The World's Biggest Bank Just Got Thrown Into The Lieborgate Mess

Tyler Durden's picture


When on Friday news broke that German regulator BAFIN (which is just like the SEC except that it also regulates, investigates and actually prosecutes, instead of just watching porn all day) was launching a probe of the biggest bank in Europe, and actually, make that the world, Germany's Deutsche Bank, the shares took a quick, brisk hit, sliding 5% with everyone anxiously expecting to find out just which bank will follow Barclays into the scapegoat abattoir (because nobody had any clue Liebor manipulation was going on until a week ago). Yet while external inquiry into banks is to be expected (everywhere but in the US of course, because in the US no banks manipulated anything. Ever) as a proactive act on behalf of regulators to cover their back, things get a little more tricky when the bank itself admits there was an obvious supervision problem. From Reuters: "Two Deutsche Bank employees have been suspended after it used external auditors to examine whether staff were involved in manipulating interbank lending rates, German magazine Der Spiegel reported, citing no sources." Now what can possibly go wrong if the biggest bank in the world, with just shy of $3 trillion in "assets", which just happens to have a 1.68% Core Tier 1 ratio, is suddenly thrust smack in the middle of the scandal that the Economist just aptly named the finance industry's "tobacco moment"?

From Reuters:

A spokesman for Deutsche Bank on Sunday declined to comment on the article, referring to its quarterly report, which said it has received subpoenas and requests for information from U.S. and European authorities in connection with setting interbank rates.


On Friday, people familiar with the matter told Reuters that Germany's markets regulator has launched a special probe into Deutsche Bank over suspected manipulation of interbank lending rates.


Investigators in the United States, Europe and Japan are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate (Libor).


Britain's Barclays has been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million.


The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars worth of contracts around the world.


A spokesman for Frankfurt-based private bank Metzler said one of its investment companies has joined a number of class action suits in New York against banks accused of manipulating Libor rates.


"This is a standard procedure," he said.

And while all of that is fun and stuff, can we just fast forward to the moment where Jamie Dimon once again tells his Congressional muppets that LIeBOR is meaningless, and to look for their Christmas Libor-adjusted donation checks in the next few months.

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Sun, 07/08/2012 - 15:18 | 2596589 SheepRevolution
SheepRevolution's picture

Ladies and Gentlemen! Llllllllets get ready to ruuumbleeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee!!!!!

Sun, 07/08/2012 - 15:28 | 2596608 HoofHearted
HoofHearted's picture

Luckily, DeutscheBank was able to determine that it was only those two rogue traders who did all the manipulation of the LIBOR. This means that DB, and all the other banks, can go back to doing God's work while those two rogue traders rot in hell.

Sun, 07/08/2012 - 15:34 | 2596617 Popo
Popo's picture

Exactly.  We will now see two pawns publicly flogged.   The only possible hope is that they pick the wrong pawns, and those pawns sing to the media in ways which even their masters hadn't imagined.  But the latter is highly unlikely.  This is afterall, the cartel that took down Spitzer and DSK with ease.  

Throwing two pawns into the abyss will most likely be cake.  

The question I have is:   How will this affect the larger, more pressing Euroland saga with respect to Germany...  Interesting developments....

Sun, 07/08/2012 - 15:42 | 2596643 Troll Magnet
Troll Magnet's picture

but surely shirley these guys wouldn't manipulate anything else, like gold and silver, would they???

Sun, 07/08/2012 - 16:32 | 2596724 Peter Pan
Peter Pan's picture

Quick. Can someone tell me without thinking what ISN'T manipulated?

Sun, 07/08/2012 - 16:58 | 2596770 samttmfw
samttmfw's picture

Your portfolio.

Sun, 07/08/2012 - 18:54 | 2596979 ndotken
ndotken's picture

Let's not feel sorry for the pawns ... TPTB will ensure that the two pawns get well compensated for their time in a private white-collar country club (aka minimum security prison).  Then once all the muppets feel comfortable that justice has been served, we can all get back to business as usual.

Sun, 07/08/2012 - 18:36 | 2597044 GOSPLAN HERO
GOSPLAN HERO's picture

Micah 6:11 Shall I acquit a man with dishonest scales, with a bag of false weights?

Sun, 07/08/2012 - 23:10 | 2597728 ZeroAvatar
ZeroAvatar's picture

Speaking of laying low, where the FUCK IS CONZINE?

Sun, 07/08/2012 - 18:34 | 2597036 GOSPLAN HERO
GOSPLAN HERO's picture

Deuteronomy 25:16 For the LORD your God detests anyone who does these things, anyone who deals dishonestly.

Sun, 07/08/2012 - 23:18 | 2597734 ZeroAvatar
ZeroAvatar's picture

Douchebagerous Hondaridecus 7:77  For the prawns shall pay a price! For whosoever challenges SNOGON in the Land of Moron shall not have two prawns, but many!


Edit:  Fuckit! I'm starting MY OWN religion.  L.Ron Hubbard, Jesus, Mohammed, Joseph Smith, Buddha, Rael, Jones, Heaven's Gate.  Man, what a bunch of shysters!


(Junk away!)  Robertson, Osteen,..................

Sun, 07/08/2012 - 15:50 | 2596663 Kimo
Sun, 07/08/2012 - 15:55 | 2596681 James_Cole
James_Cole's picture

There's no way it was more than a couple traders, this is an isolated event. Tell the guilty parties not to do it again and let our free market capitalist loving banking system do the rest, everything is fine. 

Sun, 07/08/2012 - 16:30 | 2596723 DeadFred
DeadFred's picture

In addition to the possible fines I wonder how much they have to pay the traders to allow themselves to be thrown under the bus. Traders make a bit of change so it won't be cheap. And since it has to be under the table it won't be as easy to write it off. Too bad they didn't have any Nigerian traders, much cheaper scapegoats.

Sun, 07/08/2012 - 17:55 | 2596946 WVO Biker
WVO Biker's picture

This is just to explain what MFs they are, in the 90s I was a customer of DB in Germany, and to open a letter of credit they asked me to borrow at 10% from them and deposit at 2% with them to fund my Letter of Credit. Of course I did not and they still opened the LC. Closed account soon after. 

Sun, 07/08/2012 - 16:39 | 2596737 world_debt_slave
world_debt_slave's picture

ggg guns, gold and a getaway plan

take your money out of the commerical banks and put them in coummunity credit unions.

Crash the TBTF banks!

Sun, 07/08/2012 - 15:20 | 2596594 PontifexMaximus
PontifexMaximus's picture

Business as usual, move on! Nothing will happen, algos are working as always, including DB ones!

Sun, 07/08/2012 - 15:22 | 2596598 Motorhead
Motorhead's picture

Prost, ihr Säcke!

Sun, 07/08/2012 - 15:27 | 2596599 blindman
blindman's picture

i just don't understand, for one thing, all the cynicism.
is it just an emotional left over, "barbaric relic",
of a time when the species lived intimately with scarcity accompanying each dawn and green shoot?

Sun, 07/08/2012 - 16:41 | 2596742 GernB
GernB's picture

Yea it's not like people have to work everyday any more, they just work out of the goodness of thier hearts.

Sun, 07/08/2012 - 17:07 | 2596795 blindman
blindman's picture

the message is clear, work is not nearly enough,
people are required to borrow even harder, much harder, for this thing to float. can we do it? therein
lies the answer me thinks.

Sun, 07/08/2012 - 15:24 | 2596600 Snakeeyes
Snakeeyes's picture

There is something like $40 trillion in oblgations geared to LIBOR. And The Fed / Bank of England are the biggest manipulators of LIBOR.

It is more fun to blame the banks for everything, but at some point we have to start asking whether The Fed should be trying to manipulate interrest rates.

Or whether governments should interfering at such staggering levels. It is gettting out of control.

Just asking.

Sun, 07/08/2012 - 15:26 | 2596605 Tyler Durden
Tyler Durden's picture

Make that over $500 trillion and you are correct: As Lie-Bor Unwinds, Just How Much Is At Stake?

Sun, 07/08/2012 - 15:35 | 2596627 iDealMeat
iDealMeat's picture

FED and BoE certainly have contributed / created the mess. But, the only way you get into problems of 100T ++ is the average consumer.

Thanks to Fractional Reserve banking, anyone and everyone who uses credit cards, or has borrowed for any reason is responsible for inflating the problem of unmanageable debt.

Every second of every day we all contribute to the problem...  And it will not end..  ever.

Sun, 07/08/2012 - 15:56 | 2596682 Landrew
Landrew's picture

I don't think you understand Libor rates or what they do. It's not the borrowers who were screwed it's WE the savers that were screwed! Rates for borrows were held low. Savers received low returns. I am sueing Tiaa-Cref for holding the money market rates on part of my funds lower then fair! I encourage all of you to sue your pension funds for fraud on money market returns! This costs me tens of thousands over the years! Sue the bloody assholes!

Sun, 07/08/2012 - 16:42 | 2596739 iDealMeat
iDealMeat's picture

I admit my understanding on LIBOR is rudimentary because I really haven't cared enough to research it. However, what I'm saying is that there is $500T in obligations borrowed and CDO'd into existence. That's been levered into over a Quadrillion in derivatives.  It is what it is. LIBOR rates are manipulated to entice more borrowing.. Everything is "cooked" or manipulated with regard to banks.. And you really have no other choice but to play the game.


PS:  I'd suggest not suing Tiaa-Cref.. You're just going to lose more money on lawyers.. Pull your money and tell them to f-off..

Save yourself some stress. Legal system is just as bad as banking.

Sun, 07/08/2012 - 16:48 | 2596754 DeadFred
DeadFred's picture

Sad, but it's a bullish time to be a lawyer.

Sun, 07/08/2012 - 16:23 | 2596711 Oracle of Kypseli
Oracle of Kypseli's picture

Let's mark this moment as the time we started using quadrillions.

So then half quadrillion is what's at stake.


Sun, 07/08/2012 - 18:50 | 2597072 slewie the pi-rat
slewie the pi-rat's picture

let's make that a whole quadrillion, ok, 0_K?

we can just assume the bottom half is already underwater, at this point?

Sun, 07/08/2012 - 15:36 | 2596633 bdc63
bdc63's picture

Snakeeyes said: "It is getting out of control"

No.  It done got outta control YEARS ago.

Sun, 07/08/2012 - 15:54 | 2596672 JR
JR's picture

In the Roman Empire, Snakeeyes, one could remark that all roads to Rome. In the Central Bank Empire, all roads lead to the Federal Reserve, aka The New York Federal Reserve Bank and its private owners. They’re the underwriters of last resort. And their paymaster, the American people.

The buck doesn’t stop at the Fed; it starts there.

Sun, 07/08/2012 - 15:28 | 2596610 caimen garou
caimen garou's picture

the question is what big banks are not involved in this scandal, NONE

Sun, 07/08/2012 - 16:44 | 2596746 rufusbird
rufusbird's picture

Support your local Credit Union!

Sun, 07/08/2012 - 15:30 | 2596612 The Reich
The Reich's picture

Why am I not surprised about German Banksters?

Sun, 07/08/2012 - 15:31 | 2596618 williambanzai7
williambanzai7's picture


Sun, 07/08/2012 - 17:07 | 2596794 jonjon831983
jonjon831983's picture

Um these aren't regulation packages.  You gotta show on the packaging the hazards of using LieBoR (Now with CoolFed flavour)

Sun, 07/08/2012 - 19:17 | 2597146 nmewn
nmewn's picture

Come to where the fix is in, come to Lie Bor country!

Sun, 07/08/2012 - 20:58 | 2597407 mick_richfield
mick_richfield's picture

Those things'll kill you.

Sun, 07/08/2012 - 15:32 | 2596622 Anarchyteez
Anarchyteez's picture

All the lies have become boring.

Sun, 07/08/2012 - 15:34 | 2596624 Amish Hacker
Amish Hacker's picture

This LIBOR story is going to serve as a powerful indicator of where we really are as a society. If the investigations lead to criminal charges, trials, punishment and major reforms (something at least on the scale of the S&L debacle), great. There may be hope for us yet.

But if this turns into a total whitewash (The money seems to have vaporized... It was just a few bad apples... Minor changes will keep this from ever happening again...We really must move forward and put this unfortunate episode behind us...etc, etc.) then forget it. We're hosed.

But either way, we'll know.

Sun, 07/08/2012 - 16:06 | 2596694 Hulk
Hulk's picture

I think we already know...

Sun, 07/08/2012 - 17:19 | 2596833 newworldorder
newworldorder's picture

+1  -  Most know that they dont want to know.

Sun, 07/08/2012 - 16:18 | 2596706 Temporalist
Temporalist's picture

Did you say soemthing about TomKat?  I won't follow you on twitter then.

Sun, 07/08/2012 - 15:35 | 2596626 q99x2
q99x2's picture

Libor manipulation is an industry defacto standard and represents the highest accomplishments of the world's most innovative and brightest--those chosen to do God's work.

Sun, 07/08/2012 - 15:54 | 2596675 El
El's picture

God's work. Is that what they are calling it these days?

Sun, 07/08/2012 - 17:02 | 2596779 Ropingdown
Ropingdown's picture

God's work.  They aren't wrong.  The God is Plutus, the God of wealth.  I assume they mean their own wealth, not ours.

Sun, 07/08/2012 - 18:02 | 2596963 smiler03
smiler03's picture

"Doing God's Work" - attributable to Lloyd Blankfein from November 2009.

Sun, 07/08/2012 - 15:35 | 2596631 I am Jobe
I am Jobe's picture

I think I need a drink or two or three and some hookers.


No sugar coating here. Yeah keep on buying that fucking app. No end in sight.

The Collapsing US Economy and the end of the world

Sun, 07/08/2012 - 15:40 | 2596638 FieldingMellish
FieldingMellish's picture

Well I am shocked, shocked. /sarc

Sun, 07/08/2012 - 15:41 | 2596640 grunk
grunk's picture

Ich bin ein crook.

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