bob diamond resigns

Strife212 · 3 Jul 2012 at 20:54

Dolph said:
if we're going for retrospective criminality, I hope we are including the politicians who created the failed triparite regulatory system under which all this occurred...

There may be no law against manipulating Libor specifically, but it's simpler than that, it's just outright fraud.

By the way, Zero Hedge called this way before it was on the news, which I find pretty amazing.

http://www.zerohedge.com/news/spirit-level-or-libor

Dj_Jestar · 3 Jul 2012 at 20:55

"Manipulating" LIBOR is exactly what they are entitled to do. It's when they publish that LIBOR is 4%, but are actually charging only 3% is the fraud bit.

Greebo · 3 Jul 2012 at 21:00

Dj_Jestar said:
"Manipulating" LIBOR is exactly what they are entitled to do. It's when they publish that LIBOR is 4%, but are actually charging only 3% is the fraud bit.

I thought it was the other way round? okay we are talking about 0.1% or less in the lies, but I thought they basically were saying it was 4% but really it was 5% and that was what they were charging?

Dj_Jestar · 3 Jul 2012 at 21:05

It may well have been, I just used those numbers as examples.

e: The main point of course being they were not reporting what they were actually doing.. ergo lying.

realBabelfish · 4 Jul 2012 at 09:05

Dj_Jestar said:
"Manipulating" LIBOR is exactly what they are entitled to do. It's when they publish that LIBOR is 4%, but are actually charging only 3% is the fraud bit.

they are now saying the BOE told them to lower it. could be interesting.

doodah · 4 Jul 2012 at 09:23

Metro reporting Diamond may implicate BoE senior staff and prominent Labour MPs including the vile piece of work - Ed Balls.

Greebo · 4 Jul 2012 at 09:40

realBabelfish said:
they are now saying the BOE told them to lower it. could be interesting.

Could be. However, it's only notes made by Barclays of the conversation between the BOE and them and is open to interpretation.

BOE was just asking why Barclays were always declaring they had the highest or one of the highest LIBOR rates of the major banks and that it didn't look good and could they do something about it.

You could argue, BOE meant to get their act together and borrow money at lower rates.

Mr Tucker at Barclays took those notes to mean that the BOE wanted Barclays to lie about the LIBOR rates.

To put it simpler, say you were an employee like an accountant and your boss asked you to do something about lowering the rate that your company borrowed money at, would you interpret that as meaning you did nothing but lied that you had lowered the rates?

I think Barclays made that decision on their own

Energizer Bunny · 4 Jul 2012 at 10:27

Can somebody explain to me how this benefitted Barclays or any other bank?

My understanding of what has taken place is that Barclays are accused of having reported artificially low LIBOR rates. In other words suggesting that they are able to fund themselves cheaper than they are. If that is the case then:

1. They cannot have done it alone. It must be systemic fraud. LIBOR gets set by a number of banks (I think 16) reporting their funding rates and then the top and bottom 4 being eliminated and an average of the others taken. On that basis if LIBOR is being manipulated you need a significant number of those banks to be playing ball

2. How does artificially low LIBOR help the banks involved? It has no effect on their actual individual funding costs and many of their loans are at a fixed margin over LIBOR. By reporting a lower rate they reduce their own income without affecting their own costs.

3. The real beneficiary of this action seems to be the confidence levels in the British economy. If our banks appear able to fund cheaply then the market is more relaxed about their liquidity and there is presumably a knock on effect for the country.

I'm obviously missing something otherwise I suppose it wouldn't have happened, but my immediate conclusion based on the above was that the Treasury really must have been coordinating this action.

Greebo · 4 Jul 2012 at 10:40

Energizer Bunny said:
Can somebody explain to me how this benefitted Barclays or any other bank?

My understanding of what has taken place is that Barclays are accused of having reported artificially low LIBOR rates. In other words suggesting that they are able to fund themselves cheaper than they are. If that is the case then:

1. They cannot have done it alone. It must be systemic fraud. LIBOR gets set by a number of banks (I think 16) reporting their funding rates and then the top and bottom 4 being eliminated and an average of the others taken. On that basis if LIBOR is being manipulated you need a significant number of those banks to be playing ball

2. How does artificially low LIBOR help the banks involved? It has no effect on their actual individual funding costs and many of their loans are at a fixed margin over LIBOR. By reporting a lower rate they reduce their own income without affecting their own costs.

3. The real beneficiary of this action seems to be the confidence levels in the British economy. If our banks appear able to fund cheaply then the market is more relaxed about their liquidity and there is presumably a knock on effect for the country.

I'm obviously missing something otherwise I suppose it wouldn't have happened, but my immediate conclusion based on the above was that the Treasury really must have been coordinating this action.

It does smack like it has been "guided". You are right about one point though, one bank alone giving lower LIBOR rates would not drop the reported rate and it would take many banks.........which is why Barclays is the first of 20 banks been investigated for doing it.

To answer point 2, it would make Barclays look much more financially sounded than it was during the banking crysis hence share price and confidence stays high. Also, if the reported LIBOR rate averaged out is lower than it really is, it then means that when you go to borrow your money from another bank you can say "LIBOR is 4% at the moment so that is what you are lending to me at" when it might and should have been 4.1%.

estebanrey · 4 Jul 2012 at 10:56

Why if when asked "Can you fix the Libor rate Bob?", he replied "Can we fix it? YES WE CAN!"

Narj · 4 Jul 2012 at 11:47

Please, please, please let this all be Ed Balls' fault!

Dj_Jestar · 4 Jul 2012 at 12:26

I'm rooting for it being Brown's fault tbh.

Castiel · 4 Jul 2012 at 14:38

Bob Diamond is pretty much wiping the floor with the MPs......The committe come across as though they don't actually know what they are talking about (given that some of them are former bankers, Jesse Norman for example) and Bob Diamond is teaching them.....

cm1179 · 4 Jul 2012 at 14:44

what a car crash

edscdk · 4 Jul 2012 at 14:49

mmj_uk said:
Does he get a scapegoat bonus?

not sure if already posted but the news sad £10mil

toshj · 4 Jul 2012 at 14:50

Castiel said:
Bob Diamond is pretty much wiping the floor with the MPs......The committe come across as though they don't actually know what they are talking about (given that some of them are former bankers, Jesse Norman for example) and Bob Diamond is teaching them.....

Very much so. They're also asking him a) pretty tame questions and b) constantly asking him to speculate on possible discussions that may or may not have taken place.

Dj_Jestar · 4 Jul 2012 at 14:54

To be fair to the committee.. they've not had long to prepare.

toshj · 4 Jul 2012 at 14:59

Dj_Jestar said:
To be fair to the committee.. they've not had long to prepare.

To be fair, the ongoing inquiry into the LIBOR fixings would have allowed them adequate time to prepare, and I imagine they were intending to tear him apart. It would seem as if he's thrown a major curve ball by indicating that the BOE/Whitehall were in league with them.

Therefore, it's their own fault for not being adequately prepared to question him. It actually sounds like the don't understand the industry or social technicalities of what tehy're asking him about.

Dj_Jestar · 4 Jul 2012 at 15:07

A few weeks is nothing. They've not had long to prepare at all. As demonstrated by that curve-ball you mention.

Energizer Bunny · 4 Jul 2012 at 15:32

Interesting excerpt from a Spectator interview with Osborne:

Suddenly, and far more explosively, [Osborne] moves on to the political efforts to keep Libor low during the financial crisis of 2008. ‘As for the role of the Labour government and the people around Gordon Brown — well I think there are questions to be asked of them,’ he says. He starts to discuss reports that those in the Brown circle were pressuring Barclays to manipulate the Libor rate it was paying. Then he drops a bombshell: ‘They were clearly involved and we just haven’t heard the full facts, I don’t think, of who knew what when.’

For Osborne to declare that those around Brown were involved in the efforts to keep Libor down is a remarkable charge, one sure to pour petrol on the political fire raging after it was revealed that ‘senior Whitehall sources’ were behind the pressure on Barclays over Libor. But Osborne doesn’t stop there.

He continues, ‘My opposite number was the City minister for part of this period and Gordon Brown’s right hand man for all of it. So he has questions to answer as well. That’s Ed Balls, by the way.’

This last line is delivered straight into the microphone — a classic Osborne twist of the knife.