“Don’t Worry Mate -- There’s Bigger Crooks In The Market Than Us Guys!”
One of the great things about the neverending series of Libor busts and settlements (which incidentally were once a "conspiracy theory" because it was supposedly impossible for so many people to keep their mouth shut, or so the always wrong conventional wisdom went until the summer of 2012 when theory became fact) is that they all thought they would never get caught, used communications that left a record visible from a mile away, and in the process described the criminal aspects, which lately it seems are the only ones left, of banking from the inside in greater detail than anyone else. Such as in the case of today's Rabobank $1.1 billion Libor manipulation settlement which also cost the CEO, Piet Moerland, his job. It is there that we read just how the Libor criminals saw their daily crimes, which amounted to millions in year end bonus terms: "Don’t worry mate -- there’s bigger crooks in the market than us guys!" There is (sic) indeed.
This is what one Rabobank yen Libor submitter, identified as Submitter-4 in the DOJ's Statement of Fact filing, said in the September 21, 2007 e-mail, after agreeing to increase the daily yen rate by a percentage point.
Elsewhere, one Rabobank trader told a yen submitter that people were talking with each other to change the rates. The submitter said: “yes deffinite manipulation - always is tho to be honest mate… i always used to ask if anyone needed a favour and vise versa…a little unethical but always helps to have friends in mrkt.”
Then, another mid-level manager joked to a colleague seeking help rigging rates: "I am fast turning into your Libor bitch!!!" And so on.
To the manipulating cabal, it was a lucrative victimless crime. To everyone else, between this and all the other crimes conducted by bankers in the years before 2008, it became the biggest taxpayer funded bank bailout in history. So unfortunately, the joke was on everyone else. Twice.
On July 28, 2006, a Rabobank trader and rate submitter discussed moving one-month rates higher. Within 20 minutes, the submitter contacted a trader at another bank and said: “morning skipper will be setting an obscenely high lm again today,” according to the U.S. filing.
The other bank’s trader responded, “(K)...oh dear..my poor customers....hehehe!! manual input libors again today then!!!!”
The rate submissions by both Rabobank and the other bank, which isn’t named in the documents, moved up one basis point that day, from 0.37 to 0.38. Those submissions were the second highest of the contributor panel that day, according to the statement of facts.
To be sure, everyone was involved...
Mid-level managers at the bank, such as Rabobank’s global head of liquidity and finance in London, were aware of and participated in the internal manipulation of Libor submissions, according to the statement of facts.
“We were obviously struck by the extent of the misconduct,” Mythili Raman, acting assistant attorney general of the Justice Department’s criminal division, said in an interview.
She said the investigation found both internal and external agreements to manipulate rates and that the rate setter allowed swaps traders to have significant influence over the Libor setting process.
“What we’ve found across a number of our investigations whether it be in this case or others is that there is misconduct that banks need to be paying more attention to,” Raman said. “They should be paying attention to the fact that we’re paying attention and there’s more to come.”
... and not just at Rabo but everywhere else too.
The fines make Rabobank the fifth firm penalized over manipulation of the London interbank offered rate. Global investigations into banks’ attempts to manipulate the benchmarks for profit have led to fines and settlements for Barclays Plc (BARC), Royal Bank of Scotland Group Plc, UBS AG (UBSN) and ICAP Plc.
Thirty current and former employees of the Dutch lender were involved in rate rigging, Rabobank executive board member Sipko Schat said today. Five of them were fired, he said.
“We were startled by the amounts, which were higher than we had anticipated, taking into account regulators found no involvement from the bank’s management board or senior managers,”
And that, it goes without saying, is the biggest punchline of all. Because absolutely everyone in each of the Libor manipulating banks knew what was going on- from the lowliest mail boy, to the CEO. And so did the regulators: after all many of them used to work previously at the banks where the Libor cartel operated. But it would not look good to the general public if the people at the very top of the banking industry were found to be the same common crooks like those filling every single US prison.
Full DOJ filing below.
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