What the conspirators are doing at the moment is sending a few scapegoats out into the wilderness, and then closing ranks. From the outside (unless the investigators or journalists stumble upon just the right emails), we can't penetrate the carefully-constructed wall of lies. BUT...the pressure is increasing all the time and we are now seeing multiple instances of people within the establishment breaking ranks, either because of conflicting self-interest or because they know an almighty shit-storm is coming and that the truth is going to come out anyway. So I think it is not a case of finding the right emails, but to keep cranking up the pressure and wait for the right person to break ranks, and spill the beans.
"We fail to mandate economic sanity because our brains are addled by....compassion." (Garrett Hardin)
A further seven banks have agreed to review the sale of complex financial products to small businesses and compensate customers where evidence of mis-selling is uncovered, the City watchdog said today.
Allied Irish Bank, Bank of Ireland, the Clydesdale and Yorkshire banks, the Co-operative Bank, Northern Bank and Santander UK will review the sale of so-called interest rate swaps to small and medium enterprises (SMEs), the Financial Services Authority (FSA) said.
Barclays was engulfed in scandal again last night after reports emerged of an £8.75m payoff to the most senior executive to authorise the false submission of Libor interest rates. Jerry del Missier resigned last month but is said to have arranged the payoff in the days before his departure. The move stands in stark contrast to a decision by his boss, Bob Diamond, to give up deferred bonus payments worth up to £20m.
Last night a political storm was brewing over the payment, which Barclays repeatedly refused to deny. "We're making no comment," a spokesman said.
Barclays has revealed that it is under investigation by the financial watchdog over the disclosure of fees payable under unspecified deals made in 2008.
The news came as the bank's adjusted pre-tax profit for the first six months of 2012 rose 13% to £4.2bn.
It also set aside £450m to cover potential compensation to small businesses sold inappropriate financial products, its results statement said.
It comes weeks after Barclays admitted involvement in a rate-rigging scandal.
But the first time Uncle Merv became aware of the Libor scandal was about three weeks ago. Yeh, right.
That comment looks increasingly ludicrous as a former Morgan Stanley trader claims that LIBOR was being rigged back in 1991 and this practice had probably been going on some time before then. (It may have started with the "Big Bang" of the financial markets that Thatcher introduced in 1986)
A comment in today’s Financial Times is by a former Morgan Stanley trader, Douglas Keenan, confirms a passing comment in the Economist, that Libor manipulation goes back for more than 15 years. In fact, this piece makes it clear that is the time frame exceeds 20 years. From the Financial Times:
In 1991, I had live trading screens that showed the Libor rates. In September of that year, on the third Wednesday, at 11 o’clock, I watched those screens to see where the futures contract [on three month Libor] should settle. Shortly afterwards, Liffe announced the contract settlement rate. Its rate was different from what had been shown on my screens, by a few hundredths of a per cent.
As a result, I lost money. The amount was insignificant for me, but I believed that I had been defrauded and I complained to Liffe [ London International Financial Futures Exchange, which is where the contract traded]. Liffe explained that the settlement rate was not determined by what rates were actually in the market. Instead, the British Banker’s Association polled banks, asking them what the rates were. The highest and lowest quoted rates were discarded and the rest were averaged, giving the settlement rate. Liffe explained that, in doing this, they were adhering to the terms of the contract.
I talked with some of my more experienced colleagues about this. They told me banks misreported the Libor rates in a way that would generally bring them profits. I had been unaware of that, as I was relatively new to financial trading. My naivety seemed to be humorous to my colleagues.
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.