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Citi, Bank Of America, And JPMorgan Enter Lieborgate: Congress Expands Libor Probe To Big Three Domestic Banks

Tyler Durden's picture


When the Fed released its "trove" of materials confirming that the Fed indeed knew that the Barclays was manipulating its Libor submissions (amusingly explained by Ben Bernanke before Senate today that "the employee had no idea what Libor is in that case"), few were surprised, but more were confused why the congressional inquiry focused solely on the Fed's interactions with British Barclays, instead of focusing on the three domestic banks that were part of the BBA's USD Libor fixing committee. And only three US banks. As we observed previously:

And while the DOJ may not have gotten the memo just yet that of the 16 LIBOR fixers, 3 were US, and all most certainly engaged in the same manipulation that has now cost Barclays the posts of its Chariman, CEO and COO, some Congressmen have gotten the memo. Bloomberg reports: "Congressional investigators probing banks’ efforts to rig the London interbank offered rate plan to request correspondence between the Federal Reserve and U.S. banks that help set the rate. ’’What we’re going to do now is expand our inquiry into the domestic banks and see what kind of dialogue began with the Fed and these banks,’’ Representative Randy Neugebauer, a Texas Republican and chairman of the oversight and investigations panel of the U.S. House Financial Services Committee, said in an interview on CNBC today."

Which banks? In this case, those who should be investigated.

Neugebauer intends to request correspondence between the Fed and the three U.S. banks on the Libor-setting panel, JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Bank of America Corp., according to a congressional aide, who spoke on condition of anonymity because the details were not yet public.


The U.S. central bank is drawing more scrutiny from lawmakers critical of its record as a bank regulator after the New York Fed released documents showing it was aware that Barclays Plc (BARC) underreported borrowing costs in 2008. Neugebauer requested the documents, which were made public July 13.

And where it gets tricky is that the Chairman today already made it very clear that Libor manipulation is "unacceptable behavior." He may have a harder time explaining if it is next uncovered that not only did the Fed know that Barclays was engaging in such unacceptable behavior, but that the three biggest US banks, two of which - BofA and JPM - had the lowest Libor submissions around the time in question, as Zero Hedge first demonstrated, and one of which is still an indirect ward of the state, not only did the same, but were encouraged by the Fed to do so.

Sadly, the UK does not have Dancing with the Stars and Jersey Shore, which is why heads have rolled. In America, first the general populace has to understand why all of this is important, then it has to grasp who is at fault, and finally that it was all really the Fed's fault. Sadly, with $0.99 iDistractions and reality TV, this is never going to happen.

And with "probers" like Chuck Schumer around, who needs aliens?

But one can dream.


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Tue, 07/17/2012 - 20:43 | 2626505 viahj
viahj's picture

these are not the overnight rates we are looking for

Tue, 07/17/2012 - 21:05 | 2626559 Troll Magnet
Troll Magnet's picture

okay i'll say it:


Tue, 07/17/2012 - 21:14 | 2626589 Precious
Precious's picture

The muppets are waiting for the show to begin !

Bread and circuses.  Give them bread and circuses.

Tue, 07/17/2012 - 21:19 | 2626599 vast-dom
vast-dom's picture

Bernankzi is the one that needs to be convicted. From there it flows.

Tue, 07/17/2012 - 21:25 | 2626612 tsx500
tsx500's picture


Tue, 07/17/2012 - 22:53 | 2626782 knukles
knukles's picture

Guess Barclays came up with some pretty damned big campaign contributions which opened the floodgates to all banks testiclefrying in front of CONgress.

Net result:  Power White House cufflinks bid up Big on e-Bay

Wed, 07/18/2012 - 01:21 | 2627095 James_Cole
James_Cole's picture

OT - 


Wed, 07/18/2012 - 05:21 | 2627292 Benjamin Glutton
Benjamin Glutton's picture

Enter GOP spin machine to show how big banks were just VICTIMS of FED RES policy.


"Representative Randy Neugebauer, a Texas Republican and chairman of the oversight and investigations panel of the U.S. House Financial Services Committee said he intends to request correspondence between the Fed and the three U.S. banks on the Libor-setting panel, JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Bank of America Corp., according to a congressional aide, who spoke on condition of anonymity because the details were not yet public."


Neugebauer crafting apology to Jaime Dimon no doubt.

Let us not forget that rate fixing spans many many years and so focusing on the period when interbank lending seized will be W/S banks favored strategy to deflect their crimes onto regulators.

Tue, 07/17/2012 - 23:57 | 2626946 ozzzo
ozzzo's picture

Nobody eats bread at the circus. I want popcorn!

Tue, 07/17/2012 - 21:11 | 2626574 Unprepared
Unprepared's picture


Tue, 07/17/2012 - 20:44 | 2626506 TrainWreck1
TrainWreck1's picture

I would settle with Citi being forced to drop all their Olympics ads.


Tue, 07/17/2012 - 20:46 | 2626510 Dr. Sandi
Dr. Sandi's picture

Wouldn't it be marvelous if a few of the lame duck congressmen developed a conscience and actually started probing these banks like an angry proctologist.

Hey, a girl can dream, can't she?

Tue, 07/17/2012 - 20:51 | 2626520 nmewn
nmewn's picture


Full of sound & fury signifying nothing...they're up to their eyeballs in pissed off constituents in an election year...they will come to the conclusion that ass pounding prison is not the answer, another law and more regulation is.

Mark my words.

Tue, 07/17/2012 - 21:00 | 2626545 Poor Grogman
Poor Grogman's picture

To regulate or DEBTonate.

That is the question?

Tue, 07/17/2012 - 21:04 | 2626550 TheFourthStooge-ing
TheFourthStooge-ing's picture

Oh, they'll have to do more than that this time. Look for a fine of at least ten thousand dollars. We might even see a couple temps from the mailroom get suspended 30-day jail terms. They're serious this time.

Of course, following standard TBTF protocol, this will be packaged with no admission of wrongdoing.

Tue, 07/17/2012 - 21:16 | 2626592 HardAssets
HardAssets's picture

Yeah . . . all these articles are riveting for finance junkies . . . but the result will be an absolute Big Freakin' ZERO.

Congress and the regulators will never do squat.

It will take a complete collapse of the global economy before anything changes (good or bad).

As a finance junkie . . . I'll keep reading the newest articles though. Even though they do probably elevate my blood pressure.

Wed, 07/18/2012 - 00:18 | 2627004 mademesmile
mademesmile's picture

Man, they are too busy doing important stuff, like organizing a bonfire for Chinese made Olympic uniforms. Priorities people!

Wed, 07/18/2012 - 01:43 | 2627116 zhandax
zhandax's picture

like organizing a bonfire for Chinese made Olympic uniforms

like organizing a bonfire of Chinese made Olympic uniforms

There, fixed it for ya

Wed, 07/18/2012 - 02:43 | 2627174 cbxer55
cbxer55's picture

You should see all of the chineese-made tools us U.S. Air Force Civilian employees have to work with. Crappy micrometers and calipers! Wrenchs that bend when you try and apply some force with them. 

Makes me want to cry seeing all of this made-in-china stuff on a U.S. Air Force base. ;-(

Guess they know who their masters are!

Wed, 07/18/2012 - 00:50 | 2627057 CitizenPete
CitizenPete's picture

It would be just like "looking up old freinds".

Tue, 07/17/2012 - 20:48 | 2626513 rosiescenario
rosiescenario's picture

Jeesh....and Larry Krudlow was just 'splaining on CNBS that ....gosh....if the banks set LIBOR low that was a good thing...his mortgage was pegged to it, so they did him (and the rest of us) a huge favor....


.....of course, Larry forgot to mention that some of us who had stupidly bought SWAPS got hosed.

Tue, 07/17/2012 - 20:53 | 2626526 Sofa King
Sofa King's picture

Whether it helped or hurt, fraud is still fraud and the guilty better shove some broken glass up their ass or they can expect their farts to stop making noise in no-time flat.

Tue, 07/17/2012 - 22:12 | 2626710 ChacoFunFact
ChacoFunFact's picture

a little known fact is that there is no statue of limitations when it comes to fraud.  this could lead to some interesting "discoveries" going back in time should the plantiff desire to pursue...

Tue, 07/17/2012 - 20:58 | 2626539 Dr. Sandi
Dr. Sandi's picture

Not to mention the silly few of us who paid their property taxes to municipalities whose pension plans and civil construction financing were creamed by the same LIBOR fixing.

It's just a silly little prank until somebody loses an eye.

And their house.

And their life savings.

And their future pension.

And please, I don't fucking want to hear about lazy bastard civil servants deserving to lose their pension. Because that only means that my house will be used as a county controlled piggy bank to make a second run on paying for the government's first funding 'mistakes.'

Tue, 07/17/2012 - 20:48 | 2626514 Snakeeyes
Snakeeyes's picture

Bernanke/Geithner knew about possibly "fixing" at least in the UK. But Bernanke admitted today that it would be hard to create LIBOR prices when banks aren't lending to each other.

Waiting to find out if the regulators told the banks to create LIBOR rates. Wouldn't suprise me if they did.


Tue, 07/17/2012 - 20:49 | 2626515 francis_sawyer
francis_sawyer's picture

By the time it gets to Congress, it becomes PIEHOLE-BORE GATE...

Tue, 07/17/2012 - 20:52 | 2626522 Snakeeyes
Snakeeyes's picture

Since LIBOR follows the Fed funds rate closely, you have to determine what the appropriate LIBOR rate was in absentia of traded prices. Since it will be near Fed funds rate plus a premium, I am guessing that it is low.

Tue, 07/17/2012 - 20:53 | 2626528 Totin
Totin's picture

How can these guys even sleep at night? This crap sickens me.

Tue, 07/17/2012 - 21:07 | 2626564 Dr. Sandi
Dr. Sandi's picture

Sociopaths sleep like zombies.

Tue, 07/17/2012 - 21:17 | 2626595 Cabreado
Cabreado's picture

Not when their fantasy starts to crumble.

They don't sleep at all.

Tue, 07/17/2012 - 20:54 | 2626529 imamonkey
imamonkey's picture

Huh? What? Nothing happened here ... move along & please make sure you place your donations in the box on the way out ... Luv ya!!

Tue, 07/17/2012 - 20:59 | 2626542 viahj
viahj's picture

they can go about their business, move along.  move along.

Tue, 07/17/2012 - 21:09 | 2626572 Troll Magnet
Troll Magnet's picture

duuude, you stole my avatar!!!

Tue, 07/17/2012 - 21:41 | 2626652 imamonkey
imamonkey's picture

I was thinking the same thing about you! It's been my ONLY avatar since I joined 33 weeks & 5 hours ago. Great minds think alike ...  

Wed, 07/18/2012 - 02:50 | 2627178 cbxer55
cbxer55's picture

Troll Magnet has had it for one year, 22 months.

He beats you out handily.

Time to search for a new avatar.

Tue, 07/17/2012 - 20:56 | 2626536 YouThePeople
YouThePeople's picture

The probers are as dirty as the ones they probe.

Tue, 07/17/2012 - 20:57 | 2626537 Dr. Engali
Dr. Engali's picture

Not that I think anything will come of it, but it sure looks like a lot of shit is hitting the fan as we come up on the 100 year anniversary of the fed. Here's to hoping it doesn't make it that far.

Tue, 07/17/2012 - 22:05 | 2626697 Angus McHugepenis
Angus McHugepenis's picture

They will use all the shit hitting the fan as an excuse to create the new SUPER FED! on the 100th anniversary.

Tue, 07/17/2012 - 20:59 | 2626541 Meesohaawnee
Meesohaawnee's picture

this will be bullish. this will be translated as a better likelyhood of QE3.

Tue, 07/17/2012 - 21:01 | 2626548 alien-IQ
alien-IQ's picture

I have completely given up any hope that I will ever live to see the day that any of the TBTF banks will ever be held accountable, let alone criminally prosecuted, for their vast array of...transgressions.

In the end, all the Congress critters and Senators will simply drop to their knees and suck Jamie Dimons' cock.

To believe otherwise is to believe in unicorns and tooth fairies.

Tue, 07/17/2012 - 21:03 | 2626551 Dr. Sandi
Dr. Sandi's picture

Rejoice, for I have seen a day when the banks will lie empty and ruined. And millions of homeless middle class people will huddle within their desecrated walls.

Tue, 07/17/2012 - 22:09 | 2626705 alien-IQ
alien-IQ's picture

I sure hope that's the same day that Jessica Alba is scheduled to show up at my door naked. You know...just to make the fantasy complete.

Tue, 07/17/2012 - 21:07 | 2626553 Long-John-Silver
Long-John-Silver's picture

The same prostitution (oops-strike that) prosecution efforts used on Corzine will also be used on these Banksters as well.

Tue, 07/17/2012 - 21:05 | 2626560 Bunga Bunga
Bunga Bunga's picture

Finally all the facilities and methods of the CIA might make some sense.

Tue, 07/17/2012 - 21:11 | 2626578 Whoa Dammit
Whoa Dammit's picture

I am sure the big three are just quaking in their boots at the thought of being questioned by their bought and paid for minions in Congress. And of course imagining what  Holder's DOJ might do keeps them awake at night. /s

More actual concern on their part is probably spent upon deciding which cufflinks and what tie to wear when they star in the dog & pony show.

Tue, 07/17/2012 - 21:11 | 2626580 Hype Alert
Hype Alert's picture

Why do I see representatives from each bank sitting at a table with microphones in the pose of the Three Wise Monkeys - hear no evil, see no evil and speak no evil?

Oh and of course, Schumer saying, "Get to work gentlemen!"

Tue, 07/17/2012 - 21:12 | 2626581 Xibalba
Xibalba's picture

how the fook is no one behind bars yet?  

Wed, 07/18/2012 - 01:23 | 2626594 Dr. Sandi
Dr. Sandi's picture

Apparently there aren't any young men from the ghetto running the major banks.

But if the big bad bank boys were bright, they'd come up with a summer intern program to put poor kids from the bad part of town into important positions in major banks. And by important, I mean important enough to have their asses arrested for white collar crimes when the FBI shows up to destroy the evidence.

Tue, 07/17/2012 - 21:23 | 2626608 HardAssets
HardAssets's picture

America's gonna turn into one big freakin' debtors prison after these a-holes are done.

Tue, 07/17/2012 - 22:01 | 2626689 Angus McHugepenis
Angus McHugepenis's picture

It's called "bail... out".

Tue, 07/17/2012 - 21:21 | 2626604 catch edge ghost
catch edge ghost's picture

PROBE: Placate Revolting Outrage By Equivocation; to put a lid on it; to unhappen and appease. see also: shitty deal.

Tue, 07/17/2012 - 21:25 | 2626611 bob_dabolina
bob_dabolina's picture

Jon Corzine should get the Nobel Prize for Economics

Tue, 07/17/2012 - 21:29 | 2626623 Bunga Bunga
Bunga Bunga's picture

Too late, the prize went already to Madoff for "Ultimate Theoretical and Practical Base Model of Capitalism".

Tue, 07/17/2012 - 21:25 | 2626614 Ned Zeppelin
Ned Zeppelin's picture

Two words incapable of inciting fear in any bankster: "Congressional probe."

Tue, 07/17/2012 - 21:27 | 2626620 bigkahuna
bigkahuna's picture

banksters: ooh congress, were really frightened-please don't make mean faces at us! ooh!

Tue, 07/17/2012 - 21:37 | 2626625 booboo
booboo's picture

Oh Please, this and the HSBC hearing on mexican drug money laundering is nothing more than a squeeze, a shake down. You know, when the mafia sends their goons over to your butcher shop to demand protection money "weez woodunt wants youz to gets yours windows broken out nowz would we" or in the political game of Circle Suck Off, "The Honorable Gentleman from Deleware would like some donations and we might make this whole sordid affair go away"

I hope we are reaching a stage when the only people who think that they are the only ones privy to their lying fucking ways (politicians) are the only ones that think that. Did that even make any sense or am I taking crazy pills.

"The longer we dwell on our misfortunes the greater is their power to harm us."




Tue, 07/17/2012 - 22:24 | 2626738 WmMcK
WmMcK's picture

Clever tyrants are never punished.

Tue, 07/17/2012 - 21:31 | 2626629 TahoeBilly2012
TahoeBilly2012's picture

RON PAUL 2012! Fuck the whole gawd damned thing, Hunter Thompson for VP.

Tue, 07/17/2012 - 21:34 | 2626634 Yes_Questions
Yes_Questions's picture

 "Congressional investigators probing banks’ efforts to rig the London interbank offered rate plan to request correspondence between the Federal Reserve and U.S. banks that help set the rate.




 "Congressional investigators FEIGNING THE probing OF banks’ efforts to rig the London interbank offered rate plan TO THROW A DOG AND PONY SHOW APPEARING to request correspondence between the Federal Reserve and U.S. banks that help set the rate BUT WILL BE OFFICIALLY DISSED, AND THEY WILL ALL LIVE HAPPILY EVERAFTER.  THE END.



Tue, 07/17/2012 - 22:06 | 2626700 LeisureSmith
LeisureSmith's picture

Happy 200 year anniversary Citi.... In the year 2012, Pandit The Bandit and the rest of the TBTF-crew will need some serious financial necromancy to stay animated...200 is such a round number, why wait? I've got popcorn ready, just let go.

Tue, 07/17/2012 - 22:07 | 2626703 wisefool
wisefool's picture

The scandal was exposed late last month when the British bank Barclays agreed to pay $450 million to regulators 


I am sure it was covered here on ZH, but from a criminal justice perrogative, what is the point of making central/money center banks give money to "regulators." I hate to be crude, but if you get cited for public defication, the judge does not sentence you to pay a fine in excrement.

Tue, 07/17/2012 - 22:25 | 2626740 nah
nah's picture


Tue, 07/17/2012 - 22:38 | 2626762 q99x2
q99x2's picture

Smoke and mirrors.

Tue, 07/17/2012 - 22:41 | 2626773 world_debt_slave
world_debt_slave's picture

Ron Paul was on to something with Audit the Fed, but the true action is to END THE FED!

Tue, 07/17/2012 - 22:49 | 2626786 MrTouchdown
MrTouchdown's picture

Everybody look out! Congress is preparing another probe! You'll know it's working when bankers respond with "is it in yet?"

Tue, 07/17/2012 - 23:01 | 2626799 XitSam
XitSam's picture

If the Fed employee didn't know what LIBOR was, why were they asking about it?  Did they think they could tell the difference between a valid answer to the question and pure BS? (Because marginal PLOKEY duration is nominally 2 centons but lately increased due to FARSNIP penumbras and falling Jub-Jubs.)

Tue, 07/17/2012 - 23:08 | 2626813 DeadFred
DeadFred's picture

"The DOJ realizes it can't pin Liebor on Goldman right? It has to be Citi, BofA or JPM".

In my humble/paranoid opinion Goldman is behind the whole thing. They have zero exposure, all the needed MSM and .GOV contacts and stand to make profits from feeding off the carcasses of one or more zombie bank culled from the herd. The squid goes after any and every source of blood even it's brethren TBTF.

Tue, 07/17/2012 - 23:07 | 2626814 DeadFred
DeadFred's picture

"The DOJ realizes it can't pin Liebor on Goldman right? It has to be Citi, BofA or JPM".

In my humble/paranoid opinion Goldman is behind the whole thing. They have zero exposure, all the needed MSM and .GOV contacts and stand to make profits from feeding off the carcasses of one or more zombie bank culled from the herd. The squid goes after any and every source of blood even it's brethren TBTF.

Tue, 07/17/2012 - 23:18 | 2626839 Bansters-in-my-...
Bansters-in-my- feces's picture

The new word for LYING is "underreported.......

Too fucking funny......

Makes me puke.

Tue, 07/17/2012 - 23:24 | 2626856 Problem Is
Problem Is's picture

"And with "probers" like Chuck Schumer around, who needs aliens?"

Schmucky Schumer: Douche Bag Extraordinare

Who gave a rousing campaign speech at Bernard Madoff Investment Securities while pocketing campaign bribes... here and here.

Wed, 07/18/2012 - 01:10 | 2627086 torak
torak's picture

Shred and burn.

Wed, 07/18/2012 - 02:52 | 2627180 Sid James
Sid James's picture

..."the employee had no idea what Libor is in that case".

Ben, as alibi's go, that's right up there with "the cat ate my homework".

Wed, 07/18/2012 - 07:04 | 2627385 Lumberjack
Lumberjack's picture

For those who may have missed this...



Group Of 30 Blames 'Economic Chaos' On Poor Bank Governance


NEW YORK, April 12 (Reuters) - The Group of Thirty, a private organization of influential regulators, financial executives and academics, has thrown its weight behind reform of corporate governance practices at the world's biggest financial companies, implicating executives, board members, shareholders and regulators for past failures.

"The global economic crisis, with the financial services sector at its center, wreaked economic chaos and imposed enormous costs on society," the G-30's year-old working group on corporate governance wrote in an 81-page report released Thursday by the group's Chairman Jean-Claude Trichet, the former president of the European Central Bank.

The report blamed "pervasive failure of governance at all levels" as a large contributor to the 2008-2009 financial crisis.

Note: "pervasive failure of governance at all levels" That should also include those who govern us.

Here is the report:$FILE/Toward_Effective_Governance_of_Financial_Institutions.pdf


Weak and ineffective governance of systemically important financial institutions (SIFIs) has been widely cited as an important contributory factor in the massive failure of financial sector decision making that led to the global financial crisis. In the wake of the crisis, financial institution (FI) governance was too often revealed as a set of arrangements that approved risky strategies (which often produced unprecedented short-term profits and remuneration), was blind to the looming dangers on the balance sheet and in the global economy, and therefore failed to safeguard the FI, its customers and shareholders, and society at large. Management teams, boards of directors, regulators and supervisors, and shareholders all failed, in their respective roles, to prudently govern and oversee.


Wed, 07/18/2012 - 08:23 | 2627501 Widowmaker
Widowmaker's picture

Uncle Sam and the felons of fraud Inc. -- a fat shit-burger. 

TBTF is where justice and the free market go to die.

So, what's for lunch?

Thu, 07/19/2012 - 09:09 | 2631370 swani
swani's picture

Too bad nothing will happen since we are living in a Banana Republic.

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