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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LawsofPhysics's picture

long guillotines and physical assets...

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!

El Viejo's picture

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

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.

Sudden Debt's picture

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

start diversion act NOW!!!

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.


Mr Lennon Hendrix's picture

Bomb the Banks!


Doode's picture

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

Mr Lennon Hendrix's picture

Who wants money?!

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

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.

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.

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."

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.

Diet Coke and Floozies's picture

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

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.

iDealMeat's picture

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

CrimsonAvenger's picture

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

luckylogger's picture

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

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.

BanksterSlayer's picture

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

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.

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!!!

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.

swissaustrian's picture

Misreporting is a euphemism for manipulation

NotApplicable's picture

Manipulation is a euphemism for masturbation.

Diet Coke and Floozies's picture

Therefore, misreporting is masturbation?

alien-IQ's picture

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

George Costanza

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"...

alien-IQ's picture

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

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.

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.

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.


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

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.

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.

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.

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. 


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....

WillyGroper's picture

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

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.

Lord Koos's picture

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

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.

akak's picture

See RobotLemming.

See RobotLemming troll.

Troll, RobotLemming, troll!

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.