Vocal Voices

We are constantly bombarded with information about UK banks being fined for manipulating LIBOR and other "fairytale" goings on within the "British" banks.

Yet I read this article with interest.

I already knew that a whole swathe of American banks were into this along with UBS. However I read from the wiki page on the LIBOR rigging

On 23 April 2015, Deutsche Bank agreed to a combined US$2.5 billion in fines – a US$2.175 billion fine by American regulators, and a €227 million penalty by British authorities – for its involvement in the Libor scandal. The company also pled guilty to wire fraud, acknowledging that at least 29 employees had engaged in illegal activity. It will be required to dismiss all employees who were involved with the fraudulent transactions.[96] However, no individuals will be charged with criminal wrongdoing. In a Libor first, Deutsche Bank will be required to install an independent monitor.[97] Commenting on the fine, Britain's Financial Conduct Authority director Georgina Philippou said "This case stands out for the seriousness and duration of the breaches ... One division at Deutsche Bank had a culture of generating profits without proper regard to the integrity of the market. This wasn't limited to a few individuals but, on certain desks, it appeared deeply ingrained

Not only were the UK banks not the ONLY one's doing it. They were not even the largest number; or the worst offenders...

I do wish the press would give just a little balance from time to time. It might just change the attitudes of a lot of the people in the UK. But, of course, they don't want that, they want to sell papers...

Deutsche Bank, very interesting, Suff. True, you don't tend to hear a lot about them.

Do you anticipate HSBC moving its HO operations out to Hong Kong, as threatened, to get away from all this regulation?

There are Banks and there are"Banks". The British public and media are not angry with bank counter staff, or branch managers, or regional managers, but they are angry with the Casino banks and the spivs and their bosses.

It all boils down to illegal activities and how those have been dealt with. The US Attorney General mentioned them when announcing further fines to banks. However, the fines to whole banking institutions have not been enough, as the quote from the article shows:

However, no individuals will be charged with criminal wrongdoing.

Why not? Those (suspected of) practicing in illegal activities should be brought before a court and be given a chance to prove their innocence or to be sentenced after being found guilty.

Illegal activities would be prosecuted elsewhere in business and bankers should not be immune, as appears to be the case.

They do seem to be above the law, shades of the Medicis

I read a lot about this at the time but to be more specific.

Here is how Libor works.

If you look into the mechanism, it takes 5, or more, banks to enter false data before the Libor can be "finessed". In fact it takes more than 5 in reality because that 5th bank would only represent 1/10th of the overall figure.

In reality, to significantly impact the Libor, you would need 9 banks putting in low bids. To really rig the Libor you would need 12 or more banks to do it efficiently.

This is not a system regulated by any laws. It is a system which is based on "honour" and has an averaging mechanism which is designed to make it quite difficult to change the reported level. In fact it relies mainly on the fact that most businesses actually won't cooperate with each other. Rather than on laws to ensure that what is reported is the truth. Mainly, I assume, because proving what was input to be false would be a fools game.

What the banks are being tried for here is "lying with intent to defraud elsewhere". Basically manipulating the index to sell and make money on derivatives in other market areas. To be honest, to me, derivatives are nothing more than wild assed gambling, but they are the place where an insolvent bank can actually gamble successfully enough to keep itself afloat. There is no other opportunity in the business world which has the potential to make or break a company.

In the end, they weren't lying to make bonuses. They were lying to protect their business and their investors money. Which is probably why the bankers are not being dragged into court. Because if they were, their lawyers would have made total mincemeat of the government cases and the whole thing would have been thrown out of court on it's ear. As was predicted by the FT in 2012.

So why are the governments levelling company fines on these Banks and why are the Banks paying them?

In fact the reason the Banks are paying is that it stops the governments from putting in place even more damaging regulations which would stifle business and cost the banks even more money than they are paying out.

Why would you care?

Well because it's your money too. When I worked at ABN in 2000, Branch banking made a loss. All the customer mortgages, business loans and other transactions to make money, totalled about 35% of the net profits. That's world wide and 73,000 staff.

What about the rest?

2,000 staff in the trading centres around the world (mainly London), made 65% of the banks disposable profits....

Banks now have so many laws gumming up the works that the only way they can make money is to gamble with it. I'm working in a bank right now and the laws we have to service are nothing short of draconian.

When I worked at RBS in 1992 Branch banking lost £1m per day. In that year their net profits were £54m.

Work out the figures.

Everyone thinks that their overdrafts, mortgages and loans amount to some large profit the banks make. In reality, serving the customer in branches costs banks money.

The whole thing has been twisted so far out of proportion that the truth will never really be told.

TheOstrich wrote:Deutsche Bank, very interesting, Suff. True, you don't tend to hear a lot about them.

Do you anticipate HSBC moving its HO operations out to Hong Kong, as threatened, to get away from all this regulation?

I'm told, from someone who used to work there and that is still on contact with friends, that this is a regular process (every 3 years if I hear correctly), that they are following. Of course they will use this to browbeat the government into getting what they want.

But, in the end, the figures don't stack up. Even now, still, after all the new laws and taxes, the costs of doing business in London is still very slightly cheaper than doing it in Hong Kong. So that is not a big incentive in terms of paying bonuses to the shareholders.

What is probably a much bigger incentive is that HK does not have the same draconian laws on executive bonuses or executive pay. So, will they move? Maybe. If they do it will serve all those arrogant self serving pillocks in Westminster right. Of course it will hurt the country and the people more. But who cares about them? Right?

Not the press. Not the Government. And, if what I read all the time about these B@stard bankers is the correct view of the people, not the people either.....

The vast majority of do not care about the internal workings of the banks any more than we care about the production methods us by the makers of our car.

What the public did not, and does not want, is for banks, working under some "honour" system, to fiddle the markets and cause a global crash ruining their savings, pensions and livelihoods. And when they hear the US Attorney General say, and I quote, "there was blatant criminal activity" being carried out in the banks, then they are right to ask quite forcefully why there have been so few prosecutions.

The Deutsche Bank scandal shows that it was not one or two rougue traders involved, but whole divisions. Their actions cannot have been hidden from line managers, but they were not stopped. The actions of line managers cannot have been hidden from top management, but again they were not stopped. Duetsche was apparently dealing with 47 other institutions and they would each have had their rogue traders.

New York’s Department of Financial Services (DFS). Benjamin Lewsky, said:

We must remember that markets do not just manipulate themselves: It takes deliberate wrongdoing by individuals.

The DFS is also forcing Deutsche Bank to fire seven employees who played a role in the misconduct. Six of these – a managing director, four directors and a vice president – are based in London. Sacking and resignations are not enough if they were partaking in "criminal" activities.

Let's stop pretending that the banks are some "Honourable" institutions. They are money-making machines and they are using our money to gamble with.

Actually the markets are deliberately manipulated every single day to create a gain for some and a loss for others.

That is the job of traders and the best do it very well indeed.

I wonder, truly, what the action would have been if it was the NYIbor???? Americans are awfully funny about how they discipline their own when it is on the international stage...

The interview with Mr HSBC revealed a lot.

There was not an atom of sympathy for the 25,000 people he is about to put out of work - 8,000 in the UK, "to reduce costs" = make more profit.

And the reason HSBC might relocate to Hong Kong has nothing to do with legislation. It has everything to do with the fact that Western economies are "mature" and that growth is in S.E. Asia and China. So, he wants a foot on the threshold in order to make more profits. We have made our money from you lot, so now we are off - we have spiv bonuses to pay, you know.

Beneficent institutions banks are not.

Workingman wrote:Beneficent institutions banks are not.

No company is a Beneficent institution. Well no successful one anyway. Bank or not.

That 8,000 job losses is a middle finger to the taxes the government have demanded. In the end, the government wanted to claw back money from HSBC and HSBC have said 'koff and, by the way, all those unemployed people are going to cost you more than you took from us.

Behave....

That is what they are saying.

People seem to think that you can just tax as will if you are a government and companies will just keep on taking it on the chin because it's the government.

Workers may be in that position. Companies are not.

Life. As we know it.

Suff wrote:Life. As we know it.

Then "Life" needs to change.