"This Is Just The Beginning" As LIBOR-Manipulation Liabilities May Top $176bn

Tyler Durden's picture


Forget the few hundred million dollars in wrist-slap fines the banks face from regulatory discipline over the Libor rate manipulation 'conspiracy fact'. As the WSJ reports this morning, the number of suits and potential liabilities are rising rapidly as cities, insurers, investors, and lenders all jump on the cabal-beating band-wagon. From individual investors claiming lost returns due to low rates to hedge funds squeezed in derivatives trades, liabilities could exceed $176bn as the blood-suckers lawyers note "this is just the beginning" as "scores of interested potential clients" have called. While, obviously, it won't be easy to win in court, the ongoing costs of litigation and potential liability (which will be largely ignored by Messrs. Bove et al. we are sure) range from Macquarie's $176bn estimate to Morgan Stanley's $7.8bn (quite a range) and it will likely take years for the lawsuits to see resolution. Notably though, floating-rate bond-holders are likely to have the most success (and easiest claim) as Darrell Duffie notes "assuming they can convince a jury Libor was too low, it's pretty easy to then show they were paid too little interest" but in the meantime, as CalPERS adds, "we await the regulatory investigations, which will drive the outcome" of litigation.



This potential liability, for some context, is over 35% of the entire market cap of the Big 5 US banks... (~$489.5bn) - though of course, loan loss reserves can be rotated fungibly to litigation loss reserves and any negative implication of any suit will merely lead to positive DVA adjustments - so don't feel too bad for them!!



Chart: WSJ

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Mon, 08/27/2012 - 08:51 | 2740569 Buckaroo Banzai
Buckaroo Banzai's picture

I'd feel better about these lawsuits if I didn't realize that they are gonna make a bunch of lawyers unbelievably rich.

Mon, 08/27/2012 - 09:02 | 2740597 Omen IV
Omen IV's picture

the "blood sucking lawyers" in lieu of an absentee and paid off government regulators are welcome frontier justice at the Ok Corral.

i hope they kill the pigs for good

Mon, 08/27/2012 - 09:22 | 2740654 BaBaBouy
BaBaBouy's picture

$200 Billion Cost for Libor Manipulation/Fixing!


Imagine, what will be the Bill for the GOLD and SILVER Manip that has been going on for 25 Years ???

Will every Call Option holder etc. have a claim ???

Mon, 08/27/2012 - 10:52 | 2740867 smlbizman
smlbizman's picture

maybe 49 ag's can get together and punish them with taxpayer money...that should teach them...

Mon, 08/27/2012 - 09:16 | 2740637 oogs66
oogs66's picture

Lawyers will do well - not sure who else will

Mon, 08/27/2012 - 09:20 | 2740651 Gazooks
Gazooks's picture

ink and paper suppliers

Mon, 08/27/2012 - 10:02 | 2740734 Arnold Ziffel
Arnold Ziffel's picture

Without jailtime, nothing changes.

Mon, 08/27/2012 - 09:20 | 2740649 Offthebeach
Offthebeach's picture

Time to raise some more "service charges" , good and hard, on the muppets.

Mon, 08/27/2012 - 08:54 | 2740570 LawsofPhysics
LawsofPhysics's picture

This will take years to address.  WWIII will start before then.  A non-issue.

Prepare for NIRP (floating rate my ass).  Time to make all the bond holders pay and put those retirees on the cat-food diet.



Mon, 08/27/2012 - 08:53 | 2740573 realtick
realtick's picture

Buffett, Babes And The Coming Bear Market In Bonds


Mon, 08/27/2012 - 08:55 | 2740579 LawsofPhysics
LawsofPhysics's picture

Look at the yields on all those bonds.  Is ZIRP here already?

Mon, 08/27/2012 - 08:53 | 2740576 fonzannoon
fonzannoon's picture

When the bank pays the fine, I assume this fine is distributed in correct proportion to the victims, correct?

Mon, 08/27/2012 - 10:40 | 2740832 LMAOLORI
LMAOLORI's picture


"fonzannoon When the bank pays the fine, I assume this fine is distributed in correct proportion to the victims, correct?"

When the bank pays a fine it is distributed to it's CUSTOMERS

Mon, 08/27/2012 - 08:55 | 2740577 rsnoble
rsnoble's picture

$176billion? Bullshit. It's in the trillions. Bankers don't waste their time for billions.

Mon, 08/27/2012 - 08:58 | 2740588 fonzannoon
fonzannoon's picture

Trillions in fines???? This is most excellent news. As this money is redistributed back into the hands of the victims of this scam the economy could actually see a robust and organic recovery begin at the expense of the big banks who caused all the harm!

reverse MDB

Mon, 08/27/2012 - 09:08 | 2740612 rsnoble
rsnoble's picture

Yeah I can't wait for my $2.35 class action lawsuit check lol.

Mon, 08/27/2012 - 10:15 | 2740766 ParkAveFlasher
ParkAveFlasher's picture

Personally, I'm afraid of clawback.  I had an ARM for about six years!

Meanwhile, HSBC just started charging me for all kinds of BS.  Looks like they already started clawing!

Mon, 08/27/2012 - 10:44 | 2740844 tsuki
tsuki's picture

That I can only use to buy more worthless stock in the company that was sued. 

Mon, 08/27/2012 - 08:57 | 2740585 Whatta
Whatta's picture

pshaw...settled out of court, the little guy will get shat upon, the big guy some millions of silence money and the perpetrators will continue to the next fleecing mechanism.

Banking will never change. Moneychangers always will win....if you stay in the system with them.

Mon, 08/27/2012 - 09:00 | 2740593 Inthemix96
Inthemix96's picture

Fuck me,

Is anyone associated with either banking, politics, law firms straight?  One giant sceme of fuck the populace while those dirty bastards get rich quick.

Downright fucking criminal cunts

Mon, 08/27/2012 - 09:03 | 2740596 buzzsaw99
buzzsaw99's picture

Calpers is so stupid they will end up suing themselves because of all the worthless bank stock they hold. HAHAHAHA!! Dimon, blankfein, paulson, corzine, et al already got theirs and are untouchable bitchez.

Mon, 08/27/2012 - 09:02 | 2740598 Meesohaawnee
Meesohaawnee's picture

yea. and what a about equities manipulation?

Mon, 08/27/2012 - 09:07 | 2740606 giovanni_f
giovanni_f's picture

a gdp positive development

Mon, 08/27/2012 - 09:08 | 2740611 Hayek FA
Hayek FA's picture

Fed announces monetisation of lawsuit claims, just lodge judgements with Fed for full re-imbursement.

also accepting pencil sharpenings, iphone 3's, nokia phones(all), typewriters & sincere handwritten IOU's


Problem solved

Mon, 08/27/2012 - 09:09 | 2740613 Dr. Engali
Dr. Engali's picture

Laywers will get 98% of the money and the plaintiffs will get a Spider man towel.

Mon, 08/27/2012 - 09:11 | 2740616 orangedrinkandchips
orangedrinkandchips's picture



I am a huge golfer. Love the sport as there is nothing better than a twilight by yourself in the middle of nowhwere (it would seem) at peace.


I watch a lot of golf too and I like Mick but the Barclays ad is not a good one to start with no matter the climate but Mick asking a golfer to play by the rules?


Ironic....just voice over the parts about a foot wedge and put in LIEbor.....

Mon, 08/27/2012 - 09:13 | 2740621 intric8
intric8's picture

The masses are too ignorant to understand the gravity of this libor scam. They are tuning into the Kardashians instead. Otherwise, there would be a revolution going on. Don't bother me with this heavy financial crap right now, basketball wives is about to come on.

Mon, 08/27/2012 - 09:13 | 2740623 Robot Traders Mom
Robot Traders Mom's picture

I totally headlined this shit...along with the other usual shenanigans of the "free world"




Mon, 08/27/2012 - 09:14 | 2740627 tmosley
tmosley's picture

What about all those bank deposits that now pay essentially zero interest?  I would think the liability from that would be higher than the above total by itself.

Mon, 08/27/2012 - 09:14 | 2740630 etresoi
etresoi's picture

Justice = lawyers feeding on bankers.

Mon, 08/27/2012 - 09:15 | 2740632 unununium
unununium's picture

"Few legal experts predict that [BBA banks] will file suits against other banks."

Sounds like somebody's worried about funds moving to the less corrupt arms of the syndicate. How would the WSJ know whether or not there might have been one bank among them who actually mailed in its actual borrowing costs each day?

Sorry but this has the ring of collusion and circling the wagons.

Mon, 08/27/2012 - 09:21 | 2740648 jjsilver
jjsilver's picture

Just wait until the Silver fraud explodes. Will make Libor look like childs play

Bank of International Settlements (BIS) Changed Silver Data From $203 to $93 Billion in Silver Liabilities


Mon, 08/27/2012 - 09:26 | 2740659 orangedrinkandchips
orangedrinkandchips's picture



Class Act (and lacktherof) is the easiest way out for these cocksucking serial criminals.


I DARE YOU.....SET AN EXAMPLE.....I HAVE ALL MY MONEY ON NOTHING HAPPENING! I would love to lose on this bet.

Mon, 08/27/2012 - 10:36 | 2740822 Chupacabra-322
Chupacabra-322's picture

This may be the biggest Crime of Fraud in history. I just have one question.  Why hasn't anyone, as of yet, been arrested? 

Mon, 08/27/2012 - 10:46 | 2740850 LMAOLORI
LMAOLORI's picture


Chupacabra-322 "This may be the biggest Crime of Fraud in history. I just have one question.  Why hasn't anyone, as of yet, been arrested?"


Well it would take a while to make a case but even if one was made it's likely connections will trump prosecutions

CONVICTED: Bush 1300+, Clinton 1000+, Obama 0.0 (+/-)

Five Senior Goldman Sachs Execs Gave $130K To 'Obama Victory Fund' WHILE Eric Holder Was Deciding Whether To File Criminal Charges

Mon, 08/27/2012 - 11:34 | 2740955 Chupacabra-322
Chupacabra-322's picture


The Criminals aren't even "hiding it in plain view" anymore.  The Elite are rubbing their Criminal behavior right in our Slave faces.  Perhaps you may want to read the following:

Did Eric Holder Cover Up FBI’s Role In ’95 OKC Bomb Plot?



The Criminal Cabals rabbit hole goes deep, very deep. 

Mon, 08/27/2012 - 10:49 | 2740858 disabledvet
disabledvet's picture

I thought libor kept interest rates low for borrowers. If that's fraudulent what does "real deal rate" look like?

Mon, 08/27/2012 - 12:19 | 2741070 Centurion9.41
Centurion9.41's picture

"as CalPERS adds, "we await the regulatory investigations, which will drive the outcome" of litigation."

I.e. Robo-Signing settlement writ LIBOR-Shaving....

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