Libor

The Guardian has:

Quote:

More than a dozen banks, including Royal Bank of Scotland Group plc (NYSE:RBS), are under investigation by regulators in the US, Europe and Asia for suspected rigging of the London interbank offered rate (Libor), which is used to price trillions of dollars of financial products. Royal Bank of Scotland Group plc (NYSE:RBS) (LON:RBC) chief executive Stephen Hester has already warned that the bank is likely to face fines. It is thought that Barclays PLC (LON:BARC) (NYSE:BCS) received a reduced fine for settling early.

Mann is asking George Osborne whether he or Treasury officials have been briefed on the issue, and when the FSA inquiry into Libor fixing at Royal Bank of Scotland Group plc  (NYSE:RBS) (LON:RBC) began. He said: “It’s not credible that UKFI, who represents the main shareholder ie, the taxpayer, was not kept informed of the investigation and it’s seriousness. Either George Osborne is failing to run the Treasury properly or he is failing to tell parliament what he knows.”

Now we are really moving into murky waters!

If on the one hand a nationalization of a bank is – all things considered – the least deplorable outcome, there will naturally be losses: Nationalizing banks is not something you do to benefit the community – in spite of what Marxist weed-growers might think – it is something done out of necessity to limit the damage to the economy.

But manipulating the interest rate f.i. is shifting the tax burden – it will mean less tax paid by some in exchange for more being paid by others – even though they call it something else. That is also splendid; but such thing should be included in a budget. The RBS practice is somewhat akin to some police departments that in a budget squeeze start handing out more speeding tickets – sometimes with a “commission” to the officer. There is a difference between service and business.

Quote:

Tan filed a lawsuit against the bank late last year, claiming the practice of traders making requests to the bank’s rate setters was well known by RBS management.

Royal Bank of Scotland Group plc  (NYSE:RBS) (LON:RBC) is disputing the allegations, saying Tan was dismissed for gross misconduct and that it followed its company disciplinary policy in deciding to terminate his contract. It has already announced that it has sacked several employees for misconduct as a result of its investigations.

Indubitably said Mr. Tan has misconduct on his conscience and is/has tried to get back at management. The problem is the truth of his allegations. Banks are very reluctant to let employees go – one reason might be that the employee might have covered his back with documentation against management. Now we are seeing the oldest police tool put into action: Disgruntled former employees – and their documentation is generally top notch.

Quote:

Barclays PLC (LON:BARC) (NYSE:BCS) has appointed Sir David Walker as chairman from 1 November, when Agius will step down, but is still looking for a replacement for Diamond.

Last week MPs accused Diamond of being “highly selective” in the evidence he gave to their emergency hearings on rigging Libor interest rates. The Treasury select committee also criticised the Bank of England and the Financial Services Authority, the chief City regulator, for not acting sooner: the FSA’s investigation of Libor was two years behind the US.

Now we might be getting somewhere! That is another police tool: The outraged MP – there is always a handy back bencher (or in the US a marginal representative) yearning for some inflammatory profiling – bit surprised that no initiative for bringing back hanging has appeared as of yet. Generally this is a broad hint to Mr. Diamond (couldn’t he have chosen a less precious stone?) to start informing on his colleges and co-workers.

When will this be over? Probably it will go on for a very long time, LIBOR is only the overture. The significant part is the very limited understanding the bankers have politically.