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.....
