"...At issue is a bad barrel, not a few rotten apples. Western banking is rife with fraud. The business model of major banks is grand theft."- financial writer Stephen Lendman
by Teresa Kuhn, JD, RFC, CSA
Living Wealthy Radio
Authorized Bank on Yourself(r) Advisor
By now you have surely heard of the unfolding saga of the LIBOR scandal.
Maybe you even yawned a bit as the reports rolled across your tv screen. Banksters doing bad, bad things seemingly getting little more than ceremonial wrist slaps.
Another day, another financial scandal. (yawn)
We have so many of them lately that the public has simply tuned out.
Perhaps we are so busy trying to keep our own heads above water that we just can't process any more information, however important it may turn out to be.
Or, that we are distracted with juicy celebrity gossip and reality shows to prevent us from thinking too critically about things which impact our financial futures.
In any case, it is high time Americans wake up amd face what is arguably the greatest financial scandal in recent history- the rigging of LIBOR rates by the "too big to fail" banks.
What LIBOR is.. and How It Affects EVERYTHING in Your Life
Think of LIBOR (London Interbank Offered Rate) as being similar to the fan belt on your car. When it is working, doing its' job silently in the background...you don't notice it or think about it.
However, when it breaks- chaos ensues and the entire engine shuts down.
LIBOR is the rate-setting benchmark used by banks to determine the interest rates they charge one another. If you carefully read the teeny, tiny print on your credit card statement, you'll see references to LIBOR because it determines how much you pay in interest every month.
The higher LIBOR goes, the more it costs for individual, business, real estate, and other loans.
LIBOR is also the anchor for multimillions of dollars in financial contracts, including those funky "frankenvestments" about which I've written.(are you starting to see the implications here?)
Can We Just Forget This Ever Happened?
Barclays Bank, the major (but certainly not the only) player in the scandal did what banks caught in scandals usually do: it allowed its CEO to become the whipping boy.
Barclay's CEO Bob Diamond was forced to resign, forfeiting a reported $31 million dollar bonus.
But don't worry about good old Bob. He still gets his salary and benefits estimated to be worth in the neighborhood of $3 million dollars.
Barclay's chairman Marcus Agius (great name for an emperor) stepped down a day before Bob got fired.
As the sacrificial lambs were hustled out the door to their luxury digs, Bob Diamond was heard to remark that he hoped his firing would "help close this chapter and allow Barclays to move forward and prosper."
In other words: "I'm taking a hit for the company in hopes everyone will just forget about this scandal and let Barclay's get back to scamming as usual."
In case that doesn't work, there's always the "somebody else made us do it" defense. In this instance, Barclays supporters (the politicians it "owns") are insisting that the former government leaders forced Barclays to lie about borrowing costs during the financial crisis.
So far, only Barclays has admitted wrongdoing in the LIBOR-rigging scandal.
The Financial Times reported:
“The bank admitted that it lowballed estimates of its borrowing costs from late 2007 to May 2009 because it wanted to reassure investors of its strength during the financial crisis and it believed other banks were doing the same.”
“It also admitted that its traders improperly influenced the rate submissions from 2005 to 2008 to make money on derivatives.”
But, since banking is a cartel, we all know that there are many others involved. As of today, these banks are undergoing limp-wristed government probes by politicians loathe to bite the hands that feed them:
Barclays, Bank of America, Bank of Tokyo-Mitsubishi,Citigroup, Credit Suisse, Deutsche Bank, Lloyds, HSBC,HBOS, JP Morgan, Rabobank,Royal Bank of Scotland, Royal Bank of Canada,UBS,West LB, and Norinchuckin.
Lots of the usual suspects in that list and, I suspect, the list will be longer before the year is out.
Stay tuned for another episode of "As The Cartel Turns."
Meanwhile check out this fascinating discussion about LIBOR and why it is easily the biggest financial scandal of our lifetime. "Cartel type behavior"
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