After resigning as CEO of Barclays this morning, Bob Diamond may yet
exact some revenge on the government when he testifies tomorrow in front
of the Treasury Select Committee.
There are two LIBOR fixing scandals – the first involves traders
massaging the settling of LIBOR rates a few basis points, mere hundreths
of a percent, off market reality to flatter their trading books. It
appears to have been going on for years and not just at Barclays. This was not so petty corruption.
The second LIBOR fixing scandal is of a different order altogether –
it involves the wholesale systematic substantial misrepresentation of
true LIBOR, with the encouragement of the Treasury, the FSA and in
particular the Bank of England. The policy was to under-report LIBOR
rates at much lower levels than were actually trading in the market. This deliberate policy was to cover-up the increased risks to the UK banking system revealed by higher LIBOR rates.
It is emerging
that Gordon Brown’s economic adviser in Downing Street, Shriti Vadera,
an ex-UBS investment banker, circulated a paper on ”Reducing Libor” at
the height of the banking crisis, which she argued would be “a major contribution to the stability of the banking system and to the health of the economy”.
That message will have gone out to the Treasury in Whitehall, the
regulators and the Bank of England. They in turn will have given a nod
and a wink to the investment banks. Bob Diamond is reportedly
furious that the “lowballing” of LIBOR rates by Barclays – which was
explicitly encouraged by the authorities to stabilise already panicked
markets – is being used against Barclays. Bob Diamond is expected to testify tomorrow that the Bank of England’s deputy governor Paul Tucker encouraged the “lowballing”.
The politicisation and manipulation of interest rates is ongoing even
after Gordon Brown and Shriti Vadera are long gone. The £275 billion
Quantitative Easing (QE) programme implemented by Mervyn King with
George Osborne’s blessing is designed to artificially lower interest
rates. We currently have a false market in Gilts, it is arguably the
biggest bubble since the South Sea Bubble. It is cheating pensioners and savers of income on an unprecedented scale. This is a robbery organised from within the Bank of England …
Barclay's Diamond Goes M.A.D. Over Lie-borgate Details
Submitted by Tyler Durden:
It's escalating. Following
the resignation of Barclays' Chairman this morning, the government
announced a twin probe into the Libor system and banking standards; and
Bob Diamond (Barclays CEO) is threatening, according to the FT, to reveal potentially embarrassing details
about Barclays' dealing with regulators if he comes under fire at a
parliamentary hearing on Wednesday over Lie-borgate. Unlike his
almost-namesake Jamie Dimon who suffered through the indignity of a
congressional probing, Bob has gone all Mutually Assured
Destruction with confrontational tactics that could further aggravate
the fraught relations between the bank and the authorities. "If he is
attacked, he will fight back" seems to be well understood and
the key aspect - as we have pointed out - is that if this is pursued too
vehemently then the whole house of cards could come down as [regulators
and politicians] "likely knew perfectly well those rates were not the
ones where banks were prepared to lend to each other". So much
was made at the time of several of these short-term liquidity measures
as indicative of 'no' stress to the ignorant investing public when
credit market participants were well aware of the state of reality - perhaps it is worth a glance at the current levels of Lie-bor (especially relative to EUREPO and CDS curves) to get a sense of just what could happen if the truth was ever allowed out into the public eye. M.A.D. indeed.
Source
Submitted by Tyler Durden:It's escalating. Following
the resignation of Barclays' Chairman this morning, the government
announced a twin probe into the Libor system and banking standards; and
Bob Diamond (Barclays CEO) is threatening, according to the FT, to reveal potentially embarrassing details
about Barclays' dealing with regulators if he comes under fire at a
parliamentary hearing on Wednesday over Lie-borgate. Unlike his
almost-namesake Jamie Dimon who suffered through the indignity of a
congressional probing, Bob has gone all Mutually Assured
Destruction with confrontational tactics that could further aggravate
the fraught relations between the bank and the authorities. "If he is
attacked, he will fight back" seems to be well understood and
the key aspect - as we have pointed out - is that if this is pursued too
vehemently then the whole house of cards could come down as [regulators
and politicians] "likely knew perfectly well those rates were not the
ones where banks were prepared to lend to each other". So much
was made at the time of several of these short-term liquidity measures
as indicative of 'no' stress to the ignorant investing public when
credit market participants were well aware of the state of reality - perhaps it is worth a glance at the current levels of Lie-bor (especially relative to EUREPO and CDS curves) to get a sense of just what could happen if the truth was ever allowed out into the public eye. M.A.D. indeed.Source
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