Bl***y Banks Again

There was the recent case of the Trader at U.B.S. losing $2 Billion, now JP Morgan yet they threaten to move their business to Tax Free Havens if
threatened with supervision.!!!
--------------------------------------------------------------

May 12, 12:26 AM EDT


After JPMorgan loss, a call for stricter oversight

By DANIEL WAGNER
AP Business Writer










WASHINGTON (AP) -- JPMorgan Chase faces intense criticism for claiming that a surprise $2 billion loss by one of its trading groups was the result of a sloppy but well-intentioned strategy to manage financial risk.

More than three years after the financial industry almost collapsed, the colossal misfire was citedas proof that big banks still do not understand the threats posed by their own speculation.

"It just shows they can't manage risk - and if JPMorgan can't, no one can," Simon Johnson, the former chief economist for the International Monetary Fund, said Friday.

JPMorgan is the largest bank in the United States and was the only major bank to remain profitable during the 2008 financial crisis. That lent credibility to its tough-talking CEO, Jamie Dimon,as he opposed stricter regulation in the aftermath.

But Dimon's contention that the $2 billion loss came from a hedging strategy that backfired, not an opportunistic bet with the bank's own money, faced doubt on Friday, if not outright ridicule.

"This is not a hedge," said Sen. Carl Levin, D-Mich., chair of a subcommittee that investigated the crisis. He said the trades were instead a "major bet" on the direction of the economy,as published reports suggested.

On Friday, Dimon told NBC News, for an interview airing Sunday on "Meet the Press," that he did not know whether JPMorgan had broken any laws or regulatory rules. He said the bank was "totally open" to regulators.

The head of the Securities and Exchange Commission, Mary Schapiro, told reporters that the agency was focused on the JPMorgan loss but declined to comment further.

JPMorgan's disclosure Thursday recharged a debate about how to ensure that banks are strong and competitive without allowing them to become so big and complex that they threaten the financial system when they falter.

The JPMorgan loss did not cause anything close to the panic that followed the September 2008 failure of the Lehman Brothers investment bank. But it shook the confidence of the financial industry.

Within minutes after trading began on Wall Street, JPMorgan stock had lost almost 10 percent, wiping out about $15 billion in market value. It closed down 9.3 percent.

Fitch Ratings downgraded the bank's credit rating by one notch, while Standard & Poor's cut its outlook JPMorgan to "negative," indicating a credit-rating downgrade could follow.

Morgan Stanley and Citigroup closed down more than 4 percent, and Goldman Sachs closed down almost 4 percent. The broader stock market was down only slightly for the day.

Dimon gave few details about the trades Thursday beyond saying they involved "synthetic credit positions," a type of the complex financial instruments knownas derivatives.

Enhanced oversight of derivatives was a pillar of the 2010 financial overhaul law, knownas Dodd-Frank, but the implementation has been delayed repeatedly and will not take effect until the end of this year at the earliest.

JPMorgan's trades show that the derivatives market remains too opaque for regulators to oversee effectively, said Rep. Barney Frank, D-Mass., one of the law's namesakes.

"When a supposedly responsible, well-run organization could make such an enormous mistake with derivatives, that really blows up the argument, `Oh, leave us alone, we don't need you to regulate us,'" he said.

Criticism of the bank did not stop with its traditional chorus of detractors. It also came from Sen. Bob Corker, R-Tenn., a prominent member of the Senate Banking Committee who has received $10,000 since January 2011 from JPMorgan's political action committee, the most any candidate has received.

Corker, a leader of a failed effort last year to block a Federal Reserve rule that slashed bank profits from debit cards, called for a hearing "as expeditiouslyas possible" into the events surrounding JPMorgan's loss.

Tim Ryan, president of the Securities Industry and Financial MarketsAssociation, a trade group, said it was impossible to legislate or regulate risk out of the financial system.

"My hope is that this is viewedas bona fide hedging, but it went wrong," he said in an interview. "A mistake was made. Money is going to be lost. It's not customer money. It's not government money. It's JPMorgan's money, the shareholders of JPMorgan."

No one seemed to suggest Friday that JPMorgan had broken a law. But the mistake added a wrinkle to the still-unsettled discussion about how the financial industry should be regulated in the aftermath of 2008.

"This just tells you that we are a long, long way from getting our arms around this whole `too big to fail' issue," said Cliff Rossi, a former top risk executive for Citigroup, Countrywide and other big financial companies.

Immediately after the crisis, a time of popular outrage over bailouts and investment losses, there was broad public support for an overhaul of bank regulations.

The changes promoted by the Obama administration were in many cases similar to what the financial industry had sought before the crisis: Consolidation of regulators and oversight of the multi-trillion-dollar marketplace for derivatives.

Regulators are still drafting hundreds of rules under the 2010 law.As Wall Street has returned to record profits, and executives to million-dollar bonuses, banks have fought to soften those rules.

In particular, the industry has fought hard against a few provisions that might have prevented the problems at JPMorgan.

One is the so-called Volcker rule, which will prohibit banks from trading for their own profit. The rule is still being written, and the Federal Reserve has said it will begin enforcement in 2014.

JPMorgan said that its bets were made only to hedge against financial risk. Dimon conceded that the strategy was "egregious" and poorly monitored. But analysts, former bank executives and many lawmakers disagreed.

"This is an exact description of proprietary trading-style activity," Sen. Jeff Merkley, D-Ore., told reporters Friday. "This really is a textbook illustration of why we need a strong Volcker rule firewall."

Nancy Bush, a longtime bank analyst at NAB Research and a contributing editor at SNL Financial, said the trades probably crossed that line because they were making money for JPMorgan.

"So they made money on hedges and then they hedged some more," she said. "At some point it goes from being a hedge to being a moneymaker."

JPMorgan was seenas a savior of weaker banks during the financial crisis and the only big bank to escape relatively unscathed. His reputation enhanced, Dimon, 56, has been emboldened to challenge efforts to toughen regulation.

In an interview with the Fox Business Network earlier this year, Dimon said that Paul Volcker, the former Federal Reserve chairman for whom the rule is named "doesn't understand capital markets."

Last year, he questioned the current Fed chair, Ben Bernanke, about the rules and said they might be delaying the recovering of the financial system and the broader economy.

"Has anyone bothered to study the cumulative effect of all these things?" heasked.

Dimon, who grew up in the Queens borough of New York and was groomed by the former Citigroup chief executive Sanford Weill, has also chafed against Occupy Wall Street protesters.

"Acting like everyone who's been successful is bad and that everyone who is rich is bad - I just don't get it," he said at a conference earlier this year.

On Thursday, at about the same time he was breaking news of the $2 billion loss to Wall Street, Dimon sent an email to JPMorgan's 270,000 worldwide employeesassuring them that the company was "very strong."

---

AP Business Writer Marcy Gordon, AP Business Writer Pallavi Gogoi andAssociated Press writer Jack Gillum contributed to this report.

Daniel Wagner can be reached at http://www.twitter.com/wagnerreports .

© 2012 TheAssociated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

Editor's note: William K. Black is an associate professor of economics and law at the University of Missouri-Kansas City. A former senior financial regulator and a white-collar criminologist, he is the author of "The Best Way to Rob a Bank is to Own One."

(CNN) -- JPMorgan Chase can be considered a systemically dangerous institution, which means that it is "too big to fail" because the government fears that its collapse would cause a global financial crisis.

It is simply irrational to allow such an institution to exist, especially when it can easily incur a $2 billion trading loss.

Banks are more efficient when shrunk to the point that they can no longer endanger the world economy. But because JPMorgan and similar banks are the leading contributors to Democrats and Republicans, neither political party has the courage to order them to reform.

The Volcker Rule, which aims to prevent insured banks from engaging in speculative bets, was passed as part of the Dodd-Frank Act over the objections of Treasury Secretary Timothy Geithner and almost the entire Republican congressional delegation.

CNNMoney: JPMorgan investment chief out


William K. BlackBack in 2008 when the financial crisis hit us hard, a host of large institutions were destroyed. AIG, Merrill Lynch, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, Washington Mutual and Wachovia all suffered massive losses on their toxic derivatives, particularly collateralized debt obligations (CDO) and credit default swaps (CDS), better known as "green slime." One would think everyone has learned a lesson. Jamie Dimon, JPMorgan's CEO, now agrees that banks should not invest in derivatives. But government subsidies have a way of encouraging fraud and speculation.

JPMorgan, the nation's largest bank, receives an explicit federal subsidy (deposit insurance) and a much larger implicit federal subsidy. It's improper for the megabank to use these subsidies to speculate in derivatives. And yet it can do so with hardly any serious regulatory consequences.

Follow @CNNOpinion on Twitter and Facebook.com/cnnopinion



Capitol Hill reacts to JPMorgan's loss

Sen. Corker calls for JPMorgan hearing

Sheila Bair on JPMorgan's loss Financial institutions such as JPMorgan love to buy derivatives because they are opaque, create fictional income that leads to real bonuses and when (not if) they suffer losses so large that they would cause the bank to fail, they will be bailed out.

The Dodd-Frank Act's Volcker Rule was designed to solve the problem.

However, JPMorgan led the effort to gut the Volcker Rule and the provision that requires transparency. JPMorgan is the world's largest proprietary purchaser of financial derivatives -- precisely what the Volcker Rule sought to end. The bank claims that it does not engage in proprietary trading and that it purchases derivatives solely to hedge. That claim is an example of what Stephen Colbert meant when he invented the term: "truthiness."

A hedge is an investment that offsets losses in another investment. JPMorgan's supposed hedges aren't hedges under accounting rules because they haven't been shown to perform as hedges.

JPMorgan bought tens of billions of dollars of derivatives that increased its losses rather than reduced them. It calls these anti-hedges "hedges" -- in other words, it practiced "hedginess." The bank's approach to hedging is that it would like to purchase a derivative if it deems that derivative to be a hedge to something else and voila, it's a hedge.

The draft regulations of the Volcker Rule allow such faux hedges because JPMorgan lobbied to render the rule useless. JPMorgan asserts that these inherently unsafe and unsound anti-hedges are "hedges" as that term is defined in the draft regulations implementing the Volcker Rule. But if hedginess is permissible, the Volcker rule is unenforceable.

It is a travesty for JPMorgan to be able to create an additional $2 billion in losses through investments that are supposed to be allowed only if they reduce losses. The government must revise the regulations and reject JPMorgan's absurd treatment of anti-hedges as hedges.

Faux hedges are a common, dangerous abuse and a lethal form of speculation. From 2003 to 2006, the Securities and Exchange Commission caught mortgage giants Fannie Mae and Freddie Mac violating hedge accounting to maximize their executives' compensation. Fannie's faux hedges, like JPMorgan's faux hedges, increased losses. The Justice Department failed to prosecute, and the senior executives walked away wealthy. Their successors blew up Fannie and cost taxpayers hundreds of billions of dollars.

When a bank CEO is honest but incompetent, faux hedges simultaneously increase risk and create a false complacency that the hedge has offset the risk. This can cause catastrophic losses.

Dishonest bank CEOs use faux hedges to loot the bank by creating fictional income and hiding real losses. The fake income makes the CEO wealthy by maximizing his compensation.

The current JPMorgan speculation in derivatives weakens but will not kill the bank. If it and other systemically dangerous institutions continue to engage in hedginess, it is only a matter of time before we'll get a replay of the financial crisis. And who'll lose out? Taxpayers like you and me, of course.

I SEE TODAY THAT THE PAYING IN PROCESS FOR RBS GROUP BANKS DIDN'T WORK
WAGES WERE NOT PAID INTO ACCOUNTS,DIRECT DEBITS NOT DONE ETC ETC.

PROBLEM WITH BANKING GROUP RBS/NATWEST ETC NOT TO BE RESOLVED UNTIL MONDAY.
LOTS OF PEOPLE UNABLE TO SPEND ETC UNTIL PROBLEMS RESOLVED.

SOME PEOPLE ARE UNTIL TO BUY FOOD FOR THEIR CHILDREN BECAUSE OF THE RECENT PROBLEMS AT RBS.

The problem is still not fully repaired. One of the biggest headaches was House Purchases . The Buyer did not receive the money and the sale was jeopardised, Estate Agents were not paid their Fees , Purchasers could not move into their new homes . They said it was a breakdown of the software, but I think it might have been a hacking, to affect so many Banks and the Banks did not want to frighten off the customers.

I've just had an e-mail from RBS - which is where I have a current account - to say they will be open late for the rest of the week to sort out problems. Customers with credit cards can withdraw £100.00 over their limit with no fees or charges and and any fees or charges incurred by account holders who have been affected will be refunded.

I'm not affected thankfully but it must be a nightmare for anyone who is.

I HAVEN'T BEEN PAID MY BENEFITS,IF I CHECK TOMORROW AND MY BENEFITS HAVN'T BEEN PAID IN,I MIGHT CONTACT DWP.
THE PROBLEM,THEY WERE JUST SAYING MIGHT TAKE ANOTHER FEW DAYS.
ITS SUPPOSED TO BE AN SOFTWARE UPGRADE THAT CAUSED THE PROBLEM.
IT IS BEING SAID THAT A LOT OF BANKS HAVE VERY OLD SYSTEMS THAT NEED SORTING OUT.

http://uk.finance.yahoo.com/news/rbs-computer-failure-caused-inexperienced-055406124.html

It may have been all Johnny Foreigner's fault again!

We all know how frustrating it is to try to get a good service if a technical fault occurs on your Computer and you lose Broadband, mainly because of the Language Barrier, sky Technical Staff are based in Scotland which is great.

Banks have a colossal amount of information , all the more reason to entrust any changes to a very experienced person. It is likely this will cost RBS
£100 million, yet if they had employed a U.K. Computer Firm , the cost would have been much lower . Hestor really hasn't done very well , he has had
to sell some of RBS assets, the loan to the Government is still outstanding and now this catastrophe which is likely to take almost 2 weeks to fix.
What's the betting Joe Public will pay for this with higher Bank charges.

IT IS BEING SAID THAT THE PROBLEM AT RBS WERE IN EDINBURGH.

barclays is involved in aN inter-banking lending scandal(350 MILLION?),INSIDER TRADING

Badboy wrote:IT IS BEING SAID THAT THE PROBLEM AT RBS WERE IN EDINBURGH.

barclays is involved in aN inter-banking lending scandal(350 MILLION?),INSIDER TRADING

I have only just started posting so havn't heard about Barclays....I'll watch the 7pm news.

Well as far as I can gather Barclays must pay a £29 million fine for misconduct issued by the FSA . It is something to do with the interest rates and
large numbers of Bank Personnel were lying to gain money. with the result that Barclays made £550 million.

Jon Snow thought that the punishment did not fit the crime when youngsters stealing during the Riots in London received a Jail sentence but the FSA
spokeswoman said she couldn't comment. Apparently there are more Banks under investigation, to lose their Licence would be the answer but of course
the Government cannot contemplate that because of the lost revenue and the banking and Mortgage chaos which this would entail. Bob Diamond had
the cheek to be paid a massive salary, and his Income tax paid.!!!!

Panda wrote:

Well as far as I can gather Barclays must pay a £29 million fine for misconduct issued by the FSA . It is something to do with the interest rates and
large numbers of Bank Personnel were lying to gain money. with the result that Barclays made £550 million.

Jon Snow thought that the punishment did not fit the crime when youngsters stealing during the Riots in London received a Jail sentence but the FSA
spokeswoman said she couldn't comment. Apparently there are more Banks under investigation, to lose their Licence would be the answer but of course
the Government cannot contemplate that because of the lost revenue and the banking and Mortgage chaos which this would entail. Bob Diamond had
the cheek to be paid a massive salary, and his Income tax paid.!!!!

THOUGH IT WAS 290 MILLION FINE,MUST CHECK(NOT TO BE CONFUSED WITH CHEQUES.)
BANKS NEED TO BE SORTED OUT.

27 June 2012 Last updated at 22:44 Share this pageEmail Print Share this page

2.4KShareFacebookTwitter.Barclays fined for attempts to manipulate Libor rates Chief executive Bob Diamond will give up his bonus for this year - last year it was £2.7m
Barclays has been fined £290m ($450m) for trying to manipulate a key bank interest rate which influences the cost of loans and mortgages.

Its traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.

Barclays said the actions "fell well short of standards". Chief executive Bob Diamond is to give up his bonus.

The Financial Services Authority is now looking into other banks.

The penalties from the UK financial watchdog and US authorities followed "serious and widespread" misconduct, said the FSA.

Continue reading the main story
Analysis
Robert Peston

Business editor

--------------------------------------------------------------------------------
Barclays has admitted that a group of traders lied about what it was costing the bank to borrow.

Now, why does this matter?

It matters because lots and lots of deals involving clients of Barclays used the interest rate into which Barclays was feeding this information, about its own borrowing costs, to determine the profit and loss on their own deals.

It's quite hard to think of behaviour by a bank as shocking as this: not telling the truth about what it is costing you to borrow, that then becomes a benchmark for pricing other deals.

The statement from the US regulator, which levied a big chunk of the fine, talks about how Barclays was working with other banks to try to fix this interest rate.

This of course implies that Barclays is simply the first bank to settle and we will see fines and punishments against some of the other big banks of the world.

Read more from Robert

The fine is part of an international investigation into the setting of interbank rates between 2005 and 2009.

It seems highly likely that other banks, and in other countries, will face similar sanctions to that of Barclays.

"The FSA continues to pursue a number of other significant cross-border investigations in this area and the action we have taken against Barclays should leave firms in no doubt about the serious consequences of this type of failure," the UK regulator said.

Three other Barclays executives will also give up their annual bonus this year.

Although they and Mr Diamond were not involved in the manipulation attempt, a Liberal Democrat peer has called on Mr Diamond to stand down.

Lord Oakeshott told the BBC: "If he had any shame he would go. If the Barclays board has any backbone, they'll sack him."

Crucial rates

Barclays' misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.

They can also affect lending rates to the public, for instance, with some mortgage deals.

But it is not yet clear whether Barclays staff had succeeded in manipulating the interest rates to its advantage and therefore whether it had any impact on borrowers.

Continue reading the main story
“
Start Quote
Done… for you big boy”
End Quote
Extract of exchange between Barclays rate setter and trader

Q&A: Barclays and bank rates

But even so, Tracey McDermott, director of enforcement at the FSA, told the BBC such behaviour was still "completely unacceptable".

"Libor is an incredibly important benchmark reference rate, and it is relied on for many, many hundreds of thousands of contracts all over the world," she said.

"And the market needs to have confidence that those who are involved in submitting numbers to set Libor are thinking about the integrity of the market, and confidence in the market, and not their own interests."

'Accepted culture'

Each day the British Bankers' Association and the European Banking Association publish the the Libor and Euribor rates by taking an average of the estimated rates submitted to them by leading banks.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.

And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.

The FSA pointed out that Barclays traders were quite open in their routine attempts to lobby their colleagues who submitted the bank's estimate of its borrowing costs to the BBA.

It was particularly concerned because it appeared to be "accepted culture" amongst some staff.

"Requests to Barclays' submitters were made verbally and a large amount of email and instant message evidence consisting of derivatives traders' requests also exists," the FSA said.

In one instance, a trader recounted a conversation in which he had "begged" the submitter to put in a lower Libor figure.

"I'm like, dude, you're killing us," he said. His manager replied, "just tell him to... put it low".

In turn, the staff submitting the data would respond to the traders' requests.

"For you…anything," said one. "Done… for you big boy," said another.

And: "I owe you big time... I'm opening a bottle of Bollinger."

Both UK and US authorities were also critical of Barclays' lack of internal controls over its system of submitting information on Libor and Euribor.

This, along with inadequate supervision of trading desks, "allowed this conduct to occur", US regulators said


Your'e quite right Badboy.....it WAS £290 million..

By BEN PROTESS and MARK SCOTT


Andy Rain/European Pressphoto AgencyA branch of Barclays in London.

Barclays has agreed to pay more than $450 million to resolve accusations that it attempted to manipulate key interest rates, the first settlement in a sprawling global investigation involving many of the world’s biggest banks.

The British bank struck a deal with regulators in Washington and London, as well as the Justice Department. The settlement is seen as the first in a series of potential cases against other major financial firms.

“When a bank acts in its own self-interest by attempting to manipulate these rates for profit, or by submitting false reports that result from senior management orders to lower submissions to guard the bank’s reputation, the integrity of benchmark interest rates is undermined,” said David Meister, the enforcement director of the Commodity Futures Trading Commission, the American regulator involved in the Barclays case.



.
The broad investigation centers on the way Barclays and other big banks set key benchmarks for borrowing, lending rates that affect corporations and consumers.

Regulators have questioned whether the banks attempted to improperly set certain rates — including the London interbank offered rate, or Libor, and the Euro interbank offered rate, or Euribor — at a level that was favorable to their own institutions. Authorities are also looking at HSBC, Citigroup, JPMorgan Chase and other firms.

In the Barclays case, regulators say they uncovered “pervasive” wrongdoing that spanned a four-year period and touched top rungs of the firm, including members of senior management and traders stationed in London, New York and Tokyo. A 45-page complaint laid bare the scheme, describing how Barclays made false reports with the aim of manipulating rates to increase the bank’s profits.

The complaint also outlines how Barclays, at the height of the financial crisis, submitted artificially low figures to depress the rate and deflect scrutiny about its health. The bank at the time faced concerns that it was reporting high borrowing rates pointing to a weak financial position.

The practice prompted unease among some employees, who worried the bank was “being dishonest by definition.”

The Barclays settlement represents a record for the two regulators. The futures commission levied a $200 million penalty, the largest in its history, while the Financial Services Authority in London imposed a $92.8 million fine. As part of the settlement deal, the Justice Department agreed to not prosecute Barclays, although federal prosecutors are continuing a criminal investigation into other banks and bank employees.

“The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business,” the Barclays chief executive, Bob Diamond, said in a statement. “When we identified those issues, we took prompt action to fix them and cooperated extensively and proactively with the authorities.” Mr. Diamond added that he and three other top executives had voluntarily agreed to give up their bonuses this year.

In the aftermath of the financial crisis, global regulators have been looking into whether many of the world’s largest banks attempted to manipulate Libor, a measure of how much banks charge each other for loans. In essence, the benchmark is an average of the interest rates at which that the big banks say they can borrow from the capital markets.

An important barometer of the health of the financial system, the rate not only affects big banks and corporations but also homeowners. Libor and similar rates are used to determine the price for more than $350 trillion worth of financial products, including complex derivatives, student loans, credit cards and mortgages.

At least nine agencies, including the Justice Department, the Financial Services Authority of Britain and Financial Supervisory Agency of Japan, have centered their investigations on Libor. Authorities are also looking into the activity surrounding similar benchmarks known as Tibor, the Tokyo interbank offered rate, and Euribor.

“Barclays’ misconduct was serious, widespread and extended over a number of years,” Tracey McDermott, acting director of enforcement and financial crime at the Financial Services Authority, said in a statement. “Barclays’ behavior threatened the integrity of the rates with the risk of serious harm to other market participants.”

Libor and the other interbank rates provide benchmarks for global short-term borrowing, and are published daily based on surveys from banks about the rates at which they could borrow money in the financial markets. Currently, more than a dozen financial firms, including JPMorgan, Bank of America and HSBC, provide information to set the daily American dollar Libor rate.

Regulators are investigating whether banks shared information between their treasury departments, which help to set Libor, and their trading units, which buy and sell financial products on a daily basis. Financial institutions are expected to maintain so-called Chinese walls between the two divisions to avoid confidential information being used to turn a profit as part of banks’ daily trading operations.

Analysts say the Libor system, which was created in 1986 and is overseen by Thomson Reuters on behalf of the British Bankers’ Association, does not provide sufficient transparency about how banks set their daily interest rates for borrowing in the financial markets.

When many banks were unable to borrow in the financial markets during the financial crisis, authorities raised concerns about the figures that firms were using to set Libor.

As bank funding costs rose to historic highs after the collapse of Lehman Brothers, regulators started to worry that financial firms might have submitted low interest rate figures that underpin Libor to appear in stronger financial positions than they actually were. With limited oversight over how banks set the rates, analysts say a bank could have provided lower figures in an effort to artificially keep its actual borrowing costs down.

Since then, regulators in the United States have issued subpoenas to several banks, including Bank of America, UBS and Citigroup, about how Libor was set. The Competition Bureau of Canada is investigating the activities of JPMorgan, Deutsche Bank and several other major banks about their activities around Libor. Japanese, Swiss and British authorities are also conducting their own inquiries into how the interbank rates have been set over the last five years.

In 2011, Charles Schwab, the brokerage firm and investment manager, sued 11 major banks, including Bank of America, JPMorgan and Citigroup, claiming they conspired to manipulate Libor.

Last August, Barclays disclosed that American and European authorities were investigating the activities of the British bank and other financial institutions concerning how Libor was set. The inquiries had been focused on accusations that Barclays and other firms suppressed interbank rates from 2006 to 2009, according to a statement from the British bank. Barclays had said it was cooperating with the investigation.

The British Bankers’ Association, Libor’s sponsor, defends its rate-setting process, though the trade body established a committee earlier this year to revise how the rate was set. The changes are expected to focus on establishing guidelines, including which bank employees can be told about the daily interbank rates and which specific financial instruments can be used to set Libor.

Barclays statement of facts from the Justice Department

.

The practices of more than 20 banks are being scrutinised after Barclays was caught and fined £291m for trying to manipulate inter-bank interest rates.

Barclays boss Bob Diamond is being urged to resign and a new political row has opened up about so-called "light touch" regulation in the financial sector. Meanwhile the Barclays share price has plunged.

The Chancellor George Osborne is due to make a statement in the House of Commons this lunchtime about the Financial Services Authority investigation into the industry.

He is expected to outline any steps being taken by the Treasury to establish whether criminal action could be taken against any wrongdoers.

Earlier, Mr Miliband - in what was seen as a clear bid to tap into the public mood - told the union Unite that all those responsible must face proper punishment.

"This cannot be about a slap on the wrist, a fine and the foregoing of bonuses. To believe that is the end of the matter would be totally wrong," he said in a speech.

"When ordinary people break the law, they face charges, prosecution and punishment. We need to know who knew what when, and criminal prosecutions should follow against those who broke the law.


Barclays boss Bob Diamond is facing calls to quit

"The same should happen here. The public who are paying the price for bankers' irresponsibility will expect nothing less."

He continued: "This shines a light on a swaggering culture which is not about serving the public, but serving itself by whatever means necessary.

"Too many people in the banks clearly think they were big to fail, too powerful to be challenged.

"They clearly believed they could do anything they liked and were above the law. This is yet another example of some of the rich and powerful having their own moral standards, just as we saw during phone hacking.

"We cannot have a country where this happens. That is why we need the strongest punishment, a change in regulation and a change in the culture of our banks.

On a visit to West Yorkshire, David Cameron stopped short of calling on Barclays boss Bob Diamond to resign but said the whole management team has to account for itself.

"I think the whole management team have got some serious questions to answer. Let them answer those questions first," he said.

"Who was responsible? Who was going to take responsibility? How are they being held accountable?"

Mayor of London Boris Johnson said he was a "big fan" of Mr Diamond and Barclays but that attempted rate manipulation was a "very, very dodgy practice indeed".

Urging all banks to "come clean", he added: "The truth has got to come out and if people have been guilty of criminal practices, then there must be prosecutions."

Former Barclays chief executive Sir Martin Taylor said someone high up at the bank will "certainly have known what was happening".

"I can't believe Barclays haven't identified who that is. They've been investigating for years, so have the FSA, and no doubt they will take appropriate action.

"It's really for the board to decide whether Bob Diamond, who has amazing leadership qualities and huge personal following in the organisation, can be the person to turn the page on this, or whether he's part of the problem."
Article:
Damning Emails Of Barclays Bankers Damning Emails Of Barclays Bankers
Updated: 11:09am UK, Thursday 28 June 2012

Traders at Barclays promised each other bottles of Bollinger and called each other "big boy" in jaw-dropping emails uncovered by investigators.

The emails, revealed in the Financial Services Authority's (FSA) report on rate manipulation at the bank, provide a shocking insight into the informal exchanges between traders and rate submitters.

The FSA said it was clear Barclays took traders' requests into account when setting the so-called Libor rate. One example showed 70% of submissions consistent with the request being made.

In one request for a change to the Libor in April 2006, a trader said: "If it's not too later low 1m and 3m would be nice, but please feel free to say 'no'.

"Coffees will be coming your way either way, just to say thank you for your help in the past few weeks."

The Barclays submitter responded: "Done, for you big boy."

In a telephone conversation, a trader complained to a manager that the Barclays employee was submitting "the highest Libor of anybody".

He added: "He's like, 'I think this is where it should be'. I'm like, 'Dude, you're killing us'."

The trader said that he had "begged" the submitter to put in a low rate and the submitter had said he would "see what I can do".

After one employee responded favourably to a trader's request to lower the Libor, the trader came back: "When I retire and write a book about this business, your name will be written in golden letters."

In response, the submitter said: "I would prefer this not be in any book!"

An external trader emailed another trader at Barclays on October 26 2006, saying: "If it (Libor rate) comes in unchanged, I'm a dead man."

The Barclays trader said he would "have a chat" and the submission was later lowered.

The external trader thanked the Barclays trader and added: "Dude. I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger."

A further email when a trader learned the fixer would not be in until later on a Monday said: "Noonish? Who's going to put my low fixings in? Hehehe."

On August 6 2007, a trader asked: "Pls set 3m libor as high as possible today," to which the submitter repled: "Sure 5.37 okay?". The trader replied "5.36 is fine".

On February 28 2007, a trader told an external trader the three month US dollar Libor was too high. "duuuude... whats up with ur guys 34.5 3m fix... tell him to get it up!!" The recipient replied: "'ill talk to him right away".

The FSA also highlighted suspicious extracts from instant messaging conversations with external traders, which included admissions such as "if you know how to keep a secret I'll bring you in on it" and "if you breathe a word of this I'm not telling you anything else".

Another message between traders read: "This is the way you pull off deals like this chicken, don't talk about it too much, two months of preparation... The trick is you must not do this alone... this is between you and me but really don't tell ANYBODY."

Click here to read the full FSA report Enlarge Video:
Jan 2011: Bank Bashing Time Is Over

By Mark Kleinman, Sky News City Editor

Barclays will tomorrow be drawn into another huge City mis-selling scandal that threatens to intensify the pressure on Bob Diamond, its under-fire chief executive.

I can reveal that the Financial Services Authority (FSA) is preparing a statement revealing it has uncovered evidence that many small business customers (SMEs) were the victims of inappropriate selling of interest rate swap products and that the major high street banks will write to every customer who was sold them.

The City regulator is in talks today with the major banks about its proposed statement, which is being scheduled for tomorrow morning. It could lead to another compensation bill for the country’s biggest banks running potentially to hundreds of millions or even billions of pounds.

I’m also told that the banks may agree to a moratorium on the sale of the swaps (although it’s unlikely that many people will be buying them at the moment given where interest rates are) and to pursuing customers who have been left facing large bills from the ultra-low interest rate environment.

I should point out that the details of the FSA statement are still being thrashed out today and that depending on the outcome of the discussions with banks, it may make more limited comments on the issue or proceed to a more formal inquiry.

"It [the content of the FSA’s statement] is still very much a moving target,” an insider at the City regulator told me.

What is beyond doubt is that the FSA has completed an initial review of the sale of the interest rate swap products, which were designed to protect those who bought them against steep changes in interest rates by hedging their exposure to such movements. Many business-owners have complained that they were unfairly saddled with huge penalties from the slashing of interest rates to record lows in the aftermath of the banking crisis.

I have learnt that in recent days the FSA has asked the major high street lenders which sold interest rate swaps – led by Barclays and the taxpayer-controlled Royal Bank of Scotland – to commit to writing to the hundreds of thousands of SME customers who took out these swap products.

The communications with customers will be divided into two categories: those who were sold relatively simple products, who are expected to have the opportunity for their cases to be reviewed; and those who were sold more complex products or were unlikely to have understood the downside risk they were taking on.

As I understand it under the scenario being discussed by the FSA and the major banks, those who fall into the second category will be told that their case will be reviewed by an independent assessor and that they will be compensated appropriately if there is evidence of mis-selling. The compensation would be calculated from the difference between the loss suffered by a customer and the cost of a simple fixed-rate loan from the same bank.

To be clear, derivatives products of this nature by definition carry a financial risk if rates move sharply in the opposite direction to that which is being insured against.

The conclusion that the FSA has uncovered new evidence of misselling deals a devastating blow to the banking industry in the aftermath of yesterday’s £290m fine imposed on Barclays for fixing the key benchmark interest rate LIBOR.

The FSA and the major banks declined to comment.
+++++++++++++++++++++

You have to wonder what the FSA was doing, this scandal dates back to 2006, 6 years ago and I suspect if it wasn't a joint investigation with the U.S.
this wouldn't have been discovered. You have to give the U.S. credit, they are not afraid to name and shame, the FSA are useless.!!!

RBS,DEUTSCHEBANK CREDIT SUISSE ETCARE BEING INVESTIGATED BY FSA(LIBOR?)
THE LIBOR SCANDAL COULD COST BANKS BILLIONS IN COMPENSATION,AT THE RATE BANKS ARE BEING FINED,PAYING COMPENSATION ETC ,WILL THEY BE ANY MONEY LEFT IN THE KITTY?

29 June 2012 Last updated at 01:47 Share this pageEmail Print Share this page


The boss of Barclays has insisted he will not resign after staff rigged the key lending rate between banks.

Bob Diamond was speaking at a meeting of analysts at US bank, Morgan Stanley.

And in a letter agreeing to give evidence to MPs, Mr Diamond condemned the inappropriate behaviour of a "small number" of employees who had tried to make profits for their own benefit.

On Thursday, the prime minister said the bank's management faced "serious questions" after it was fined £290m.

Some MPs - including Tories Steve Baker and Nick De Bois - have suggested Mr Diamond should resign and former Liberal Democrat leader Paddy Ashdown told BBC One's Question Time his position was now "untenable".

Meanwhile, Barclays and other banks face the threat of criminal investigation in the UK over the scandal.

Royal Bank of Scotland has said that it expects to reach a settlement in a few months. One report said the bank faced a fine of £150m for market manipulation but RBS said it did not recognise that figure.

'Control systems'

In his open letter to Andrew Tyrie MP, the chairman of the Commons Treasury Committee, Mr Diamond pointed out that authorities found no evidence that knowledge of the manipulation, for which it has been fined £290m, went any higher than "immediate desk supervisors".

But he admitted that the bank's control systems should have been much stronger.
Business editor

--------------------------------------------------------------------------------
Read more from Robert

He added: "When the trader conduct was first discovered by more senior management, steps were immediately taken to stop it, and it was reported to the authorities."

Mr Diamond's comments come after Prime Minister David Cameron said: "The whole management team [at Barclays] have got some serious questions to answer. Let them answer those questions first.

"Who was responsible? Who was going to take responsibility? How are they being held accountable?"

Labour leader Ed Miliband said those Barclays staff found to have committed the wrongdoing "should face the full force of the law".

Mr Tyrie also said that Barclays was now "completing a review of employee conduct for all those involved", and that "all appropriate options will be pursued for those who have a case to answer, ranging from the clawback or withholding of remuneration to being asked to leave the bank".

'Substandard'

Barclays was fined £290m ($450m) on Wednesday by the UK and US authorities after an investigation into claims that several banks manipulated the Libor rate at which they lend to each other.

Investigators say that Barclays' traders lied to make the bank look more secure during the financial crisis and, sometimes - working with traders at other banks - to make a profit.

Barclays had acknowledged that its actions between 2005 and 2009 had fallen "well short of standards".

David Cameron: "The whole senior management team have got some big questions to answer"
The scandal has hit Barclays shares, which ended Thursday trading down 15.5%.

Other banks shares also fell, with RBS losing 11.5%, Lloyds down 3.9%, and HSBC giving up 2.6%.

Meanwhile, Chancellor George Osborne confirmed that HSBC, RBS, Citigroup and UBS were also under investigation.

The Serious Fraud Office subsequently said it was in talks with the Financial Services Authority (FSA) about the case. This could result in UK criminal proceedings being brought.

The US Department of Justice had already confirmed that criminal investigations into "other financial institutions and individuals" were ongoing.

Mortgage deals

Barclays' misconduct relates to the daily setting of the London Interbank Offered Rate (Libor) and the Euro Interbank Offered Rate (Euribor).

George Osborne: "How were such failures allowed to continue undetected and unchecked?"
These are two of the most important interest rates in the global financial markets and directly influence the value of trillions of dollars of financial deals between banks and other institutions.

They can also affect lending rates to the public, for instance with some mortgage deals.

The British Bankers' Association asked the government on Thursday to consider taking over the regulation of how Libor is set.
London Inter Bank Offered Rate. The rate at which banks in London lend money to each other for the short-term in a particular currency. A new Libor rate is calculated every morning by financial data firm Thomson Reuters based on interest rates provided by members of the British Bankers Association.
Glossary in full The fine imposed on Barclays is part of an international investigation into the setting of interbank rates between 2005 and 2009.

Between 2005 and 2008, the Barclays staff who submitted estimates of their own interbank lending rates were frequently lobbied by its derivatives traders to put in figures which would benefit their trading positions, in order to produce a profit for the bank.

And between 2007 and 2009, during the height of the banking crisis, the staff put in artificially low figures, to avoid the suspicion that Barclays was under financial stress and thus having to borrow at noticeably higher rates than its competitors.

The FSA said Barclays traders were quite open about their routine attempts to manipulate rates.

"Requests to Barclays' submitters were made verbally and a large amount of email and instant message evidence

++++++++++++++++++++++++++++++++++++++++++++++++++++

Another 20 Banks worldwide are under investigation including RBS which is 82% owned by the Government and whose share price has dropped rapidly

THE BANKING SYSTEM SEEMS TO LURK FROM ONE PROBLEM TO ANOTHER,WHATEVER NEXT I WONDER.

Somebody was being interviewed on Radio 4 this evening about the latest news from Barclays. He indulged in some hyperbole, but the principle was good, I reckon. The interviewee said that in the US, the banksters at Barclays would be sent to jail for a thousand years, but in the UK, we're a bit disappointed about it!

BANKS HAVE BEEN MIS-SELLING INTEREST RATE SWAP INSURANCE,MANY BUSINESSES WENT OUT OF BUSNESS AS A RESULT.
IT SEEMS THERE IS NEVER A DAY WITHOUT ANOTHER BANKING PROBLEM AND/OR SWCANDAL.

WHICH BANKS ARE BEHAVING ETHICALLY?

100,00 BUSINESES MAY HAVE BEEN MISSOLD THE INSURANCE.
CITY OF BALTIMORE MAY SUE BANKS FOR THE MISSELLING.