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Steffan
Original Poster
6,178 posts
97 months
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Ozzie Osmond said: Steffan said: I did find the constant "I knew nothing of this", very unlikely, but there it is. That is his defence. The "James Murdoch" defence as it might be known! AKA not much of a defence at all. Bloody hell Ozzie I actually agree with you. That's almost a first I have agreed with you on occasion before. You are absolutely correct the "James Murdoch" defence. Murdoch and Diamond IMO will both disappear from the UK. I have no doubt both could be charged with wrongful trading. As a main board PLC director, in post , over a period of years, the defence of "I did not know" is simply not a valid defence. But not being in the UK and being an American citizen in the USA does make extradition virtually impossible. I doubt that either will serve time, but, I do think, that the bonus of Mr Diamond is under some threat. As it should be in the circumstances. How can you have a bonus when all sorts of shenanigans have been going, within the organisation of which your were a main board director and Chief Executive? Answer is, I think, you cannot. Good.
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Mermaid
12,481 posts
40 months
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MP's reject labour request for judge-led inquiry.
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Steffan
Original Poster
6,178 posts
97 months
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Mermaid said: MP's reject labour request for judge-led inquiry. Which is unsurprising, given the problems that the Leveson inquiry is causing Hunt, Cameron, Osbourne and all the other coalition members apart from possibly, Cable. The Bob Diamond testimony told us much more about what was wrong with Barclays and the rule of Mr Diamond than i thought it might. The suggestion from BD that he knew nothing of the rates fiddle until a month ago, floored the MP's totally. I did not believe a word of it, unsurprisingly, and even if it were true, which I think is really risible, it would simply identify another reason why the Chief Operating Officer, BD was entirely ineffective in correctly managing Barclays, and give further reasons for his dismissal and withholding his bonus. I find the plethora of comments, in the media, from individuals, many it would seem working in finance, that it is ridiculous to expect Board members to know what has been going on. within their own business, most informative. These individuals clearly have no understanding of the responsibility and duties of such posts, as defined in the Companies Acts and the consequences to the directors that such failures must involve. Were this the case charges such a corporate manslaughter, wrongful trading and so forth could never be brought against directors. They can and are, because the " Not me Guv" defence simply does hot hold up. That was and is the intention of the relevant legislation. Directors of quoted PLC companies cannot escape quite that easily. As many now know to their cost. My interest in this, now, is to get the truth out before the reforms, currently proposed to banking are made. I think we face a problem here that is far more widespread, dangerous and deep set, than, we had appreciated with the limited information available before this latest series of revelations took place. If, as it would seem, this rigging of interest rates was as widespread within the Banks, as it would now appear to be, then we could well be looking at substantial, conspiracy to defraud charges and false market charges,against PLC directors in more than one institution. I cannot think of a more serious case within the UK. We need a cultural change in banking, and we need bankers to become primarily concerned with customer service and maintaining confidence in banks. We appear to have had chancers acting as concert parties in order to rig the system. These latest revelations suggest systemic failure in both the attitude and approach within banking, to me and are deeply disturbing. This requires a totally new approach to the reform of banks, if they are to be trusted again.
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Cheib
6,168 posts
44 months
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Guam said: Eric Mc said: I presume there were rules, regulations, guidelines and formulae that were agreed between the banks and the regulators for arriving at the LIBOR rates and that the problem is that these methods were simply ignored in order to bolster the bank's position and mask its problems.
Obviously, the enquiry, whenever and however it happens, should uncover what was really going on. You may well be correct in that Eric, however this thing is really as clear as mud at every level. As an outsider it appears to me that the banks were allowed to set their predictions based on their best estimates of the forwardgoing costs. Whether an institution made money as a consequence of that will almost be an irrelevance as thats what Banks exist to do. IF <big if I accept> my view is an accurate representation of the position, then I fail to see how there would be any criminal wrongdoing at all. This one is going to be almost impossible to get through the courts I reckon. The average jury has enough of an issue with a a "Normal" fraud case. I cant see how this could ever result in more than some further scapegoating and a supposed tightening of the regulations. It seems to me that you cant as a society give people free reign to do a thing, then whine when the law of unintended consequences kicks in, when they do that which you have allowed them to do? Cheers That is a pretty good grasp of the situation and the reality is that the Libor submissions are an art not a science that may sound ludicrous but it's true. Each currency has a libor fixing panel of banks...these will be made up of the obvious bulge bracket what I would call "money centre banks" i.e. Barlcays,RBS, HSBC, Citigroup etc and then a group of banks relevant to that currency so for say JPY it would include some of the Japanese banks as they would be most active in that currency. For each currency they have to submit a curve of data points overnight, one month, two month, three months and so on out to twelve months. Now whilst Barclays on any given day will borrow vast quantities of US$ for the various different dates it might not borrow any AU$ at all but it still has to submit the full data set for Au$ which is where the art comes in. A trader has to submit a best guess of where they think they could borrow money.....that is pretty much what Libor often is a banks best guess of where it COULD borrow. This Libor "scandal" has two elements to it. Did banks submit false Libor levels during the 2008 financial crisis and did the regulators know about it? The answer to that is 100% yes. I know that for a fact, former colleagues of mine are involved in these markets and I know the conversations they have had directly with central bankers both here and across the atlantic. Central bankers were doing it for good reason and it most definitely wasn't so the banks could profit from it....the question is how much influence politicians had on it. Personally what we have now is petty point scoring form politicians and not much more...that said there might be the odd central banker sleeping nervously as those conversations weren't just about libor fixings. They would have been about the general market....Paul Tucker for one ignored advice from people at the banks before even Northern Rock blew up in 2007 there were issues....and ignored it. The second and entirely separate issue is did traders knowingly submit false libor levels to increase their and thus the banks profitability. The answer to this is definitely yes but the amounts involved will be much,much smaller than people think. It's almost impossible for an individual bank to move the libor level by more than a hundredth of one per cent so for there to be a meaningful profit to be made positions would have to be in the many tens of billions. It's important to remember that they are only moving the interest rate for one day's fixing so for example is someone has a position of £10,000,000 and Barclays influenced the Libor fixing by 0.01 the loss would be £275. So if the total market exposure to that Libor fixing was £1 trillion the total loss would be £27mil spread across many,many institutions.
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RYH64E
3,059 posts
113 months
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Cheib said: That is a pretty good grasp of the situation and the reality is that the Libor submissions are an art not a science that may sound ludicrous but it's true.
Each currency has a libor fixing panel of banks...these will be made up of the obvious bulge bracket what I would call "money centre banks" i.e. Barlcays,RBS, HSBC, Citigroup etc and then a group of banks relevant to that currency so for say JPY it would include some of the Japanese banks as they would be most active in that currency. For each currency they have to submit a curve of data points overnight, one month, two month, three months and so on out to twelve months. Now whilst Barclays on any given day will borrow vast quantities of US$ for the various different dates it might not borrow any AU$ at all but it still has to submit the full data set for Au$ which is where the art comes in. A trader has to submit a best guess of where they think they could borrow money.....that is pretty much what Libor often is a banks best guess of where it COULD borrow.
This Libor "scandal" has two elements to it.
Did banks submit false Libor levels during the 2008 financial crisis and did the regulators know about it? The answer to that is 100% yes. I know that for a fact, former colleagues of mine are involved in these markets and I know the conversations they have had directly with central bankers both here and across the atlantic. Central bankers were doing it for good reason and it most definitely wasn't so the banks could profit from it....the question is how much influence politicians had on it. Personally what we have now is petty point scoring form politicians and not much more...that said there might be the odd central banker sleeping nervously as those conversations weren't just about libor fixings. They would have been about the general market....Paul Tucker for one ignored advice from people at the banks before even Northern Rock blew up in 2007 there were issues....and ignored it.
The second and entirely separate issue is did traders knowingly submit false libor levels to increase their and thus the banks profitability. The answer to this is definitely yes but the amounts involved will be much,much smaller than people think. It's almost impossible for an individual bank to move the libor level by more than a hundredth of one per cent so for there to be a meaningful profit to be made positions would have to be in the many tens of billions. It's important to remember that they are only moving the interest rate for one day's fixing so for example is someone has a position of £10,000,000 and Barclays influenced the Libor fixing by 0.01 the loss would be £275. So if the total market exposure to that Libor fixing was £1 trillion the total loss would be £27mil spread across many,many institutions. Estimates are much higher than that, no idea how accurate http://www.telegraph.co.uk/finance/newsbysector/ba...
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Steffan
Original Poster
6,178 posts
97 months
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RYH64E said: Interesting article. I fear it could be much more. If the facts, now under discovery, show an organised and premeditated rigging by the banks of one of the fundamental rates, that in part, determine the rate every borrower, has paid on mortgages and loans throughout banking, then that sum could all too easily soar skywards. I think this could be far and away the most serious problem the banks have been forced to face since the collapse in 2008. I am entirely unconvinced that the coalition can deal with such a matter effectively. Cameron's U turns will be no good here. Osbourne cannot hide behind the ladies skirts here. This is deeply serious stuff. I await more information with a deep sense of foreboding. I actually hope this turns out to be less serious than it now appears to be. Despite that fact that I intensely dislike the creed of greed that has ruined banking. But this is in my opinion far too serious for our weak willed facile, shallow politicians to correct. I hope that they do not need to. They are not capable of rising to the occasion.
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sidicks
3,231 posts
90 months
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Steffan said: If the facts, now under discovery, show an organised and premeditated rigging by the banks of one of the fundamental rates, that in part, determine the rate every borrower, has paid on mortgages and loans throughout banking, then that sum could all too easily soar skywards. Unless new information has come to light, there is no evidence to show widespread and consistent manipulation of Libor. Hence any commments about the rate being paid by 'every borrower....' are well wide of the mark.  Sidicks
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Steffan
Original Poster
6,178 posts
97 months
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sidicks said: Steffan said: If the facts, now under discovery, show an organised and premeditated rigging by the banks of one of the fundamental rates, that in part, determine the rate every borrower, has paid on mortgages and loans throughout banking, then that sum could all too easily soar skywards. Unless new information has come to light, there is no evidence to show widespread and consistent manipulation of Libor. Hence any commments about the rate being paid by 'every borrower....' are well wide of the mark. Sidicks You will note. I hope , the comment starts with, "If the facts, now under discovery........" I used that phrasing deliberately because we do not yet know the facts. I recognised that and structured my comment accordingly opening with the caveat. It remains to be seen where this leads us. If after 5 years to prepare his case, BD, can only rely upon " I know nothing, Guv, I only found out a month ago" I think that suggests a carefully crafted defence and the the knowledge of deep and serious concern about what really went on. Which he prefers to have nothing to do with at all. I do not believe a word Mr Diamond spoke. Clever man with crafted answers.
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Steffan
Original Poster
6,178 posts
97 months
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munky said: Actually, we do know know several facts. E.g. that LIBOR does not determine mortgage rates, with a small number of exceptions. Does anyone here have a LIBOR-linked mortgage? Thought not. And no, the base rate does not depend on LIBOR in any way, shape or form. How about the small number of exceptions? They will have paid LESS on their mortgage, IF the LIBOR rate had been successfully manipulated, which the FSA said there was NO EVIDENCE of. So, Steffan - direct question to you: How many people will sue the banks because they paid TOO LITTLE interest on their mortgage?
It still looks like some people don't graps the facts of how LIBOR is produced or what it is used for. I fear they may never grasp it. Which is a shame, because if they don't grasp it, they have no idea of what they are talking about, and they will never understand how it is that nobody paid too much on their mortgage as a result of anything to do with LIBOR.
Now, there is a group of people that could have lost out as a result of LIBOR being artificially low, IF it is proven that it was artificially low. (Remember one bank alone cannot influence LIBOR. It was designed that way, fact). Do you know who that group is? Nope, not mortgage holders, and not ordinary borrowers.
There is also a rather larger group of people that gained, from Barclays specifically quoting a low rate. Who? That'll be the taxpayer, saved from a £100bn bailout of Barclays. There are two ways to look at this question IMO. Firstly. were there activities in the banks going on that were unregulated, because the banks did not know these activities were going on in the period if the banking crash and the post crash? Of there were then, we need to know about it and pretty damned quick. Because if it happened then it can, and in fact, may have happened again. May I suggest you ask yourself a question minky? If Bob Diamond was feeling physically sick when he found this out, apparently only a month ago, according to BD, does it not seem likely to you, that there is reason behind that surprising reaction. It suggest to me that Mr Diamond, has decided not to be involved. Because he realises how serious that discovery actually is. Secondly irrespective of the possibility of fraud, how can it be that five years later the FSA and BofE have only just found out about it? That in itself is a major failing in Barclays systems and huge cause for concern. Either way we need to know the facts. Either way the reporting systems and control systems of Barclays bank, and all the others who were involved, because it is apparent there were more banks involved, were woefully inadequate and still had not notified the regulators or drawn attention to the problem, in any way some years later. Thus cannot be the correct way for banks to trade. Turning to your question, "How many people will sue the banks because they paid TOO LITTLE interest on their mortgage?", which I will happily answer, the answer must be: not many. But IMO that is, in fact, not really the germane matter in this case. It would seem Barclays were engaged in activities involving billions of pounds over some months, of which the authorities and the directors of Barclays were blissfully unaware. That really is a loaded question and one that I suspect, has resulted, in a sudden memory loss for Mr Diamond. In summary, these revelations show, that banking as practised by Barclays, was not an effectively managed business, since major trades were happening which years later, were still unknown to the directors of Barclays and the regulators. That cannot go on and the system needs changing.
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Camlet
301 posts
18 months
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Bob Diamond is symptomatic of two key problems facing banking. First, the risks are way too low versus the incredible rewards. Done something illegal? Jail time. Second, markets do not regulate themselves. Machines can't regulate markets. Markets need firm and independent human regulation backed by draconian penalties, notably....jail time.
Charles Ferguson's movie "Inside Job" is entertaining. But it also shows the huge barriers facing change. The only light at the end of tunnel is depressingly self-destruction. Nature has a brilliant system of self-destruction. We humans have it baked into our DNA. Where risks are too low, oversight poor and rewards huge, humans will exploit. They become arrogant believing they are ever more super-smart. And this creates increasing excess until something goes bang.
History has shown this bang to be mostly armed conflict. I hope we can stop the excess by bringing in massive personal risk and very strong oversight before history repeats itself and nature activates its own "waste-gate".
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Mikeyboy
5,010 posts
104 months
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there seems to be some line of thinking on here that because some regulations didn't ccover this area then well, perhaps they should have been able to do it. Or that regulation doesn't work. But thats missing the point. for deregualtion to work it supposes a level of ethicality I have never experienced in any walk of life, let alone in one based upon money.
I never really understand the US model of deregulation. regulation does work for the greater good, deregulation rarely does. Its a bit like saying that we should derregulate the food industry, after all would we trust our butcher to throw away the meat once its past a reasonable date?
Well no, we wouldn't. They put in health regulations (originally in the middle ages) about such things because they worked out that people are basically venal and sociopathic to a slight degree and that meat sellers were regularly increasing their profits at the expense of other people.
With the banking industry the real problem comes because it is always someone else's money. And to say to a group of people, you can make money for yourself in vast quantities with someone elses money and we won't keep a check on you, requires a level of care, morality and ethical strength that i do not believe 80% or more of the population has. let alone people who join an industry simply because it pays well.
My personal experience of such a person who works in sales-trading for a French bank has been that they are mendacious, manipulative and certainly unaware of the consequences of their actions to others. All to get their way and make more money. Is that the sort of person who doesn't need regulating? I would say that this is the very example of someone who needs regulating, but in fact it has made this person actually very good at their job according to other people who know them. Which to me is very worrying.
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Gazzab
15,109 posts
151 months
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Surely this needs to be looked at in the context of the international banking markets? I cant believe that the UK is alone or even 'up there'. If we choke the UK then surely the international market will step into the void and the same bad things will happen but this time the £'s benefits wont be felt in the UK.
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Eric Mc
67,253 posts
134 months
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So, we keep the obviously flawed system in place in the UK for fear of the flawed system moving elsewhere?
It's a bit like the Sicilian Mafia worrying about the Mafia moving its centre of operations to New York.
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fido
9,382 posts
124 months
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Eric Mc said: So, we keep the obviously flawed system in place in the UK for fear of the flawed system moving elsewhere? Yes, while it's producing >10% of the UK's revenue then that would be a good idea. Everything else in the UK is 'obviously flawed' - the NHS which now costs £100-odd billion a year, the Education system which churns out morons, a benefits systems which pays for generations of the idle - maybe we should cut back a little on all of these? Then we can re-employ the swathes of City workers in cheese-farms, yoghurt factories and River Farm Cottages.
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Gazzab
15,109 posts
151 months
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Eric Mc said: So, we keep the obviously flawed system in place in the UK for fear of the flawed system moving elsewhere?
It's a bit like the Sicilian Mafia worrying about the Mafia moving its centre of operations to New York. No I mean that we keep believing the Daily Mail and we allow the UK to eat its own head.
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turbobloke
55,469 posts
129 months
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Mikeyboy said: regulation does work for the greater good, deregulation rarely does Given the spiralling costs involved in regulation, and other implications as detailed in e.g. Kurdas C (2009), Does Regulation Prevent Fraud, where the answer was not very well at all, there are real negative impacts. Kurdas said: To have a fair chance of being effective, an extensive panoply of interventions would be required, almost certainly costing more than the failures they are supposed to prevent. See also: http://www.openeurope.org.uk/Content/Documents/PDF...
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Camlet
301 posts
18 months
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turbobloke said: Mikeyboy said: regulation does work for the greater good, deregulation rarely does Given the spiralling costs involved in regulation, and other implications as detailed in e.g. Kurdas C (2009), Does Regulation Prevent Fraud, where the answer was not very well at all, there are real negative impacts. Kurdas said: To have a fair chance of being effective, an extensive panoply of interventions would be required, almost certainly costing more than the failures they are supposed to prevent. See also: http://www.openeurope.org.uk/Content/Documents/PDF... Does a speed limit on a motorway make you slow down? How about a police car on a mound? This isn't rocket science.
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Eric Mc
67,253 posts
134 months
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fido said: Eric Mc said: So, we keep the obviously flawed system in place in the UK for fear of the flawed system moving elsewhere? Yes, while it's producing >10% of the UK's revenue then that would be a good idea. Everything else in the UK is 'obviously flawed' - the NHS which now costs £100-odd billion a year, the Education system which churns out morons, a benefits systems which pays for generations of the idle - maybe we should cut back a little on all of these? Then we can re-employ the swathes of City workers in cheese-farms, yoghurt factories and River Farm Cottages. That is a bereft and extremely soul destroying view on life, to be honest. We are doomed as a nation. As as been said before, stop throwing other examples of badness at us to justify the wrongness of something else. That is lazy and lame debating.
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Eric Mc
67,253 posts
134 months
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turbobloke said: Mikeyboy said: regulation does work for the greater good, deregulation rarely does Given the spiralling costs involved in regulation, and other implications as detailed in e.g. Kurdas C (2009), Does Regulation Prevent Fraud, where the answer was not very well at all, there are real negative impacts. Kurdas said: To have a fair chance of being effective, an extensive panoply of interventions would be required, almost certainly costing more than the failures they are supposed to prevent. See also: http://www.openeurope.org.uk/Content/Documents/PDF... One word - balance. Free for all = bad Over regulation = bad Effecive regulation - ideal It's getting the latter that is hard.
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fido
9,382 posts
124 months
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Eric Mc said: As as been said before, stop throwing other examples of badness at us to justify the wrongness of something else. That is lazy and lame debating. It's not bad debating - it's about consistency. You have singled out a few issues disproportionately and then tarred the entire industry with a wide brush. Yet when countered with examples of similar issues in other industries you do not state an opinion, or as you accused Mr Diamond of doing, not answering it.
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