Matt Taibbi: LIBOR Rate-Fixing Scandal "Biggest Insider Trading You Could Ever Imagine"

Democracy Now
Rolling Stone’s Matt Taibbi joins us to discuss the pattern of systemic corruption by 16 banks accused of rigging a key global interest rate used in contracts worth trillions of dollars. The London Interbank Offered Rate — known as LIBOR — is the average interest rate at which banks can borrow from each other; some analysts say it defines the cost of money.

Barclays was recently fined $453 million for rigging LIBOR, and a number of other banks are under investigation. "Ordinary people actually suffered when LIBOR was manipulated downward, mainly because local governments tended to lose money," Taibbi says. "Even the tiniest manipulation downward when you’re talking about a thing of this scale would result in tens of trillions of dollars of losses. ...

The banks weren’t doing this just to make themselves look healthier, they were also doing this just to make money. They were trading against this information in what essentially was the biggest kind of insider trading you could possibly imagine." Taibbi is author of the book, "Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History." [Transcript to come. Check back soon.]

Banks face billions more in Libor losses

Banks implicated in the Libor-fixing scandal will likely take billions more in losses as a result of pending litigation and regulatory penalties, according to industry analysts at Morgan Stanley. The analysis -- which the authors admit is crude -- is based in part on the experience of Barclays, the British bank which admitted that its staffers attempted to manipulate the London Interbank Offered Rate.

Many of the world's major banks, including Deutsche Bank (DB), Royal Bank of Scotland (RBS), Credit Suisse (CS), Citigroup (C, Fortune 500), UBS (UBS) and JPMorgan Chase (JPM, Fortune 500) have disclosed that they are being investigated.

Barclays has agreed to pay $453 million to U.S. and U.K. regulators, a settlement which provided the basis for Morgan Stanley's calculation that at least ten additional banks could be fined between $420 and $651 million by regulators. Other banks implicated in the scandal -- but not included in the Morgan Stanley analysis -- could also face penalties.

Banks that have not yet settled with regulators will likely pay a premium, as Barclays received preferential treatment from regulators because it was cooperative and settled quickly. The other banks, according to the analysis, should expect to pay 30% more. Under another scenario, the banks could face even higher fines after the U.K. Serious Fraud Office completes its investigation. Read more >>

130 Point Move In Dow In 15 Minutes On No Volume

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Zerohedge comment of the day
by John McCloy
What do you do when those who are meant to protect you simply no longer care? Who is left to make money from? Only themselves. There are not many short squeezes left in their pocket. Do you think retail wants any part of this? What is the point of marking up prices when there is nobody to sell to but one another?

They shot themselves in the foot with the flash crash. It was a blatant maneuver as we all know to move influence political legislation. There is a reason we have supposedly autonomous branches. When Central bankers are using the markets to influence legislation we have a coup d'etat ladies in gentleman. This is nothing short of a financial coup perpetrated against the American public.

• Pres. Obama announced Volcker Rule: Market shakedown and the newstream begins that Prop trading cannot be banned.
• Llyod Blankfein goes on the stand: Market collapse into the close to assure he is not badgered.
• Financial Regulation begins to make headway as Senators finally attempt to bring amendments to the floor and the day a Full Fed Audit is considered: The markets begin crashing and only reverse when Sanders is taken into a backroom. A deal is made to turn this into a false bill because they knew Senators could not vote against a Fed audit so they diluted it to solve the problem.
• Greece & PIGS bondholders need cash as liquidity seizes, the Euro begins the walk to the river Styx and LIBOR skies: President Obama gets on the phone to Merkel to coerce a bailout (Look how well it worked for us), Bernanke begins making the rounds, and the IMF courageously volunteers 57 Billion in American taxpayer money for a bailout to buy FUCKING BONDS so that banks again take no haircut in restructuring.
• Derivatives spin off/naked derivatives & Mccantwell/McCain (Glass-Steagall) are attempting to come to a vote: Markets are crashed, phone calls are made, Rahm & The President make phone calls to take the pressure off and a vote to cloture is rushed. The vote fails the first time..markets crash THE NEXT DAY they bring the vote to the floor again to prevent the amendments from being voted on and it passes. Banks sell off into the close to pretend they do not like the bill.

In the meantime Oil continues to hemorrhage in the Gulf, unemployment claims continue to rise, 99er's begin to fall off benefits, Credit cards & Foreclosures continue to climb, Mark to Market vanishes into the land of the Unicorns,Food stamps reach record levels (Modern day Soup Lines), Manufacturing jobs contract and are never to be seen again, Incumbents are being tossed, Savers see a continuous wealth transfer, small business ceases to exists, home prices continue to fall, QE ends, Fannie & Freddie is ignored and costing billions a month and our money supply has gone parabolic. How all this data equates to record bank bonuses, perfect trading quarters for all of the big banks, skying gold and a Dow at 10,000? This is 2010 America in name only. Close to 1500 people now have created a shared fascist government.