£290 mill in fines, what do bankers have to do go to prison?

[RichyBoy]

Surely the money involved in the thing (what do you call it for people like this, party?) is a lot more than the fine.

[bitchstewie]

johnfm said:

VinceFox said:

Can someone give me a potted down "newsround" version of this?

Libor and Euribor are set buy asking a bunch of banks "how much would you pay for an interbank loan at 11am today?" The 'setters' answer this Q.


Some of the banks' business (revenues from derivaives, swaps etc) may more profitable depending on Libor.

So some traders at Barclays would ask the team of 'setters' to set the quote lower than the real value because it was advantageous for their trades.

Basically, artificially setting Libor in collusion (it seems ) with other banks.

It is naughty.

I'm going to ask a really dumb question: Why wouldn't you want that rate as low as possible if you are a borrower?

I can see why you'd want it high as a lender, but I'm not quite sure how the pieces of info glue together here?

[Use Psychology]

Adrian W said:

Use Psychology said:

sorry, just imagining newspaper headlines in keeping with the current popular opinion of bankers.

the debate is hindered by the inability of most people to tell the difference between bankers (people who work for banks, probably quite reasonable, normal and nice people) and banks (fked up organisations).

I'm having a little trouble with this, people manipulated the rates not organisations, however it does seem that people are immune from any consequences from their direct actions, in any other industry arrests would have been made

I think it's well established that 'normal' people can have their behaviour significantly altered by the culture of the organisation in which they find themselves. My point was that individually bankers are probably as moral, ethical, blah blah blah, as the righteous tabloid readers of this world, but when you put them together in an organisation (a bank) then it's possible for an irresponsible culture to emerge. Thus the behaviour of the organisation can be different from what the individuals in that organisation would consider reasonable.

[Adrian W]

Use Psychology said:

Adrian W said:

Use Psychology said:

sorry, just imagining newspaper headlines in keeping with the current popular opinion of bankers.

the debate is hindered by the inability of most people to tell the difference between bankers (people who work for banks, probably quite reasonable, normal and nice people) and banks (fked up organisations).

I'm having a little trouble with this, people manipulated the rates not organisations, however it does seem that people are immune from any consequences from their direct actions, in any other industry arrests would have been made

I think it's well established that 'normal' people can have their behaviour significantly altered by the culture of the organisation in which they find themselves. My point was that individually bankers are probably as moral, ethical, blah blah blah, as the righteous tabloid readers of this world, but when you put them together in an organisation (a bank) then it's possible for an irresponsible culture to emerge. Thus the behaviour of the organisation can be different from what the individuals in that organisation would consider reasonable.

Can the same argument not be put forward regarding the Totonham rioters, the judges didn't see it like that.

[AndrewW-G]

Use Psychology said:

they's go to prison if anyone caught them EATING BABIES.

Somebody has obviously seen the menu for the staff restaurant at 1 Churchill place

[Gene Vincent]

VinceFox said:

Can someone give me a potted down "newsround" version of this?

Vince Fox... perhaps this way might help, say you wanted a jaunty hat, perhaps hundreds of them in fact and you had to borrow money to buy them, but you were skint or at least financially embarrassed, the seller might say, you are very risky person to give credit to, you being a troublesome, sweary sort of Fox who might just abscond and lie low with the money in the middle of a r'about... so they add a bit as a form of 'insurance' to the price of each jaunty hat... now if you lied, called them s and swore blind (as any self-respecting Vince Fox would would) that in fact you were worth more than you really were, you'd get the jaunty hats a bit cheaper.

Now pretend you're in fact a bank, not a fox and the jaunty hat is some money and the person you were buying the hat from was the lending houses and Hey Peston! you've got a whole heap of jaunty hats cheap and you can get yourself out of the financial hole your penchant for jaunty hats got you into trouble in the first place!

[VinceFox]

Gene Vincent said:

Vince Fox... perhaps this way might help, say you wanted a jaunty hat, perhaps hundreds of them in fact and you had to borrow money to buy them, but you were skint or at least financially embarrassed, the seller might say, you are very risky person to give credit to, you being a troublesome, sweary sort of Fox who might just abscond and lie low with the money in the middle of a r'about... so they add a bit as a form of 'insurance' to the price of each jaunty hat... now if you lied, called them s and swore blind (as any self-respecting Vince Fox would would) that in fact you were worth more than you really were, you'd get the jaunty hats a bit cheaper.

Now pretend you're in fact a bank, not a fox and the jaunty hat is some money and the person you were buying the hat from was the lending houses and Hey Peston! you've got a whole heap of jaunty hats cheap and you can get yourself out of the financial hole your penchant for jaunty hats got you into trouble in the first place!

Oh THAT is fking jaunty!!

[Gene Vincent]

VinceFox said:

Oh THAT is fking jaunty!!

Yes. Jaunty.

[Dr Jekyll]

Adrian W said:

Can the same argument not be put forward regarding the Totonham rioters, the judges didn't see it like that.

The difference is that even if they don't go to prison the bankers aren't going to roam the streets manipulating interest rates.

[Adrian W]

Dr Jekyll said:

Adrian W said:

Can the same argument not be put forward regarding the Totonham rioters, the judges didn't see it like that.

The difference is that even if they don't go to prison the bankers aren't going to roam the streets manipulating interest rates.

[VinceFox]

Gene Vincent said:

VinceFox said:

Oh THAT is fking jaunty!!

Yes. Jaunty.

http://www.youtube.com/watch?v=hNRHLXKuXpQ&feature=youtube_gdata_player

[Use Psychology]

Adrian W said:

Can the same argument not be put forward regarding the Totonham rioters, the judges didn't see it like that.

the difference being, of course, that a company is a legal entity in its own right, and a mob isn't. The whole purpose of companies is to limit the liability of the individuals working for/owning that company,

[miniman]

johnfm said:

Libor and Euribor are set buy asking a bunch of banks "how much would you pay for an interbank loan at 11am today?" The 'setters' answer this Q.


Some of the banks' business (revenues from derivaives, swaps etc) may more profitable depending on Libor.

So some traders at Barclays would ask the team of 'setters' to set the quote lower than the real value because it was advantageous for their trades.

Basically, artificially setting Libor in collusion (it seems ) with other banks.

It is naughty.

Is it illegal?

[xr287]

LIBOR is an interquartile mean so if Barclays would have to be very careful about how much of a change they submitted otherwise it wouldn't be taken in to consideration for the calculation of LIBOR.

Is it possible that they sometimes failed to make any impact or would they have a good idea of the lower and upper ranges they could play with?

[Randy Winkman]

Use Psychology said:

Adrian W said:

Can the same argument not be put forward regarding the Totonham rioters, the judges didn't see it like that.

the difference being, of course, that a company is a legal entity in its own right, and a mob isn't. The whole purpose of companies is to limit the liability of the individuals working for/owning that company,

To give crims an excuse/hiding place.

[fido]

bhstewie said:

I'm going to ask a really dumb question: Why wouldn't you want that rate as low as possible if you are a borrower?

I can see why you'd want it high as a lender, but I'm not quite sure how the pieces of info glue together here?

Yes, a lower rate would have favoured anyone paying the floating side of a swap e.g. a variable rate loan based on LIBOR.

In summary:
a) malpractice on the part of the bank employees & doesn't look great on the 'controls' the bank is meant to have in place
b) doesn't make a jot of difference to most residential mortgages which are driven off the Base Rate + Spread, but it gives something the lefties to wing about and demand more state control
c) Robert Peston gets a boner when it comes to anything to do with banks

[Olivero]

RichyBoy said:

Surely the money involved in the thing is a lot more than the fine.

This is the single biggest reason why this type of thing will keep happening. If the fine is going to be less than the profit you can make then it makes good business sense to keep doing it.

This, mixed with the fact that goverments are happy to give away cash with very few strings attached makes for a never ending mess.

[collateral]

The silence in here is deafening.

Interesting to see what other banks get their wrists slapped over this

[turbobloke]

fido said:

Robert Peston gets a boner when it comes to anything to do with banks

He had a slot on Radio 2 today speaking spaffing on this.

Even so it's an unacceptable state of affairs. What's the point of the fine, however high this went up the Barclays greasy pole there should be P45s and a file heading over to plod.

[turbobloke]

collateral said:

The silence in here is deafening.

?