law courts are two separate institutions.

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Re: The curious thing about all this..

"It is not fraudulent to say that someone else is doing a better deal than they are."

Technically it is, because the liar is telling the porky to secure a commercial benefit. That meets most dictionary definitions of fraud. As part of the normal bartering process you and I might agree that it is acceptable, and that the seller is at liberty to walk away, and will also lie back about the terms of discounts that they are able to make, on delivery promises etc etc.

However, in the case of Barclays, the fraud was perpetuated to avoid an unwelcome outcome for bank management, and undoubtedly to secure fat bonuses for the traders, and the difference is that in your example the seller could have refused to sell at a discount, but Barclays were manipulating the basis for trillions of pounds worth of international contracts, and those who might be negatively affected would not be able to change the rules and say, "Don't like that, can we use the Dubai Interbank Offered rate instead?"

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Vic
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Re: The curious thing about all this..

> It is not fraudulent to say that someone else is doing a better deal than they are.

Yes it is.

Section 2 of the Fraud Act 2006 says :

"A person is in breach of this section if he—

(a)dishonestly makes a false representation, and

(b)intends, by making the representation—

(i)to make a gain for himself or another, or

(ii)to cause loss to another or to expose another to a risk of loss."

Vic.

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Re: The curious thing about all this..

"This will horrify the saints on these forums, but I believe self serving lies that happen also to prevent catastrophes are good lies."

Looking at the mushroom cloud that is still growing over the City, I have to say that I'm not sure that catastrophe was avoided. If Barclays hadn't been doing this, then they'd have needed to tap the government for funding, as many other banks did, but most have since paid it back with interest - job done, move on. And those loans (as opposed to equity investments) were rather profitable for the taxpayer, because the money was just magicked up. So you ask me for a fiver to tide you over, I print a new fiver, hand it to you, you pay me back six quid, and I then throw away the fiver and keep the quid.

Now we can expect a vast volume of expensive court cases round the world, and the reputation of the City has taken a bigger knock than the financial crisis itself has delivered, because that was largely simple, everyday incompetence, but this is systematically dishonest. I don't see that the outcome has been good for the City (which generates a big chunk of our overseas trade), or for the taxpayer. Don't forget that Barclays weren't the only people involved - merely the first named. There's plenty of mileage in this yet.

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Re: The curious thing about all this..

I stand corrected

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Re: The curious thing about all this..

Well technically they could have done. But they had to do when they agreed the deal. Caveat Emptor surely?

Why choose to base my deal on something that relies on the honesty and integrity of those who may have a vested interest in manipulating it. It is not right if they do then manipulate it but I can hardly claim that I have no choice in doing the deal.

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Re: The curious thing about all this..

I'm all for "caveat emptor" when a deal is fairly struck...

But Barclays was in the position where if they took your funding away, your firm would collapse and they dressed the LIBOR swaps up as insurance to people who couldn't understand them. My *introduction" to Swaps course book is >200 pages and uses maths I did at university.

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Re: The curious thing about all this..

Although thinking about it if I honestly make a false representation I am free. So if I say "I don't think this is true but if it was would you lower the price" I am not committing fraud. So if I make my Libor return and "say we know this is not the correct figure but it is close because by its very nature it is a flawed calculation" is that still fraud.

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Vic
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Re: The curious thing about all this..

> we know this is not the correct figure but it is close because by its very nature it is a flawed calculation

That would seem to be a "best-effort" approximation.

> is that still fraud

Probably not.

The same section of the Fraud Act 2006 says :-

"A representation is false if—

(a)it is untrue or misleading, and

(b)the person making it knows that it is, or might be, untrue or misleading."

If the statemement, as above, is not misleading, then it would not fall under this Section.

Vic.

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Re: The curious thing about all this..

One key word here is "reckless", you may not have thought through the consequences of your actions, but you intended to do the thing that caused them.

ie if I shout *FIRE !* in a crowded cinema and someone gets hurt or killed then it is my fault, even though I didn't know that person would be crushed.

And yes there is judgement here, look at your own finances: You may pay 4% on your mortgage and 24% on your credit card, so which is the right rate the reflects the market and your credit status ?

I could argue that since the mortgage is secured and the credit card isn't the 24% is the more accurate figure, you of course would argue it was nearer 4%

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Re: The curious thing about all this.. (@Dominic Connor)

"they dressed the LIBOR swaps up as insurance to people who couldn't understand them"

Maybe I misunderstand but as I see it:

* I do my homework so I understand the seller's complex guff, or

* I force the seller to explain it to me in ways I can understand, and can evaluate with my simple spreadsheet models, and that I can hold them to legally in a way that's satisfactory to me, or

* I do neither and choose to believe the nice man so I get screwed because I'm stupid.

Caveat emptor maintains.

I admit there are a shocking number of people in the third group but that's an observation not an excuse.

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Re: The curious thing about all this.. (@Dominic Connor)

>>"they dressed the LIBOR swaps up as insurance to people who couldn't understand them"

> I force the seller to explain it to me in ways I can understand, and can evaluate with my simple spreadsheet models, and that I can hold them to legally in a way that's satisfactory to me, or

But in this case they sold you swaps as an insurance. eg. Buy this product and you are covered if LIBOR changes and your interest rate goes up. But the same people who sold you the insurance are able to rig the LIBOR rate.

It's as if the person selling you life insurance is also repairing your car's brakes

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Re: The curious thing about all this.. (@Dominic Connor)

It's as if the person selling you life insurance is also repairing your car's brakes

Not quite - if they're selling my life insurance, it's in their interest that I don't die, so they'll do a good job.

This is more like the person repairing your car's breaks casually mentioning "By the way, I've just taken out life insurance on you, I win big time if you pop your clogs. There, as good as new..."

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Re: The curious thing about all this.. (@Dominic Connor)

@Yet Another Anonymous coward, @Stuart Moore

Not the same thing. Fixing libor --> heads must roll. Shafting numpties who won't perform their own due diligence is another (again: "they dressed the LIBOR swaps up as insurance to people who couldn't understand them". That's taking advantage of stupidity. Illegally warping libor denied necessary information to the buyers - totally other thing).

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Interesting

Enjoyed that - thanks.

Now could you explain why buying corporate debt is better than buying back national debt (as far as QE is concerned).

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Re: Interesting

I would imagine that one aspect would be to support businesses so that they

i) Survive

Leads to retention of staff - greater tax receipts from employees + no benefits paid out

ii) Prosper

Leads to greater corporate tax receipts + possibility of hiring new staff (tax receipts, people coming off benefits).

Of course, that's the theoretical ideal: in reality, YMMV...

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Re: Interesting

The problem is *which* firms to support ?

The government does not have the competence and the banks do not have the will.

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Coat

Re: Interesting

I beg to differ - for example there's...

um...

ah... I see.

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Re: Interesting

One reason is that the BoE seems to own about half of the national debt at present anyway.....

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Devil

Re: Interesting

Previously, when the Moon was a green, lush planet teeming with life and intellectual activity, the Lunar Central Bank was situated exactly where Tycho Crater is now.

Then the "The General Theory of Employment, Interest and Mooney" went to the printers...

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Re: Interesting

>The problem is *which* firms to support ?

1, Banks - have to look after a chap. Old friends and everything

2, Defense companies - don't want to look weak in the tabloids. And they do a good line in non-execs when you retire.

3, Anything in a marginal constituency - at least tide them over till after the next election

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Getting a basis in reality

How difficult would it be to have a provable rate from the day before in conjunction with the estimates for today?

Technically feasible but politically impossible would be my guess.

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It would be conjecture...but

Is it possible to get an estimate of how much the bank stand to gain vs how much some third party (that'd be the UK population for me) stands to lose? If I read it right, it sounds to me like the bank are prepared to commit an act that makes them say £10 when it actually costs someone else £100, or do they simply make what someone else loses?

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Re: It would be conjecture...but

Joe public isn't really directly affected by LIBOR rate fixing. We are, after all, talking about a few basis points (from 3.5% to 3.55%, say) rather than a doubling - which latter really could affect your mortgage repayment. It's more analogous to the old trick of stealing a penny from each of 10 million accounts to make £100,000.

Like most derivative trading (as opposed to real investment), betting on movements in the LIBOR is a zero-sum game. If you've made a million profit, someone else must have taken an equivalent loss.

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Re: It would be conjecture...but

Sorry @Chris Miller, that is fundamentally wrong.

Barclays and some other banks used their position as lenders in a tough market to coerce small-medium firms to buy swaps, basically a form of insurance against interest rate moves. Unlike insurance a swap can cost you *far* more than the premium if it goes against you.

If you work for firm whose swap contract with Barclays was based on LIBOR, it is entirely possible that it is under grave financial stress because of a rate that Barclays has admitted screwing with.

As you say this does not directly affect mortgage rates much, but it can affect whether you have a job to pay your mortgage.

Lastly, derivative trading is not a zero-sum game. On average it increases the amount of wealth in the economy, a fact that the actions of Barclays et al has obscured.

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Re: It would be conjecture...but

"Derivative trading is not a zero-sum game" It does increase wealth but only in the same way QE creates wealth.

You can tell that by the way we are all so much better off right now.

What really annoys me about this 'ere modern accounting is its very easily modelled on computer (shit even this laptop of mine can do over 1,000,000,000 floating point calculations a second so money is a piece of piss) but when the models show the truth its the model that's somehow wrong not the actualite.

Some say economics is an understanding of the human condition. Only if the human condition is ignorance and malicious greed. All I can say is its not the science it could so easily be.

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Re: It would be conjecture...but

I don't agree it's fundamentally wrong. 99.99% of the population (which is what the OP was asking about) haven't taken out interest rate swaps, and so aren't affected. And if your firm is going bust because of an interest rate swap, they shouldn't have taken out the swap - Barclays fiddling the rate may be the last straw, but the putative firm would still be in difficulties without it. (Swaps have been mis-sold by people on commission - who'd have guessed?)

And derivative trading is essentially zero-sum - for every position taken, someone else is taking the opposite stance (though I'm sure there are some exceptions) - this is completely different from buying Apple stock in 1980, since when you would have made a 22,000% profit, but no-one else can point to a balancing loss. The fact that some middle-men (including traders) can make a lot of money by creaming a bit (or a lot) off the top doesn't affect that - and I agree that this increases the wealth of the economy, and may even increase tax take a bit.

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Re: It would be conjecture...but

Yes, Tom we *are* better off partly due to derivatives trading. Some of it has gone badly, but the net effect is still positive.

And no, it is not easily modelled on a computer, it is very very hard and whole floor of banks consist solely of computers trying to calculate the price and risk of things.

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Re: It would be conjecture...but

The net effect is still positive? Is this result from the computers whiring away in the banks or from reality?

Derivatives et all ride on the real wealth generating economy and every time they are given a free hand they grow to the point where their parasitising brings that real economy to its knees. Its only by regulation that they were kept at a level where they don't kill the economy which gives them many years of statistical 'proof' that they contribute to wealth.

If you remove the imaginary fiat money that derivatives and the banks et all supposedly generated from economic figures and look at the economy these things are supposed to stimulate the picture is not good for them.

I'm glad the economy is so much better than it was when I was a child and my father could work reasonable hours to keep a wife and kids comfortably off whereas now I have the luxury both partners working their arses to service a huge debt that, when looked at closely would buy 10 times the goodies that supposedly improve my wealth over that of my father.

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Re: It would be conjecture...but

Barclays had written lots of interest rate swap contracts. Higher interest rates meant they had to pay out more money on these contracts. The total value of the LIBOR swap market was around $300tn, and Barclays is one of the largest players in that market. Barclays weren't the only bank involved in this scam, there were other major players who also stood to benefit from it.

That brings us to the SME swaps scandal, where lots of small businesses were sold unsuitable swap contracts. For example the contracts went on for a lot longer than the duration of the loan they were insuring against. As a result of the LIBOR scandal these businesses had to pay out a lot more money to Barclays and other banks than they should have done, and quite a few went bust or had to downsize as a result, leading to redundancies and unemployment. That does affect Joe Public directly.

Turning to compensation. The entire GDP of the UK is $2.2tn, so 0.7% of the swap market paid as compensation would wipe that out completely.

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Re: It would be conjecture...but

"Yes, Tom we *are* better off partly due to derivatives trading."

You may be personally. Most people aren't.

Perhaps you missed that minor thing that happened in 2008. You know, the one caused by casino gambling which the rest of us are still picking up the tab for - because somehow we're responsible for the gambling debts of the inconvenienced ultra-rich?

I think you need to get your head out of your arse and spend some time in the real world - that place where solvent businesses can't get credit because banks won't lend to them, where sovereign democracies are being bullied by whacko nutjobs from the IMF and the ECB who think that depressing an economy will somehow make it grow, and where disposable income is shrinking rapidly for most people.

We're *better off* because of this? What colour is the sky on the planet you live on?

What we should have done was taken Iceland's lead, nuked the unpayable settlements, and thrown the architects of chaos in jail.

Luckily it seems that after LIBOR - and you and I know LIBOR was never the only game in town - jail time may happen anyway.

And probably nuking too. The banks are only nominally solvent because of QE. If there's another loss of confidence - and I can't begin to imagine why there might be - we can look forward to fun times for all.

And all on the back of derivatives, CFDs, CDSs, and other speculative 'instruments' that are almost totally divorced from real economic activity and real wealth creation.

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Anonymous Coward

Re: It would be conjecture...but

So many incorrect presumptions in one post....but I'll just take up a single point:

"What we should have done was taken Iceland's lead, nuked the unpayable settlements, and thrown the architects of chaos in jail."

Iceland was bullied by the UK in particular, leaving Iceland in penury, whilst bailing out rich British twats who ignored the exemplar of BCCI and invested their loot wherever they could see an extra fraction of a percent of return offered by foreign banks about whom they knew nothing. The whole affair is a stain on the UK's reputation.

But more significantly, you might have noticed the attempt to pin some blame on the Tchenguiz brothers, resulting in dawn raids by the SFO, and an investigation that blew up in the SFO's face. Fairly early on in that episode, before it came to court, a politically connected contact of mine made the claim that both Icelandic and UK authorities knew that Technguiz was a mere bit part player in the Icelandic banking collapse, and that the real architects were far more important figures in the UK perhaps including the FSA and BoE, and in particular in the Icelandic political establishment. if you look at those jailed so far in Iceland, we're talking about low level individuals, not key decision makers. To be fair the former prime minister is also on trial, but do you think he did it alone?

Tchenguiz was allegedly being pursued because it was expected that he could be villified, and because neither the UK or Icelandic politicians and bureaucrats were too worried if he went down, whereas their mates were going to be protected. You can decide whether you want to believe that, but isn't if funny that nobody from the heart of the City is on a trial, but a famous foreigner with some tangential involvement finds themselves in the dock? And the attempt to pin something on the older Tchenguiz brother left the SFO with a judge labelling them with the term "sheer incompetence".

Curious as well that RBS did exactly the same as Kaupthing, we actually had to bail them out with UK taxpayers money, but yet we haven't prosecuted a soul. Another things that makes you proud to be British, eh?

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Anonymous Coward

Re: It would be conjecture...but

Derivatives do provide a benefit. Without them it is extremely difficult to manage and reassign/transfer risk. Misuse is a very big issue but we'd certainly be pretty screwed without them. How are you going to get a fixed rate loan when LIBOR is floating unless you can trade a swap? How are you going to ensure against future moves in exchange rates or crop prices without futures and forwards? Would you fancy being a farmer and producing your crop for an unknown price vs a hedge-able amount?

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Getting a basis in reality

@RichardIV : Many numbers are found by looking directly at transactions, listed share prices, the FTSA aggregate etc. If there were a central counterparty (as exists for shares and option) through which interbank borrowing was conducted scooping the numbers would be trivial.

What political issue do you see ?

The financial issue is risk, if all interbank borrowing went through one outfit, then if that went titsup it would by necessity be a bigger mess than any plausible set of bank failures.

It is possible to directly tap into bank systems to see what they borrow and lend, this is not *very* hard, I have personally directed a project that does something like this and would be happy to do it again for a fixed price that is in the low millions of quid because I did it before and it came in on budget (yes ,really).

But I won't get it, partly because I am not a member of the cartel that supplies government IT and frankly there are others who could do it, however the set of outfits I'd trust to do it and those with a chance of getting the bid do not intersect.

(9 months, 2 million quid including passing both bank and government security standard, and a bunch of analytics)

Another reason it won't happen is that of course the sucking system would have to "believe" the numbers fed to it by the bank. That's easy to screw with. However it would be tough to do it in a way that would not leave traces if you went and looked. The fact that an audit trail existed would be a useful but incomplete deterrent).

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Re: Getting a basis in reality

"the set of outfits I'd trust to do it and those with a chance of getting the bid do not intersect."

"the sucking system would have to "believe" the numbers fed to it by the bank"

^ these, plus the political momentum to get the politicians through the banks' making out that it would be far too expensive and complicated and would doom the economy(*)

(*) Stop them doing quite nicely out of such information asymmetry.

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Headmaster

Nice picture

Nice picture of the Bank underground station sign - but why has it got the Mansion House in the background? Wouldn't it be more relevant to use a picture taken from the opposite direction with the Bank of England in it?

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Meh

At the height of the battle of Britain, parliament debated at length the legality of bombing munitions factories because they were private property and not covered by the declaration of war.. the world had not woken up to total-war, and some MP’s were distracted by the details.

Fast forward seventy years and the credit crunch threatened financial Armageddon more serious than “simply” the interbank lending market, demanding unprecedented coordinated action to flood the market with liquidity and print money. While the Bank of England continues to provide unlimited “free money” to banks, LIBOR pretty much a notional measure. Fretting over LIBOR in total-economics is like fretting over property in total-war.

At the height of the crisis LIBOR rates were so high relative to bond-futures that the money-markets froze and yield-curves (with LIBOR on the short end and futures on the long) pointed negative breaking financial models for every wholesale financial product including equities. In the circumstances it’s incredulous that politicians did not lean on Bankers (just as incredulous as Jeremy Hunt being the first to use an advisor as a back-channel), but if you’re going to mention a short rope at Blackfriars, you’re going to use a clean-line.

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Flame

Getting to the truth

There are records of what Bank X lent to Bank Y and the rate of that loan.

There are records of what Bank X and Bank Y reported to the LIBOR committee, and the people that made those reports.

It is therefore a straightforward job to identify rogue reports, given access to the data.

It is therefore a straightforward job to identify those banks and individuals that reported rogue rates.

In the interests of national security (it's been used as justification for much less) demand those records. Identify, charge and prosecute. Get to work.

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Re: Getting to the truth

>There are records of what Bank X lent to Bank Y and the rate of that loan.

Yes, but you'd have to filter them for ones that matched the maturities used in LIBOR, fiddly but not impossible.

>There are records of what Bank X and Bank Y reported to the LIBOR committee, and the people that made >those reports.

I'd bet money that the records who submitted are incomplete and in any case they were being asked to make a judgement, not state a fact.

>It is therefore a straightforward job to identify rogue reports, given access to the data.

It is not straightforward, having some knowledge of these systems I reckon it would be a couple of man years per bank.

>It is therefore a straightforward job to identify those banks and individuals that reported rogue rates.

Sadly it is tough.

Firstly you'd have to show that *this* person typed *that*, the way the systems are set up makes that hard and may be impossible. IDing the bank is easier.

>In the interests of national security (it's been used as justification for much less) demand those records. >Identify, charge and prosecute. Get to work.

It's scary that that national security legislation is now getting used for pretty much everything from Iceland's financial issues (yes really) to who has put the wrong thing in their recycling bin.

As it happens, you don't need it anyway, the FSA has the powers to do this, but you don't make incompetent people more useful by giving them more authority.

To get as far as can be done, I'd out the number at 4-5 million per bank, including forensic costs and some good statisticians and DBAs, so somewhere between 75-100 million.

The stats I'd start with are negative correlation between their actual borrowing costs and quotes and then short term positive correlations pairwise between banks. I'd be 99% confident of identifying some banks who did the wrong thing, 90% sure of identifying some people who input numbers that were wrong, but <20% of getting evidence that could be used in court.

The only 100% I have is that >50% of the people responsible left no footprint on any system.

A criminal trial would be horribly expensive,, I'd guess 5 million per person tried with at best 50% chance of conviction.

You might argue with the 50%, it's just a number, but what probability of conviction would you choose at £5 million per head ?

Is it worth £150 million to convict (say) 5 rogue traders for acts that would get them 1-2 years in prison ?

That's 15-20 million per year, maybe with political pressure on the judges you might get 4 years, still a lot of money.

Put it another way...

How much would you be prepared to take out of spending on things you like per year of imprisonment for the guilty ?

Be very clear that the taxpayer will pay for this, *you* will pay for this and the money doesn't just appear.

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Re: Getting to the truth

It's public information too. OIC. Those are the rates at which deals actually took place.

So, look at the spread between Libor and OIC. Declining from 2000 to 2006/7, then blows out in the crash.

This is actually well known (in certain circles I mean). Available on a Bloomberg screen near you, certainly.

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Vic
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Re: Getting to the truth

> I'd be 99% confident of identifying some banks who did the wrong thing

Isn't that a "Murder on the Orient Experss" moment? "They all did it".

> Is it worth £150 million to convict (say) 5 rogue traders

Yes.

The value of such convictions is not in getting some sort of revenge against those traders, it is to discourage others from following in their footsteps.

Vic.

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Re: Getting to the truth

"Be very clear that the taxpayer will pay for this, *you* will pay for this and the money doesn't just appear."

Oh, the irony. Yep, that's right - money only 'just appears' for banks, not for anything else...

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Re: Getting to the truth

"The value of such convictions is not in getting some sort of revenge against those traders, it is to discourage others from following in their footsteps."

mmmm, dunno about that, it only seems to discourage people until a new cycle of grads get to the required position to execute their "brand new scheme" to fleece someone. Drexel, Leeson, etc - still get insider trading, still have boiler rooms.

short term-ism and greed is the killer - if party a can screw party b for 1mm, get a bonus and be gone before the contracts up, party a's already got their pen out. Merrill and Melvin would be spinning.

Cheers

D

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