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Key Highlights From Fed Lieborgate Disclosure

Tyler Durden's picture


Here are the choice highlights from the Fed datadump as we see them.

From Barclays to NYFed:

"Libor's going to come in at.. .. three-month libor is going to come in at 3.53.'s a touch lower than yesterday's but please don't believe it. It's absolute
rubbish. I, I, I'm, putting my libor at 4%


...I think the problem is that the market so desperately wants libors down it's actually putting wrong rates in."

and on the 'Stigma':

"I think people are afraid to be seen as urn being ahh having, I mean if they have a high libor the market automatically assumes they're paying too much, but in a perverse kind of way if you put a low libor, it's almost as if the market knows that you're scared to put where you really think it is. I mean, I know that I'm consistently high, but I think I'm consistently correct."

and just how bad:

"when libor was fixing at 3.55... just to give you a clue I got paid 4.30 in threes by my Tokyo, via the yen"

and specific to Barclays:

"I don't know if you've looked at my libors but I've kept mine the same virtually every day for the last week and everyone seems to be gradually sort of coming up to my levels, and I can tell you that I'm putting levels in that I' m not sure I can trade or not, but I know they're more realistic than anyone else's."

From June 2008, the Fed appears to have been aware of Libor "misreporting" issues:

Apparently Libor has credibility issues:

The BBA was made fully aware of the issues:

And here are all the banks that were complicit: basically, all the BBA members:

Timmy Gee to M-King:

And M-King's response:


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Fri, 07/13/2012 - 11:33 | 2613045 LawsofPhysics
LawsofPhysics's picture

long guillotines and physical assets...

Fri, 07/13/2012 - 11:39 | 2613064 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The banks use gold as a reserve to balance their books.  This is what Bernanke was forced to admit when he was asked if he has gold.  At first he replied, "No."  This either shows he lies, or he doesn't know his own balance sheet.  Either should scare economists and financiers alike, as it shows the man behind the curtain is evil or is clueless.

The banks use gold, but it is then rehypothecated ad infinum.  This is their chink in their armour.  While they use this ponzi scheme, gold and silver lies all around us, scattered from an economic war started in 1913 by a clique of international bankers who wanted to subdue the population into a control system. 

If we take back the money supply, gold and silver, that which has always been used as money, then if they try to pull some shit on us like a New World Order, we can tell them to fuck off because we will have the goods.

Take back the money supply!

Buy Bullion!

Fri, 07/13/2012 - 11:56 | 2613133 NotApplicable
NotApplicable's picture

I believe shit's getting serious.

When it becomes serious, you have to lie."

Fri, 07/13/2012 - 12:03 | 2613163 El Viejo
El Viejo's picture

Just following in the footsteps of the Grand-daddy of all rate setters.

Fri, 07/13/2012 - 12:59 | 2613371 Daily Bail
Daily Bail's picture

The sheeple have been paying more attention than we thought...


BANKERS BEHIND BARS - Petition To Put Bankers In Jail Passes 350,000 Signatures In Two Days

Fri, 07/13/2012 - 14:39 | 2613845 bubbleburster
bubbleburster's picture

I don't mean to sound like an idiot, but the only ones that we know are buying Gold in a big way are the Chinese and good on them for hedging their obese double down on the T Bill special they've been holding in their version of Fort Knox.  The Chinese can no more dump T Bills than they can turn down next years orders for production of Barbie Dolls.  The US and China are tied at the hip and they both know it.

Fri, 07/13/2012 - 12:06 | 2613172 Sudden Debt
Sudden Debt's picture

ehe... long smoke machine yeah!
it will all just go away like all the other fraud!

start diversion act NOW!!!

Fri, 07/13/2012 - 13:19 | 2613462 Stoploss
Stoploss's picture

And now you know how subprime was "contained".

US ARM's were tied directly to LIBOR.

When this happened, the "OMG option ARM resets" talk, coupled with CRE ARM"S and the "market RE crash" ceased the day after. SHOCKING, isn't it.

All i know is bankers better start going to jail before they're found hanging from over passes. Or at least have the decency to off theirself.

Better yet, i have the solution.


Fri, 07/13/2012 - 11:33 | 2613046 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bomb the Banks!


Fri, 07/13/2012 - 11:43 | 2613084 Doode
Doode's picture

You do realize that everybody's loans were lower because of it.

Fri, 07/13/2012 - 11:51 | 2613117 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Who wants money?!

- The President of the Unted States, Barrack Obama, June 2012

Fri, 07/13/2012 - 12:34 | 2613252 AlaricBalth
AlaricBalth's picture

Doode, do you realize that billions of dollars worth of pensions were tied to it. Large pensions use asset-swapped derivatives to receive Libor plus margin in an attempt to maximize their return. Suppression of Libor rates would have lowered the yield of these swaps.

Fri, 07/13/2012 - 14:05 | 2613668 Thisson
Thisson's picture

The pension funds I am familiar with do not use asset swapped derivatives.  Their investment policies generally require them to make "prudent" investments in traditional stocks and bonds.  Most cannot even use vanilla equity options.

Fri, 07/13/2012 - 15:15 | 2613851 AlaricBalth
AlaricBalth's picture

Large pensions such as CalPERS and New York City Retirement use them to hedge risk, usually interest rate risk, or to maximize returns. The Illinois State Teachers Pension took massive losses 2 years ago due to derivatives.

"Dale Rosenthal, a former strategist for Long Term Capital Management, the hedge fund known for its epic collapse in 1998, and a proprietary trader for Morgan Stanley, has seen his share of financial complexities.

But when shown a seven-page list of derivatives positions held by the Illinois Teachers Retirement System as of March 31, obtained by Medill News Service through a Freedom of Information Act request, the University of Illinois-Chicago assistant professor of finance expressed disbelief.

“If you were to have faxed me this balance sheet and asked me to guess who it belonged to, I would have guessed, Citadel, Magnetar or even a proprietary trading desk at a bank,” Rosenthal said."

Fri, 07/13/2012 - 11:51 | 2613118 LawsofPhysics
LawsofPhysics's picture

So what you are saying is that fraud is okay so long as we all benefit at some level?  Go fuck yourself.

Fri, 07/13/2012 - 12:01 | 2613153 Diet Coke and F...
Diet Coke and Floozies's picture

+1. It's all about confidence in the systems.

Fri, 07/13/2012 - 12:07 | 2613174 Matt
Matt's picture

From what I got from the quotes above, the actual rates banks were able to borrow at were higher than the posted Libor rates. If that is correct, than we didn't benefit at all from manipulated rates, as they were just false advertising.

Fri, 07/13/2012 - 11:52 | 2613119 iDealMeat
iDealMeat's picture

That didn't entice everyone to borrow more at all..

Fri, 07/13/2012 - 12:00 | 2613150 CrimsonAvenger
CrimsonAvenger's picture

so tell me - who's on the other side of those lower rates? Savers? Pension funds?

Fri, 07/13/2012 - 12:03 | 2613162 luckylogger
luckylogger's picture

you do realize that everybodies savings were paid less than market rate.

Fri, 07/13/2012 - 12:16 | 2613201 short-swap
short-swap's picture

As well as many people's legitimate investment return rates. But as long as the parasitic leeches are good, so be it.

Fri, 07/13/2012 - 12:19 | 2613213 BanksterSlayer
BanksterSlayer's picture

And so were our pension plans, savings accounts, and oh yeah, paychecks, for those who still had a job .....

Fri, 07/13/2012 - 13:36 | 2613534 Diplodicus Rex
Diplodicus Rex's picture

You are welcome to correct me if I'm wrong but I'm led to believe the banks did not pass that reduction along to their clients. They simply kept the difference to themselves. So if correct, then your statement is wrong.

Fri, 07/13/2012 - 13:26 | 2613497 free market dreamer
free market dreamer's picture

Great book "The Silver Bomb - Beyond The Return Of Money As Metal" on Amazon. Lays it all out... BUY SILVER!!!

Fri, 07/13/2012 - 11:33 | 2613050 Snakeeyes
Snakeeyes's picture

The ONLY relevant bit was ... Geithner knew about it (at least) in 2008. Regulators likely turned a blind eye since it was another monetary stimulus.

Fri, 07/13/2012 - 11:40 | 2613073 financial apoca...
financial apocalyptic contagion's picture

no shit
he's one of them 

Fri, 07/13/2012 - 12:02 | 2613078 American Dissident
American Dissident's picture

Fri, 07/13/2012 - 12:05 | 2613169 akak
akak's picture

I completely agree.

Fri, 07/13/2012 - 11:43 | 2613080 swissaustrian
swissaustrian's picture

Misreporting is a euphemism for manipulation

Fri, 07/13/2012 - 11:48 | 2613104 NotApplicable
NotApplicable's picture

Manipulation is a euphemism for masturbation.

Fri, 07/13/2012 - 12:49 | 2613309 Diet Coke and F...
Diet Coke and Floozies's picture

Therefore, misreporting is masturbation?

Fri, 07/13/2012 - 11:42 | 2613081 alien-IQ
alien-IQ's picture

"It's not a lie...if you believe it"

George Costanza

Fri, 07/13/2012 - 11:43 | 2613085 Nothing To See Here
Nothing To See Here's picture

What's staggering me is that the guys working in these crooked institutions seem to actually think that there exists a thing called "the market"...

Fri, 07/13/2012 - 11:47 | 2613098 alien-IQ
alien-IQ's picture

"Market" is the diplomatic code word for "Muppets"

Fri, 07/13/2012 - 11:44 | 2613090 hedgeisforpussies
hedgeisforpussies's picture


Fri, 07/13/2012 - 11:45 | 2613096 williambanzai7
williambanzai7's picture

This is price fixing Price fixing is a felony. Everyone involved was engaged in a felony conspiracy. It was an organized scheme of coordinated criminal activity which also makes it a RICO.

If we had a prosecutor with balls, there would be hell tp pay.

Fri, 07/13/2012 - 11:51 | 2613111 mikla
mikla's picture

In a sane world you would be right.

However, the Fed (and all other Central Banks) have a *job* that is *price-fixing*.  That's what they do.

I always thought it was weird that nine guys march into a room, vote on the price of money world-wide, and announce to everybody after the vote.  With no review.  And no petition.  And they are not elected by anybody.

And, everybody thinks this is normal.  Wow.  Insane.

It's the greatest form of Central Planning.  They don't even have to take the trouble of offering a "Five Year Plan", nor review what they've done in the past.

The entire worldwide economic system is merely central planning and price fixing.  People are just upset now because they are starting to realize it.

Fri, 07/13/2012 - 12:07 | 2613176 machineh
machineh's picture

'The Fed (and all other Central Banks) have a *job* that is *price-fixing*. That's what they do.

Actually, there are SEVERAL privileged sectors of the U.S. economy in which price fixing is 'all legal':

- Academia, where colleges collude to fix tuition charges.

- Health care, where capacity controls and price discrimination are the gov-sponsored norm.

- Dairy and sugar prices, propped by gov-sponsored price floors.


Fri, 07/13/2012 - 11:58 | 2613142 same old story
same old story's picture



been reading ZH for a few years, but only posted recently.  wanted to thank you for all your wonderful artwork. Priceless, funny and brilliant.


As for prosecutors with balls - the power structure is never going to put their mates in prison.  A few tokens, but that is about it.  I know you know this, but everyone is Waiting for Godot.  Seems all we can do is watch.  If you protest you get shot by rubber bullets, and if that is not enough the SWAT team will raid your home in the middle of the night on charges that you are an anarchist.  Several DC OWS protestors just had this happen several days ago, and they were hauled off to jail.  Going after protestors is how the prosecutors and police show they have balls

Fri, 07/13/2012 - 13:02 | 2613388 Bastiat
Bastiat's picture

Several DC OWS protestors just had this happen several days ago, and they were hauled off to jail.

The next step is black bags over their heads and they will hauled off, period.

Fri, 07/13/2012 - 12:00 | 2613149 BeetleBailey
BeetleBailey's picture

1,000% correct. The fucking Feds use "conspiracy" to lock up people for hundreds of years.

ALL this is, is  a God Damned conspiracy...the slimy bastards need to rot in prison over it. Every damned last one of them.


I placed fresh shorts on all this fucking hopium this was like a gift from God.

Fri, 07/13/2012 - 12:03 | 2613156 Rainman
Rainman's picture

Agree....but emergency powers is the ultimate cover for what used to be known as blatant crimes. All their bases are covered.

Fri, 07/13/2012 - 12:07 | 2613179 game theory
game theory's picture

The fraud is so widespread and goes so far up, sideways, and around that none of us can expect to see what we used to call "justice". Perhaps there will still be "hell to pay" coming in the form of increased crime, more social unrest and perhaps even some vigilante justice. 


Fri, 07/13/2012 - 13:15 | 2613444 rosiescenario
rosiescenario's picture

...from today's WSJ:


"Twelve Senate Democrats on Thursday called on the Justice Department and federal banking regulators to pursue a widespread civil and criminal probe against bankers who might have unlawfully manipulated Libor.

The group of Democrats, including Sen. Jack Reed of Rhode Island and Carl Levin of Michigan, also asked the Justice Department to look into "allegations that U.S. and foreign bank regulators may have been aware of this wrongdoing for years."

They said "regulators who were involved should be held to account for any failures to stop wrongdoing that they knew, or should have known about." Holder is being asked to investigate this matter? This ball has just too much hair on it for anyone in D.C. to really come clean with the facts....

Fri, 07/13/2012 - 13:16 | 2613448 WillyGroper
WillyGroper's picture

While Whalen is not an atty, he explains why this would be difficult. Gonads or not.

Fri, 07/13/2012 - 14:55 | 2613920 bubbleburster
bubbleburster's picture

It is interesting what you say.  At some point, with or without Barny Franks barking like a mad dog.....or Levin sounding like Moses thundering from the can be that there will be a big investigative panel, probably on the scale of the Watergate inquest....about Libor....and just about any other thing they want to score political points on.  That will be one hell of a good reason to turn on the television.  After this is all over, I say again and again: if the heads of S & P, Moody's and Fitch are not put to jail or at least a few rounds on the rack...then there is no justice in the world and we deserve the cess pit we think is capitalist heaven.

Sat, 07/14/2012 - 10:39 | 2615539 Lord Koos
Lord Koos's picture

You must be confused -- bankers have "scandals", muppets commit "crimes".

Fri, 07/13/2012 - 11:47 | 2613097 RobotTrader
RobotTrader's picture

LIBOR is a non-issue when the pre-eminent PigMen Bank (JPM) is now up 6% after reporting blowout trading loss.


Nobody cares.  Its all about momentum gunning right now.

Fri, 07/13/2012 - 11:55 | 2613129 akak
akak's picture

See RobotLemming.

See RobotLemming troll.

Troll, RobotLemming, troll!

Fri, 07/13/2012 - 12:01 | 2613151 gjp
gjp's picture

Absolutely right.  It may be disgusting and destructive, but it's hard to disagree or call this spam.  Lately, these low-volume summer Fridays have been especially egregious in an entirely egregious market.

Fri, 07/13/2012 - 11:49 | 2613105 The Gooch
The Gooch's picture

I believe the keyword is "regime".
Somebody start shooting these moherfuckers already.

Fri, 07/13/2012 - 11:49 | 2613107 GolfHatesMe
GolfHatesMe's picture

Earnings season needs to have name changed to Lying Season.  Just by changing these two words, I can go back to Fundamental Analysis of companies.  No more Earnings Projections, Just Lying projections.   And seeing that this is all made up shit, the further a company can distance itself from reality or true numbers, the better.  This could cure my endless frustration. 

Fri, 07/13/2012 - 11:50 | 2613109 SheepDog-One
SheepDog-One's picture

So how many hours till this all just gets swept under the rug and the path cleared for S&P 1,650?

Fri, 07/13/2012 - 11:51 | 2613113 Sutton
Sutton's picture

"We destroyed Libor to save Libor."

Fri, 07/13/2012 - 11:51 | 2613114 Central Wanker
Central Wanker's picture

Long lamp posts!

Fri, 07/13/2012 - 11:53 | 2613120 dannynewmexico
dannynewmexico's picture

Buy food!!!

Fri, 07/13/2012 - 12:04 | 2613161 ich1baN
ich1baN's picture

I'm Long precious metals, fresh water, food, liquor, guns and ammo, gambling stocks, commodities, and tobacco.

Fri, 07/13/2012 - 12:07 | 2613177 akak
akak's picture

What a coincidence --- precious metals and liquor make me long too!


(At least, that is what my girlfriend tells me.)

Fri, 07/13/2012 - 11:57 | 2613137 CloseToTheEdge
CloseToTheEdge's picture

In a nation run by swine, all pigs are upward-mobile and the rest of us are fucked until we can put our acts together: not necessarily to win, but mainly to keep from losing completely.

Hunter S. Thompson

Fri, 07/13/2012 - 11:58 | 2613141 prodigious_idea
prodigious_idea's picture

Neil Barofsky's on-air Bloomberg interview moments ago was scathing.  The term "Criminal behavior" was used several times.  Too bad the inquiry won't get that far.

Fri, 07/13/2012 - 11:59 | 2613144 Everybodys All ...
Everybodys All American's picture

The markets are severely dysfunctional and the newly minted fraud just continues daily. It's not even slightly disguised as fraud by the JPM perpetrators. The self admission by JPM is astounding and nearly everyone in the markets simply yawns. I'm wondering what happened to the rule of law or if the FBI and Justice Department has been dismantled by Obama/Holder.

Fri, 07/13/2012 - 12:03 | 2613160 SDRII
SDRII's picture

This may eve trump libor frojm the Editor of Saudi Media Al Arabiya:

"We are in the middle of a unique battle, in which the weapons are the dollar, euro, insurance companies, the US naval forces in front of the Iranian shores, and Iran, whose oil exports dropped by more than a million barrels a day. Iran’s exports have dropped by more than a third of those before the ban. They will further decrease and so its financial income. The Iran regime may therefore shake from inside. This may turn Iran either into a moderate country or an aggressive one. Iran may resort to its last weapons, which is launching a war against its neighbors. For this reason, I said at the beginning that we have finished with the first round, but the battles are continuing. It is difficult to predict what the generals of Sayyid Ali Khamenei may do when they become hungry."

Fri, 07/13/2012 - 12:04 | 2613166 Not Too Important
Not Too Important's picture

Now we know why the NYFed has been pumping the stock market:

(2) Capital gains absolutely dictate the wealth of the richest Americans. As Matt O'Brien graphed for us, that's why the income of the top 0.1 percent hugs the S&P so closely.

(3) Remember that as this is happening, the long-term capital gains tax rate has fallen from 28 percent in 1990 to 20 percent for the latter half of the 1990s to 15 percent under George W. Bush.

The NYFed admits they've been pumping the market for over a decade:

So the market pump is primarily to feed taxpayer funds - through the dividend payouts - to the top .01%, with very generous tax breaks. A backdoor payout that will never be recovered. Into the trillions.

Fuck me.

Fri, 07/13/2012 - 12:08 | 2613175 nobusiness
nobusiness's picture

Good news is good, but bad news is better.  Up Up and away.  No manipulation move along.

Fri, 07/13/2012 - 12:09 | 2613183 moskov
moskov's picture

I am long for US Olympic uniforms!!!

The arericans will buy more from china to burn them

Very bullish!

Fri, 07/13/2012 - 12:20 | 2613210 Duke of Con Dao
Duke of Con Dao's picture

see BoE Chief Paul Tucker eat a shit sandwich:  64 seconds of Gold!

YouTube - Squirm Worm Squirm! BoE Sleazebag Paul Tucker skewered by Parliament over LIBOR fraud




Fri, 07/13/2012 - 12:44 | 2613297 TahoeBilly2012
TahoeBilly2012's picture

They "mis remembered"...which would be a great name for a punk band...

Fri, 07/13/2012 - 13:17 | 2613455 rosiescenario
rosiescenario's picture

So Holder is being called upon to do the investigation? Perfect!

Fri, 07/13/2012 - 13:51 | 2613579 Doomer
Doomer's picture

Welcome to the United States of Fraudistan.

Notice that when the frauds of LIBOR rigging and mark-to-fantasy (e.g. JPM marks) are sanctioned de facto by the state (by the total lack of prosectution for said fraud) the markets rally?  That tells you the whole market is supported by fraud.

I want my fucking country back from the criminals!!!!!!!!!!!!!!!!!!!!!

Fri, 07/13/2012 - 15:41 | 2614194 W10321303
W10321303's picture

(Reuters) - Barclays' embattled former chief executive Bob Diamond is being represented by top white-collar defense lawyer Andrew Levander in a widening scandal over the manipulation of benchmark interest rates, people familiar with the matter said. 

More than a dozen current and former employees of several large banks under investigation have hired defense lawyers over the past year, but Levander's role is one of the most high-profile.


Levander, a partner at the law firm Dechert LLP, is one of the biggest names in the defense bar in the United States. He is currently also representing former New Jersey governor Jon Corzine in investigations into the collapse of the failed commodities brokerage he ran, MF Global.


Levander, who is known for his trademark bow ties, had a prime seat by Corzine when the former CEO was grilled multiple times at congressional hearings in Washington late last year.


He has also represented outside directors of Lehman Brothers Holdings Inc, former Merrill Lynch CEO John Thain and hedge-fund manager and

Fri, 07/13/2012 - 15:44 | 2614210 W10321303
W10321303's picture

CFTC order goes on to describe at least six incidents in which Barclays traders conspired with traders at other banks to manipulate Libor, including one four-month long period of coordinated manipulation to generate trading profits. The CFTC doesn't name the banks, but obviously knows exactly who was involved in these actions with the Barclays traders. We know that at least three banks are involved, since the order lists them as Bank A, Bank B and Bank C.

In addition to Barclays, there are several foreign banks and three United States banks involved in Libor panels: JPMorgan Chase [JPM  36.08    2.04  (+5.99%)   ] , Bank of America [BAC  7.805    0.325  (+4.34%)   ] and Citigroup [C  26.89    1.61  (+6.37%)   ] . There's no way to tell which were involved in the Libor scandal with Barclays. For now.

Fri, 07/13/2012 - 15:47 | 2614222 W10321303
W10321303's picture

The fallout from the alleged manipulation of LIBOR and other interbank offered rates continues to accumulate. In the wake of Barclays’ record fines, the regulatory investigation continues, and authorities reportedly have also launched criminal investigations. Along with the governmental investigatory and enforcement activity has also come civil litigation activity as well

The latest suit to be filed is an antirust action filed I on July 6, 2012 in the Southern District of New York. The complaint, which can be found here, alleges that Barclays, several Barclays entities, and several other banks, conspired to artificially manipulate the reported European Interbank Offered Rates (“EURIBOR”), which, the complaint alleges is “the baseline interest rate used in the valuation of more than $200 trillion in derivative financial products.”

The recent EURIBOR antitrust action is far from the only civil action to follow in the wake of the governmental investigation.  According to a May 2012 PLUS Journal article  by Eric Scheiner and Jennifer Quinn Broda of the Sedgwick, Detert, Moran & Arnold law firm entitled “Move Over Subprime? Financial Institutions and Brokers Face Increasing Concerns Over Allegation of Improper Libor Manipulation” (here), in 2011, at least 21 class action lawsuits were filed I n various U.S. federal courts against numerous Libor member banks. These lawsuits were instituted by institutional investors who purchased interest rate swaps tied to Libor and who claim they lost millions through the alleged manipulation of the interbank rate or who lost money on other interest-rate sensitive investments and instruments. Further background about these antitrust suits, which have now been consolidated, can be found here.

Nor are these institutional investor lawsuits the only suits to emerge. According to a June 27, 2012 memo from the Kennedys law firm (here),   there have also already been at least two shareholders derivative lawsuits filed, one brought by a Bank of America shareholder and another by a Citigroup shareholder, against former and current directors and officers of those firms, alleging breaches of fiduciary duty “regarding lack of oversight relating to the bank’s purported manipulation and suppression of LIBOR as early as 2006.”

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