LIeBOR Gets Interesting As Regulatory Capture Reverses Itself In England

Reggie Middleton's picture

LIeBOR is all over the MSM today...

I wonder how many realize how deadly this is to big western banks workwide. I have commented on this in detail in my most recent Max Keiser interview, which aired last night. Download the Barclays Submission, aka the "Smoking Gun".pdf for more insight to what happened. Here's a taste...

barclays email header

barclays email

Quick translation...

BOE inquires why Barclay's LIBOR rate was always so high,  realistic...

Barclay's asks BOE reps to brand the liars as liars...

BOE says, "are you out of your fucking mind???"

BOE rep says, this is coming from on top, lose the truth, or lose your ass! But you didn't hear that from me...

Of course the most daming part of this email is this "I asked [Tucker] if he could relay the reality, that not all banks were providing quotes at the levels that represented real transaction". This clearly shows that the BOE was on alert (as if they didn't already know, and probably orchestrated) of the fact that most banks were outright lying.

See my extensive comments on Max Keiser's show earlier this week, starting at 12:48 in the following video...

So, who are these other banks???

From Matt Taibbi's blog:

 The Royal Bank of Scotland is about to be fined $233 million (£150 million pounds) for its role in the Libor-rigging scandal. It joins Barclays as the first banks to walk the plank in what should be, but so far is not, the most sensational financial corruption story since the crash of 2008.

Many of the banks implicated in the Libor mess have also been targeted in the various municipal bond bid-rigging investigations, and RBS is no different – its subsidiary Natwest is also a defendant in the major civil lawsuit in the bid-rigging case. The cases aren't related, except in the sense that they both involve manipulation and anticompetitive cooperation. It's going to be harder and harder to make the case that the major banks do not routinely cooperate at the expense of the public when it serves their purposes to do so.

The news that RBS is involved comes with a perverse twist. This is from the Times UK:

The bank, which is 82 per cent owned by the taxpayer, is preparing for a political firestorm over the affair because it believes that it has no power to claw back bonuses from the traders responsible. Instead, the expected fines would be borne by the shareholders — largely the Government.

Libor manipulation is a crime that already robs the public to create bonuses for bankers. By artificially lowering interest rates, the banks caused cities, towns, countries, and other public entities to receive smaller returns on their variable-rate investment holdings. If it turns out that taxpayers end up paying the fine for RBS's crime of robbing taxpayers, how perfect would that be?

More importantly Matt, synthetically depressed LIeBOR rates artificially lowers the bar for economic profit, in layman's terms it makes the bank look more profitable and less risky than they actually are. As you stated, this leads to bigger bonuses funded by bigger taxes borne by financially smaller taxpayers. Hmmmm....

Who else is in the sights of the upcoming truth? Citbank, Bank of Lynch (robbing) America Coutrywide and JP Morgan! Have I commented on these big banks' risks ad nauseum? The litigation risks in these institutions are enormous, and are not discounted in their pricing - Banks face crippling Libor litigation costs

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Not only do the share prices of these banks fail to reflect the true litigation risks, the bank management themselves are failing to come clean, despite astute BoomBustBlog analysis....

There's imprudent risk management litigation stemming from JP Morgan's massive derivative's exposure, first brought to light in 2009 by yours truly...

Listen Carefully and You Can Hear the Crumbling ....May 11, 2012 – First, pardon my tardy response to this JP Morgan news. ... Equity segment, net income (excluding Private Equity results and litigation expense) ...

In 2009 I noticed that JPM's exposure to Fraudclosure-gate and to a greater extent, mortgage putbacks, was much, much more than what was being reported by managment. There's much more, see:

JP Morgan & Other Banks Legal Costs Spike, Many Should Ask If It Was Not Obvious Years Ago That This Industry May Become The "New" Tobacco Companies

JP Morgan Purposely Downplayed Litigation Risk That Spiked 5,000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!!! Shareholder Lawyers Should Be Scrambling Now Mar 2, 2011 – JP Morgan Purposely Downplayed Litigation Risk That Spiked 5000% Last Year & Is Still Severely Under Reserved By Over $4 Billion!

The Rating Agency Endorsed BoomBustBlog Big Bank Bash Off ... Feb 16, 2012 – JP Morgan (as well as Bank of America) is literally a litigation sinkhole. See JP Morgan Purposely Downplayed Litigation Risk That Spiked ...

You see, what many believe to be a UK bank thing can drag these big American banks deeper, much deeper, into the quagmire. Beware, the F.I.R.E.! The F.I.R.E. Is Set To Blaze! Focus On Banks, part 1


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Styles9002's picture

Where does the money collected from fining these banks go?

disabledvet's picture

I'm still trying to figure what the scandal is besides "DIE mofo! DIE!" how actually is libor being rigged? Banker bonus pool protection? If so how would that work? Obviously if Barclay's is highly dependent on overnight funding for getting and providing credit then the goal would be to set the rate as low as possible. Is that what's going on here? To date I have seen no data. And what are the implications for Euribor and Shibor? Simply put I have nothing to go on courtesy of the worthless phucking media here in the USA. Brief mention with Tom Keen last Friday but his guest refused to elaborate even though he wrote a 1000 page tome on the entire subject. Here's my shot in the dark as a consequence: libor is already inverted meaning short term borrowing is more expensive unless you can start going well out on the yield curve. This explains the hilariously paltry sums being lent to entire States within the EZ since if libor is a fraud who knows what the interest rate is for anyone right now. Throw in the inability to hedge courtesy of the willful denial of payment of CDS contracts and seems a real Bitches Brew of toxic debt is about to be discharged into the Euro financial system who's value is simply unknowable. Good luck calling that an asset to either a: borrow against or b: (even worse) call Capital in order to define your bank as even solvent. Anywho "still just speculation" at this point. Should know if I'm right (yet again!) shortly however!

Zero Govt's picture

and the FARCE is the Regulators (in Blighty they are the British Treasury, FSA and Bank of England) are fining Barclays et al for something they the Regulators (ie. BoE) have clearly colluded in ?!!!!

the BoE telling Barclays their Libour rate was "high" compared to the other British Bank submissions and no doubt ignoring subsequent lower submissions more in line with the others thereafter

the British tri-partheid regulatory system is as bigger farce and as corrupt as any other countries

what the hell the totally inept tea-sipping crone Mervyn King is doing still at the helm of the BoE having failed miserably to regulate for a stable British Banking sector that was leveraged into outer space, the tragedy of bailouts (because he wasn't doing his f'n job in the first place) and now this rigging scandal while King ups his wages and further enriches his Gold-plated pension is a wonder to behold

what a rotten beyond a sad joke bunch of calamity clowns 

q99x2's picture

Guess this is a sign that the elite are going to allow the collapse to take place and the military to take over. Time to hang out your UN flags.

cristo's picture

Ask yourself , WHY NOW .why are these goverment regulators going after these banks now ? It's a fact that this LIBOR corruption has been going on for years or even decades .The regulators have known about this corrupt practice for as long as it's been going on . you seen this set up before .PROBLEM REACTION SOLUTION .

Zero Govt's picture

the bigger question is not why the British Regulators are going after the Banks but why they aren't going after THEMSELVES

both Labour Ministers and the Bank of England have colluded in this rigging scandal, when do there heads roll, where are there fines, where is the public enquiry into the rotten public sector collusion and corruption???

Getting Old Sucks's picture

Next IPO bubble = White Shoe Law Firms

vast-dom's picture

what nonsense re: ultraviolence! it's WAY MORE SUBVERSIVE than ULTRAVIOLENCE!!!!! Come on!!! This is perverted updated Bentham-like one-way panopticon sterilized higher-tech much more damaging than violence!!! 


The Fed and BOE need to be prosecuted for myriad crimes.


Reggie is the man!

ghenny's picture

You guys are dreaming if you think the US government and the European Governments are going to allow any significant prosecution and fines beyond what we see now.  They are populated by paid for satraps who want jobs or consulting from the financial sector when they leave public service.  They will slap a few people (minor) in the slammer and levy manageable fines on maybe 6 - 12 banks and that will be it.  The alternative would be a complete meltdown of our OECD political and economic system which is justified by what these crooks have done but would be devastating to ordinary people. I think the only alternative is some kind of international truth and reconcilliation system for the financial sector that gets all the dirty laundry out and then figures out how best to keep us out of a depression while reorganizing our political and financial systems.  In a way we are facing here what South Africa and Rwanda faced.  So many people were involved in the apartheid and genocide crimes the system did not have the taintless people or the resources to get all the criminals.  The same is true in the global financial system.  Let me know if someone has a better idea.

Careless Whisper's picture

"you have to pay what you have to pay" ... capo di tutti capi, Paul Tucker, Bank Of England.



DelusionalGrandeur's picture

Being that we are conveniently in a perpetual state of war, these criminal basket skulls should be held for high treason thus going to the head of the line for death by firing squad or hanging. Let's not clog the judicial system with the obvious guilt they all bear. Or maybe they can all start jumping from their high rise offices and flats.

rsnoble's picture

Actually for me this shit has gone from entertaining to absolutely terrifying. 

JPM is the market, so much so it's the main gauge used by traders.

I really was hoping what's coming wouldn't transpire in my lifetime but so much for that.  I'd assume get it over now than when im an old man.  This shit can't possibly end well, especially since all the fuckers in charge are plumfuk crazy.

Zero Govt's picture

in addition to rigging the MBS market with the Credit Agencies (no fine brought) and last year being fined for rigging the US Muni market JP Morgan also face a new rigging scandal in the US energy market, this new rigging scandal in Liebor and will no doubt be brought to book at some point for their favourite rigging regime, the Silver market

I'm sure there's more if not dozens of other markets JP Morgan are rigging. Their excuse for rigging the Muni market was "errant employees"... there comes a point when there's so many rigged markets JP Morgan have their filthy hands in you wonder if anything they do, and the CEO overlooks, isn't a criminal enterprise

rsnoble's picture

Oh I think it's safe to say they are a criminal enterprise and we're all about to pay dearly because of it.  Of course we already have been but nothing like what could become of all this.


Snakeeyes's picture

Look at the charts of LIBOR vs Fed Funds Rate or Fed Funds Effective Rate. The BIGGEST MAIPULATOR OF LIBOR is the Fed and Bank of England.

Vet4RonPaul's picture

Reggie you are indeed a prophet among muppets.  /nosarc  

On the chart, how can JPM have more of anything than the bar showing The Entire World?  Doesn't The Entire World by definition include JPM?  even if it doesn't want to?


On a positve note, and to channel MDB, I'm sure that with our two oustanding candidates of ORomney and Obamney, we'll overcome this NWO attempt to serf the last free man standing.

Vidar's picture

The chart shows JPM's notional deriviative exposure vs. the whole world's GDP. Derivative exposure can be much larger than GDP because GDP is spending that actually occurs, derivatives may pay off or they might not, obviously most do not, which is how notional exposure can get so high.

Vet4RonPaul's picture

Thanks Vidar - that makes sense and i should have known better

Diet Coke and Floozies's picture

Likely measured as the world combined excluding JPM.

Jack Sheet's picture

So after all this razor-sharp analysis, what is the grand finale? France defaults on its government bonds after taking over the shit in excess of GDP that is the big banks debt from the private to public balance sheet?

i-dog's picture

Very good interview with Max, Reggie. Kudos.

falak pema's picture

good reference in that to WB7 art work! Clockwork orange it is!

DogSlime's picture

That JP Morgan chart looks terrifying.  Talk about TBTF.

That's a hell of a lot of fraudulent "wealth".  Bloody con-men.

Jail them all.

falak pema's picture

Comparison between crony corruption in China and in USA; the ongoing saga of derivaitves scams and Lie-bor now blowing up. 

See this :David Kotok: What A Crazy Week - Business Insider

And this final damning phrase : The US and UK systems were once the models for the world.  They are now sick and corrupt.  We are five years into a financial crisis and nothing has changed.  Who are we to throw stones at others?

Read more:

oops, sorry somebody beat me to it! 

Zero Govt's picture

well said Falak

both Govt and its bastard baby, Regulation, are a complete and utter failure at everything they oversee or purportedly manage.. we now have hundreds of examples of total failure to prevent anything or resolve anything ...and no successes

there is only one regulator that works: the free market

..everything else is a sad f'ing joke

km4's picture

DAVID KOTOK: LIBOR-Gate Will Take Down Many More Bankers, And The Claims Will Spiral Into The Trillions

Read more: