LIBOR Manipulation Was No Secret

By Das, Satyajit | Winnipeg Free Press, August 4, 2012 | Go to article overview

LIBOR Manipulation Was No Secret


Das, Satyajit, Winnipeg Free Press


Regulators knew about it, finally acted after publicity

In June, British and American authorities fined the United Kingdom's Barclays Banks 290 million pounds (US$450 million) for manipulating key moneymarket benchmark rates, such as the London Interbank Offered Rate (LIBOR) and Euro Interbank Offered rates (EuroIBOR).

Pre-2007, Barclays manipulated rates to obtain financial benefits. Subsequently, during the global financial crisis, Barclays manipulated rates due to reputational concerns.

Lord Turner, head of the U.K.'s Financial Services Authority, told a parliamentary committee it hadn't occurred to him before 2009 that the rate was something that could be manipulated. However, anecdotal evidence suggests LIBOR submissions may have been manipulated over a long period. Banks and regulators may have been aware of these practices for some time, but did not take corrective action.

Barclays' senior management and board of directors have indicated they became aware of the problem recently. Banks offer the same excuse J.P. Morgan Jr. did in 1933: "Since we have not more power of knowing the future than any other men, we have made many mistakes (who has not during the past five years?), but our mistakes have been errors of judgment and not of principle."

The practice appears blatant and warnings were ignored. Canadian court documents indicate a UBS employee contacted employees at other banks with a view to achieving a "certain movement" in yen LIBOR. The correspondence does not attempt to hide the actions from superiors or express concern about any breach of internal or regulatory rules.

In a Singapore lawsuit against the Royal Bank of Scotland for wrongful dismissal, trader Tan Chi Min alleged he and colleagues were regularly consulted by senior managers and personnel responsible for setting the bank's yen LIBOR. The filing alleges there was no regulation, policy or guidelines for submissions. RBS's position is Tan was dismissed for trying to manipulate the bank's rate-setting to benefit his trading positions between 2007 and 2011.

Between 2007 and 2008, it appears Barclays' compliance department did not act on three separate internal warnings about conflicts of interest and "patently false" rate submissions. In an opinion piece published in the Independent on July 7, a former Barclays employee alleged problems with LIBOR fixings were escalated by several people up to their directors and further within the organization.

Recent disclosures indicate U.K. and U.S. regulators knew banks were posting artificial rates that did not correspond to the actual rates the banks would pay to borrow. In April 2008, a Barclays employee notified the Federal Reserve Bank of New York that the bank was underestimating its borrowing costs. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

LIBOR Manipulation Was No Secret
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.