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(Washington Post)   Casual emails between "dudes" asking each other for "small" favors actually reveals a plot to fix interests rates on $456 TRILLION in financial trades   (washingtonpost.com) divider line 76
    More: Scary, Barclays plc, Financial Services Authority, Canary Wharf, BBA LIBOR, interest rates, international financial center, fixed interest, bankers  
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11036 clicks; posted to Business » on 29 Jun 2012 at 2:05 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-06-29 11:19:41 AM
The British Bankers Association confessed to being "shocked" at the accusations.

Yes, I'm sure multiple monocles fell into multiple glasses of champaign over that 'shocking' bit of news.
 
2012-06-29 11:33:34 AM
I know these guys weren't exterminating jews or anything, but that whole banality of evil thing comes to mind
 
2012-06-29 11:46:01 AM
Didn't we just give these guys all kinds of bailouts?
 
vpb [TotalFark]
2012-06-29 12:02:05 PM
The only surprise is that they got caught.
 
2012-06-29 12:10:09 PM
Clearly some deregulation is in order.
 
2012-06-29 12:32:11 PM

vpb: The only surprise is that they got caught.


Given that they weren't even bothering to code these messages or use any sort of euphemisms, it tells me that either they didn't even think they were doing anything wrong, That they'd never get caught, or they just felt so bullet-proof that they literally had no reason to fear the consequences of thier actions
 
2012-06-29 12:39:44 PM
"One trader said this..." "Another trader said that..."

Can we just have their names so we know who these assholes are? Why is it that the names of child rapists are released to the public before trial but we can't get the names of our financial rapists?
 
2012-06-29 01:06:49 PM

Magorn: Given that they weren't even bothering to code these messages or use any sort of euphemisms, it tells me that either they didn't even think they were doing anything wrong, That they'd never get caught, or they just felt so bullet-proof that they literally had no reason to fear the consequences of thier actions


And so far, they haven't had to worry about the consequences other than losing their job. I'm sure they'll get hired at another bank in not time, and I doubt that criminal charges will ever get filed.
 
2012-06-29 01:17:37 PM

bdub77: "One trader said this..." "Another trader said that..."

Can we just have their names so we know who these assholes are? Why is it that the names of child rapists are released to the public before trial but we can't get the names of our financial rapists?


Child rapists aren't usually rich and you never find out about the ones who are.
 
2012-06-29 01:20:26 PM
rhida.ch
 
2012-06-29 01:20:46 PM

Aarontology: Clearly some deregulation is in order.


Why shouldn't the banks be able to conspire with each other to manipulate interest rates? Certainly this is letting the free market handle the problem. We should be going for the optimal solution so that the titans of industry continue to invest.
 
2012-06-29 01:34:56 PM
Casual emails between "dudes" asking each other for "small" favors...

huh. The rest of that sentence wasn't as sexy as the first half suggested.
 
2012-06-29 02:15:13 PM

penthesilea: Casual emails between "dudes" asking each other for "small" favors...

huh. The rest of that sentence wasn't as sexy as the first half suggested.


Are you telling me that $456 trillion dollars doesn't sound sexy to you?
 
2012-06-29 02:16:24 PM

ShawnDoc: Magorn: Given that they weren't even bothering to code these messages or use any sort of euphemisms, it tells me that either they didn't even think they were doing anything wrong, That they'd never get caught, or they just felt so bullet-proof that they literally had no reason to fear the consequences of thier actions

And so far, they haven't had to worry about the consequences other than losing their job. I'm sure they'll get hired at another bank in not time, and I doubt that criminal charges will ever get filed.


"Aren't you the guy that got arrested for fraud?"

"Yes, yes I am."

"Welcome aboard, we need someone like you here."
 
2012-06-29 02:20:29 PM

jaylectricity: penthesilea: Casual emails between "dudes" asking each other for "small" favors...

huh. The rest of that sentence wasn't as sexy as the first half suggested.

Are you telling me that $456 trillion dollars doesn't sound sexy to you?


Worked for him...

www.i-reviewmovies.com
 
2012-06-29 02:21:02 PM
I am just concerned that Bill and Ted are now working in banking rather than playing music!
 
2012-06-29 02:28:23 PM

HotWingConspiracy: "Aren't you the guy that got arrested for fraud?"

"Yes, yes I am."

"Welcome aboard, we need someone like you here."


A) Its the banking industry
B) No one has been arrested yet. It is merely being "investigated". Chances of an arrest and successful prosecution? I think 10%.
 
2012-06-29 02:29:09 PM
The 'Dudes' will claim they were under a Confundus Charm, thereby exonerating them.
 
2012-06-29 02:33:16 PM
Mark it 0.
 
2012-06-29 02:33:31 PM
Dude, where's my cartel?
 
2012-06-29 02:34:10 PM

Aarontology: Clearly some deregulation is in order.


you do realize that current regulations and laws cover these sort of violations right? The reason for the lack of early detection is that no one blew the whistle. This is classic cartel activity. The banks perceive this as everyone winning...banks make money...and everyone else "thinks" they are getting a fair deal, which of course the banks maintain that it is fair.

They are being glib assholes with a defense like that but that is their position.
 
2012-06-29 02:34:42 PM
Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.
 
2012-06-29 02:36:40 PM

TDBoedy: Aarontology: Clearly some deregulation is in order.

you do realize that current regulations and laws cover these sort of violations right? The reason for the lack of early detection is that no one blew the whistle. This is classic cartel activity. The banks perceive this as everyone winning...banks make money...and everyone else "thinks" they are getting a fair deal, which of course the banks maintain that it is fair.

They are being glib assholes with a defense like that but that is their position.


If they weren't stopped early, the current rules clearly aren't effective.
 
2012-06-29 02:39:19 PM
I say old chaps, it would be greatly appreciated if you might ascend to the peak of a tall structure and then briskly stride forward.
 
2012-06-29 02:55:27 PM
Why does subby hate job creators!?!?!
 
2012-06-29 02:56:37 PM
The global financial system, brought to its knees by a bunch of bros.
 
2012-06-29 02:59:36 PM
And I'm betting not a single one of these scumbags will go to jail
 
2012-06-29 03:03:53 PM

LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.


I can't believe they stole 554 trillion dollars. That's so much money. If you took that in $1 bills and laid them end to end it would stretch from the sun to Pluto and back like10-20 times, depending on where Pluto is in it's orbit. If you had it in $100 bills it would weigh over 6 million tons, or about 53 Nimitz class aircraft carriers.

We could pay off the national debt 50 times over with the money these guys stole.

Oh wait, thats just the notional value of the derivatives and utterly meaningless. Carry on.
 
2012-06-29 03:07:48 PM

LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.


Which is, literally more money than there is in the entire world.

The combined world GDP last year was about 65 trillion, so these trades were almost 10x the entire WDP
 
2012-06-29 03:09:05 PM

germ78: The global financial system, brought to its knees by a bunch of bros.


somehow "Wanna Bro down and crush some financial markets?" Doesn;t have the same ring to it
 
2012-06-29 03:18:44 PM

germ78: The global financial system, brought to its knees by a bunch of bros.


"Hey dude just got LIBOR to just 20 basis points. Fist Bump!"
 
2012-06-29 03:25:22 PM
Debeo Summa Credo: Oh wait, thats just the notional value of the derivatives and utterly meaningless. Carry on.

My memory is better than that, liar.
Extreme leverage in an unregulated industry that shouldn't exist in the first place is still a threat. That "utterly meaningless" "notional value" of derivatives almost dragged the economy of the entire planet into the Greater Most Profound Depression from September 14th to October 11th in 2008. We're still experiencing the aftereffects.

/PS They still won't let you in the plutocrat club, no matter how publicly and devotedly you blow them.
 
2012-06-29 03:35:52 PM
What's wrong with fixed interest rates? You don't want to get a variable interest rates when the rates are historically low.

// JK, but you should have said something like 'rig interest rates, or 'doctor interest rates'.
 
2012-06-29 03:37:52 PM

vpb: The only surprise is that they got caught.


It makes you wonder what the "clever" ones are getting away with. For every one caught, you have to figure 100 are getting away with it.

/ Like cockroaches
// And I apologize to the cockroaches...
 
2012-06-29 03:51:27 PM

Debeo Summa Credo: LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.

I can't believe they stole 554 trillion dollars. That's so much money. If you took that in $1 bills and laid them end to end it would stretch from the sun to Pluto and back like10-20 times, depending on where Pluto is in it's orbit. If you had it in $100 bills it would weigh over 6 million tons, or about 53 Nimitz class aircraft carriers.

We could pay off the national debt 50 times over with the money these guys stole.

Oh wait, thats just the notional value of the derivatives and utterly meaningless. Carry on.


So it's cool if some Bronies make $554,000,000,000,000 in loans cost more to borrow? It's a-OK if banks manipulate their numbers for profit?

Tell me - what's the ripple effect if the rate is too high by .01%? .1%? .5%? 1%? This affects all loans, right - that's gotta be, in actual inflated-costs-due-to-fist-bumps terms, billions of pounds' worth of money moving around, all making the bank an extra fraction of a cent (or even whole penny) for each dollar loaned. For you and me, that might be chump change. For a 30yr mortgage holder (call it $250k), a .1% rise in interest rates could mean the difference between paying off your note on time vs paying it off 2 years early (but I haven't run the math on that).

// not a businessman, so these are actual questions
 
2012-06-29 03:58:04 PM

Debeo Summa Credo: LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.

I can't believe they stole 554 trillion dollars. That's so much money. If you took that in $1 bills and laid them end to end it would stretch from the sun to Pluto and back like10-20 times, depending on where Pluto is in it's orbit. If you had it in $100 bills it would weigh over 6 million tons, or about 53 Nimitz class aircraft carriers.

We could pay off the national debt 50 times over with the money these guys stole.

Oh wait, thats just the notional value of the derivatives and utterly meaningless. Carry on.


Ummm...they didn't steal anything, just covertly manipulated the LIBOR by colluding on the rate at which they lent each other money. Still wrong, still illegal, still doubtful anyone important will go to jail as charges are being considered rather than have already been filed.

$554 trillion is the value of stuff that uses the LIBOR rate for valuations. The rate these guys illegally manipulated.

///Send Martha Stewart to jail again, that'll teach 'em.
 
2012-06-29 03:58:24 PM
I wish I could steal billions of dollars and pay a $500 million fine.
 
2012-06-29 04:24:14 PM

roc6783: Debeo Summa Credo: LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.

I can't believe they stole 554 trillion dollars. That's so much money. If you took that in $1 bills and laid them end to end it would stretch from the sun to Pluto and back like10-20 times, depending on where Pluto is in it's orbit. If you had it in $100 bills it would weigh over 6 million tons, or about 53 Nimitz class aircraft carriers.

We could pay off the national debt 50 times over with the money these guys stole.

Oh wait, thats just the notional value of the derivatives and utterly meaningless. Carry on.

Ummm...they didn't steal anything, just covertly manipulated the LIBOR by colluding on the rate at which they lent each other money. Still wrong, still illegal, still doubtful anyone important will go to jail as charges are being considered rather than have already been filed.

$554 trillion is the value of stuff that uses the LIBOR rate for valuations. The rate these guys illegally manipulated.

///Send Martha Stewart to jail again, that'll teach 'em.


So what is the real world, non-finance implication of this? Clearly they were doing something sneaky to make money, but who is on the losing end of that equation?
 
2012-06-29 04:26:08 PM
Oh for God's sake.

"huh huh the derivatives (note: scary word) were worth $456 trillion (THAT'S A BIG NUMBER!!!1!)"

Look people, if I buy a 6 month call option for 100 shares of Microsoft at $40/share (current price = $30), my investment will be about $8. Not $4,000.

But I guess big numbers create more page views, so derivatives will always get a bad rep in the press.
 
2012-06-29 04:36:41 PM
dude check out this picture of a starving kid lol eat a cheeseburger or something lol

OMG maybe we can buy him lol

lol we could teach him tricks lol

bro let's stroke the LIBOR so we can totally make some extra money and buy that kid :)

sweet lol
 
2012-06-29 04:36:54 PM

rugman11: roc6783: Debeo Summa Credo: LordStormes: ***snip**
So what is the real world, non-finance implication of this? Clearly they were doing something sneaky to make money, but who is on the losing end of that equation?


Quick Google search indicates that rate is used to set the price on many exotic interest rate swaps and other transactions. Also, ARM and traditional mortgages, student loans, and credit card interest rates.

So they screw around with the rate by a few hundredths of a percent to make their derivative make a few extra grand and banks across the world raise their loan interest rate a tenth of a percent.

The problem isn't for one guy who has to pay an extra $20 a month on his $100,000 mortgage, it's the fact that every mortgage in the world that uses LIBOR is now $20 a month more expensive per $100k borrowed.
 
2012-06-29 04:46:46 PM

miss diminutive: The British Bankers Association confessed to being "shocked" at the accusations.

Yes, I'm sure multiple monocles fell into multiple glasses of champaign over that 'shocking' bit of news.


Reminds me of the Casablanca scene where Renault is "shocked shocked" that there is gambling going on, at which point a croupier hands him his winnings.
 
2012-06-29 04:49:42 PM

mantabulous: I wish I could steal billions of dollars and pay a $500 million fine.


So do the guys who did this. What makes you think they stole billions?
 
2012-06-29 04:51:20 PM

LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.


1.bp.blogspot.com
 
2012-06-29 04:53:43 PM
Am I the only one shocked that that much money even exists in all of the ledgers in the world combined? That's like 25 years worth of the GDP of the entire planet.
 
2012-06-29 04:54:30 PM

rugman11: roc6783: Debeo Summa Credo: LordStormes: Actually 554 trillion. So, more than half a QUADRILLION dollars. Or, 38 times the entire GDP of the United States.

I can't believe they stole 554 trillion dollars. That's so much money. If you took that in $1 bills and laid them end to end it would stretch from the sun to Pluto and back like10-20 times, depending on where Pluto is in it's orbit. If you had it in $100 bills it would weigh over 6 million tons, or about 53 Nimitz class aircraft carriers.

We could pay off the national debt 50 times over with the money these guys stole.

Oh wait, thats just the notional value of the derivatives and utterly meaningless. Carry on.

Ummm...they didn't steal anything, just covertly manipulated the LIBOR by colluding on the rate at which they lent each other money. Still wrong, still illegal, still doubtful anyone important will go to jail as charges are being considered rather than have already been filed.

$554 trillion is the value of stuff that uses the LIBOR rate for valuations. The rate these guys illegally manipulated.

///Send Martha Stewart to jail again, that'll teach 'em.

So what is the real world, non-finance implication of this? Clearly they were doing something sneaky to make money, but who is on the losing end of that equation?


They're still trying to figure that out. Presumably, to the extent they were trying to rig markets to aid their derivatives positions, the guys who lost would be those on the other side of those trades (presumably other financial institutions).

They also rigged the rates so that they (Barclays) didn't look worse than other banks during the crisis.

They're still trying to figure out whether and how much Barclays benefited from this.

Regardless, they broke the rules and distorted the credibility of the market.
 
2012-06-29 05:06:01 PM

Tommy Moo: Am I the only one shocked that that much money even exists in all of the ledgers in the world combined? That's like 25 years worth of the GDP of the entire planet.


The out-of-control derivatives market is the inevitable result when you let parties with access to lots of money and who have vast influence bet on anything, and you don't regulate it in any way, shape, or form.

Of course, if they screw up badly enough, they can just get their lobbyists to work their politicians for taxpayer-funded bailouts.
 
2012-06-29 05:44:06 PM
Could you imagine if a vigilante group modeled after "Los Pepes," the group that terrorized Pablo Escobar's footsoldiers in Columbia, started randomly hitting bankers like these "bros?"

'Cause I can.
 
2012-06-29 06:35:24 PM

Debeo Summa Credo: mantabulous: I wish I could steal billions of dollars and pay a $500 million fine.

So do the guys who did this. What makes you think they stole billions?


One basis point on 554 trillion dollars is 55 biliion dollars. Barclays has about 1% of the global lending market. That means they only needed to move the LIBOR market 2 basis points to steal 1 billion dollars per year.


\Chicks dig the math.
 
2012-06-29 06:49:56 PM

scandalrag: Debeo Summa Credo: mantabulous: I wish I could steal billions of dollars and pay a $500 million fine.

So do the guys who did this. What makes you think they stole billions?

One basis point on 554 trillion dollars is 55 biliion dollars. Barclays has about 1% of the global lending market. That means they only needed to move the LIBOR market 2 basis points to steal 1 billion dollars per year.


\Chicks dig the math.


Terrifyinggiantheadedgreenalienfromfamilyguy.jpg

THAT'S NOT HOW THE DERIVATIVES MARKET WORKS!!
 
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