And Now The Fed Gets Dragged Into LiEborgate

Tyler Durden's picture

As was first reported two days ago, and confirmed today, Barclays' natural response to allegations it single-handedly manipulated the interest rate complex for up to $500 trillion notional in IR-sensitive swaps and other products (it didn't - everyone else did it too), was to drag everyone into the scandal, starting off with the Bank of England (and about to drag Whitehall into it too), and specifically the man who was next in line for governorship of the English Central Bank: Paul Tucker. What does this mean? Well, as we suggested also two days ago, now that the natural succession path at the BOE has been terminally derailed, it brings up those two other gentlemen already brought up previously as potential future heads of the BOE, both of whom just happened to work, or still do, at... Goldman Sachs:  Canada's Mark Carney or Goldman's Jim O'Neil. Granted both have denied press speculation they will replace Mervyn King, but it's not like it would be the first time a banker lied to anyone now, would it (and makes one wonder if this whole affair was not merely orchestrated by the Squid from the get go... but no, that would be a 'conspiracy theory'.) Yet the fact that Goldman is hell bent on global domination by stretching its tentacles into every monetary policy administration is no secret: it is only a matter of time before GS also runs the English CTRL-P macros. More interesting is that in addition to the BOE, Barclays today also dragged America's very own Federal Reserve into the fray.

From MarketWatch:

Barclays also said in the document that the lender believed other banks were making Libor submissions that were too low during the credit crunch. “The evidence shows that the intent was to protect Barclays from the unfounded negative perceptions by bringing Barclays Libor quotes closer to the pack but not to affect the ultimate rate,” the bank said.


Barclays also cited subsequent research by the New York Federal Reserve staff members that, according to the lender, concluded that banks’ Libor quotes were systematically below their borrowing rates by 39 basis points after the Lehman bankruptcy. “Barclays own submissions for tenors of 1 month to 1 year Libor were higher than actual Barclays trades on 97% of the occasions when Barclays had actual trades during the financial crisis,” the lender said.

Translating the bolded: the Fed knew all along that Barclays self-reported levels were impossible. And did nothing. Which of course was not an issue until 2 days ago. Now that heads are rolling, it is.

So we wonder: will the captured and corrupt congressional critters even pretend to have the guts to escalate LiEborgate on US soil, where the real bodies are buried, or will everyone continue to tiptoe around the issue, hoping it just blows off on its own? If the latter, look for many new and exciting $0.99 apps to hit the iTunes store in the next 12-24 hours. After all must keep the fat, lazy, easily distracted muppets, occupied with cool retina displays and even cooler games where stuff happens fast without draining the battery for hours.

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Colombian Gringo's picture

Banksters of the world unite! You have nothing to lose but your heads.

SilverTree's picture


camaro68ss's picture

Once these contracts are found to be illegal, by law they are null and void instantly.

so what happens next?

camaro68ss's picture

wouldnt you have a CDS event instently?


i guess not because its not happening

Comay Mierda's picture

no credit event, just barclays and cohorts sold swaps to everyone and their mother pitching higher interest rates, then manipulated rates even lower to pocket profit.

when will muppets learn? whatever the banks recommend, ALWAYS do the opposite

derek_vineyard's picture

someone get the broom...ill hold up the rug

sunaJ's picture

I love the defense coming out of Barclays:  During the height of the credit crunch, Barclays ordered its inner-circle to manipulate the Libor lower (You see!  It wasn't OUR fault, we were told to do it by the BoE). 


It is not difficult to see that the cheap credit and graft were had earlier, and profits already in corporate salaries.  ONCE THE CREDIT MARKET WAS BROKEN, banks started ratcheting up credit and were asked not to by BoE.  This is because we were in a credit crisis brought on by much of the very fraud of which we speak.  Once again, government is late to the party and no enforcement was even in sight.   Gotta love the scapegoating game when it gets down to brass tacks, though.

Mark Carney's picture

It's all a lie, do not believe them.



disabledvet's picture

i am surprised they didn't say "why are you blaming just us when we all are doing it" myself. that's normally how these things go down. anywho what's going on is truly "Out of the Box"..and has been for some time. ANYONE who says or implies otherwise is a simpleton. The question that should be asked of course is "who get's the higher rate"? So far it's been Greece, Ireland and Portugal. Now it is (or isn't?) Spain. Is it Italy? Is it Belgium? How about Hungary? You can blame fractional reserve banking all you want...but the real problem is the breadth and depth of US capital markets is it not?

The Big Ching-aso's picture



This is all nothing a brand new shiny pair of prez cufflinks on t.v. couldn't fix.

Al Gorerhythm's picture

Not if the ISDA has anything to say about it.

dolce vita's picture

A; owes B

B; owes C

C; owes A

A; "where the hell did C go ? they owe me for this CDS , cuz i owe B......."

Notice that faint wiff?................Shit now hitting the perverbial fan.

knukles's picture

Maybe no direct CDS events...

But what about all the floating rate notes set off of LIBOR?
That was manipulated downwards.
All them holders of them notes had coupons that were fraudently set tooo law, depriving them of their rightful income.

Which means in many structured deals (CDOs, etc) many floaters did not generate the income necessary to pay the coupons on the senior/junior/sub, etc notes what may indeed have led to income deficiencies, events of default and liquidations of deals.... and many people HURT!

I don't mean to open up a hornet;'s nest or anything

Go buy some CDS on the folks writing Barclay's D&O and E&O insurance!


Liquid Courage's picture

Heh, heh ... he said "floaters".


Not sure if accidental, but nice imagery there.

a) back in the day knew a girl who worked part-time at Woolworth's. Part of the daily pre-opening routine was to remove all the "floaters" from the 25 cents/fish Goldfish tank. Nice.

b) next to an actual drowning, the worst thing that can ruin a Lifeguard's day is for someone to launch a "floater" into the pool. Better.

ToNYC's picture

The Salomon Brothers Treasury bid-rigging scandal in 1988 brought down the house. This LIeByOurRates was everyday love in Financial Engineering. There is no engineering in a gamed engine; it exists to lie and steal and performed by acting like a judge to fool the stupid humans who think they are going to give their money to the nice man or woman who will come back with more for you.

Kitler's picture

That's easy... I would just get some new and better judges to declare them legal again.

EscapeKey's picture

They won't be. Not in a million years.

Foreclosuregate was an example of systemic corruption. And the net result? Oh if we pay $40bn, of which you give us $30bn, we'll brush it under the carpet and act as if nothing happened.

I mean, fuck me, if a peanut-sized $10bn fine is the net result of an issue the size of foreclosuregate, then why even pretend there's any kind of regulatory oversight?

dark pools of soros's picture

and where do those 'fines' actually go??  any % allocated to victim compensation?? Thieves robbing from thieves

EscapeKey's picture

They will no doubt go straight into the coffers of the Treasury, helping to "bridge" the deficit, thereby "helping us all" (especially those on bidless government contracts).

shanearthur's picture

Captured my feelings exactly. I've learned a boatload reading this site the last six months, but even without that knowledge, I suspected the whole damn system was corrupt beyone repair. Now I know beyond doubt it is.

MsCreant's picture

I kept asking this about everything associated with real estate. All dem loan was given on false pretense. All dem houses was sold on false pretense. All dem loans was sold into MBS on false pretense. All dem taxes went unpaid under dem false pretense. None of dem is null or void, or so it seems.

CalibratedConfidence's picture

Two words:

Litigation arbitrage

Popo's picture

It would seem that Bernanke is guilty of fraud.


CPL's picture

Same thing will be done to curb the excesses of the system as the last time.

MsCreant's picture

It would seem you can't be a banker and be innocent of fraud.

t_kAyk's picture

Sure you can, I see these banksters every day, strolling around all free and easy doing gods work. 

strannick's picture

Or be a banker and convicted of fraud

knukles's picture

He can just plead ignorance.

CheapBastard's picture

"There's never one roach."


gmrpeabody's picture

Relax..., Eric Holder is on it. Er... huh..., nevermind.

Bob's picture

No doubt Issa has been salivating over the chance to link Holder to something like this. 

Or not.  He knows his masters. 

Debt-Penitent's picture

Meh, the Puppet Of The United Status-Quo already has all the culprit's names filled into the next Presidential Directive form. 

He just needs a date when it won't look so obvious.

Mesquite's picture

He is in something...and it smells...

Xibalba's picture

QUICK!!! Media Blackout!

Dr. Richard Head's picture

So perhaps the mass arrests of the banking cabal that have subjegated the world's population in debt/tax servitude will comence and the guilty finally be held accountable?  That, I am going to be voted to the seat of POTUS tomorrow.

Widowmaker's picture

Not even a chance.

The solution is new money, and new money institutions from top to bottom.

If you are a banker you will be lucky to live.

Debt-Penitent's picture

The solution is new money, and new money institutions from top to bottom.

If you are a banker you will be lucky to live.


You must be on drugs!

You and who's Army will implimenmt that?  I assure you, the current current military WILL defend the current financial institutions...upto and including...

Debt-Penitent's picture

Never forget:
The financial districts fund policy.
Policy sets agendas.
Agendas set political directives.
Political directives always are fulfilled by military might.

Conchy Joe's picture

The New Pledge of Allegiance...


disabledvet's picture

name one that is being funded by them currently.

Divided States of America's picture

This is effin unbelievable.

Libor - rigged

NBA Draft - rigged (New Orleans getting 1st overall pick)

Lottery Draws - rigged

Stock market - rigged

FX rates - most likely rigged

Holy fuck, tell me what isnt rigged these days.


surf0766's picture

Welcome to Amerika. All your rigs belong to us.

The Gooch's picture

All your rigs are belong to us!


surf0766's picture

I am new to this country . PLease excuse my marx.

CPL's picture

It's all left Engels to the rest of us.


<rimshot>  Little commie humour for tuesday.

francis_sawyer's picture

US Justice Dept... nigged... Oh wait!... (PS... I love "junks")...

walküre's picture

I tell you what is not rigged.

My hog and beef production is not rigged. The animals wouldn't live another day if I started feeding them derivatives. They need the real stuff.

So tell me, why are we still accepting derivatives in exchange for our hard days work?

I'd like to be paid in real stuff for my real wares because they eat and shit for real and they really feed you. Unless your veggie then I can fix you up with some real corn as well.

You get what I'm saying?