2 Jul 2012

BBA LIBOR: a vastly bigger scandal than we knew

For the first time since the massive Libor scandal broke, an individual has surfaced who seems to have a serious investigative handle on what was going on. The evidence supplied by the Reuters journalist Carrick Mollenkamp today, if it proves to be correct, gives the lie to any sense that in some way the fiddling of the BBA Libor was some secret, hole in the corner, operation.

Mollenkamp has toiled round the Square Mile for several different financial news operations in the recent past. Throughout he has tracked the Libor and watched the way in which, he claims, ALL the big banks fiddled the rates the posted to it. The Libor is presided over by the British Bankers Association. Angela Knight – the BBA’s outgoing CEO told me that the BBA didn’t really handle the Libor – the work was ‘outsourced’ to Thomson Reuters. But the facts reside in the reality that Ms Knight’s office was constantly badgering many of us reporting these things to call the Libor by what they regarded as its ‘proper’ name – the BBA Libor.

The BBA was indeed in charge of setting the Libor interest rate upon which so many of our own commercial life depends – mortgage rates, loan rates, and the rest.

Little can the last Labour government have known as they and the then Tory opposition called for ‘light touch regulation’, quite how light it was. It was so light, when it came to the BBA Libor, that it was non-existent.

There are vast questions being thrown up by the minute which are in danger of being eclipsed by the attention focusing on the naming of names. Marcus Agius, according to one senior Barclays source to whom I have spoken, was a ‘by-stander’. His resignation is ‘flak to protect Bob (Diamond)‘.

Get past the names then and let’s look at this ‘light touch regulation’. Carrick Mollenkamp describes his life in the city, intersecting with traders and bankers alike. As they relaxed in bars around Canary Wharf, Mollenkamp concluded that the fiddling of the Libor was a standard and widespread practice.

If a Reuters journalist was picking this up – he says even BEFORE the financial meltdown of 2008 – how on earth was it missed by the regulators, the Bank of England, the Financial Services Authority, and the so-called ‘City fathers’ (the old Boys network around the stock exchange and other City institutions)?

Looked at in the cold light of this drab summer’s morning, it seems impossible that the regulators did not know and simply went along with the Libor fiddling simply to save institutions that even by 2008 were far too big to fail. That’s a bold claim. But it is the claim that needs to be addressed. And not just by the Financial Services Authority, which clearly can’t investigate its own track-record.

There is a strong suspicion that we are only where we are today because the US authorities took the view that what was going on amounted to criminal activity. They moved to prosecute Barclays as a test case – Barclays did their multi-million dollar deal on the US fines, at the same time, it’s said, informing on the other banks they knew to be involved.

There is a vast amount more slurry to come – watch our Channel 4 space!

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27 reader comments

  1. margaret brandreth-jones says:

    It seems clearer that it is an aggregation of many individuals and departments who can’t be named as there are many involved. Perhaps it is the sway of your writing or a take on it that just Mollenkamp has, but his take I find more believable.

    Perhaps the revelation of Libor fixing was about to be surfaced in another arena and one of the most successful banks was pin pointed to evade general scandal. Bob Diamond as the fall guy for many .

    As the facts emerge and being slightly cynical about the timing of revelation, I wonder what is happening at the side lines which the public are not aware of.

  2. Anthony Martin says:

    In all your years as a news presenter, I reckon you’ve come to realise just what a fraudulent bunch of people there are in privileged positions. Worse then that, you’ve come to see how they work together in a collusive net of self interest & protection. They avoid being called to account because they’re confident their own kind have manipulated the ‘regulatory’ system’. All with a vested interest in fiscal benefits.
    They hob-nob with the aristocracy and, high faluting, pompous, arrogant, obfuscating clique of faecals.
    We can only hope that their greed and power egos result in these criminals turning on and, turning-against each other.
    The Government is nothing more than a protector to these crony vermin of theirs. They ensure prison for kid ‘rioters’ while they secretly applaud these buddy criminals. All watched on by law slaves with their bias repressive system to protect the wealthy scum.
    The scale of this Libor fraud and, all the other fiddles and manipulations, are merely the tip of an Iceberg, surrounded by sharks in the immoral, infested waters of the City, backed up by stealth Sub-doms and high flying Clones.
    We can hope for an Earthquake induced tsunami to come calling!

    1. citizen smith says:

      Don’t beat about the bush…. tell ’em straight :)

    2. margaret brandreth-jones says:

      well said: I feel with the same passion and revulsion about the way dirty tricks, collusion by manipulators and corruption many and myself have beeen subjected to since all my worldy goods were stripped from me illegaly in the 80’s.Of course they got away with it and I have been trodden on ever since and every time I present evidence. “I will spoilt it for them “I am told , whoever THEY are.
      However I am scared that there are other ways of repeating a twin towers disaster and trying to weaken the west to such an extent that we suffer more than we could ever realise.

    3. margaret brandreth-jones says:

      just another comment to Anthony .. thankyou.. for verbalising what I have been suffering for many years.I am in tears as I read and am determined to fight on. One day I will get the scum.

  3. Philip Edwards says:

    Jon,

    If I were you I wouldn’t get too complacent over the media role despite Mollenkamp’s praiseworthy reporting.

    The fact is mainstream media not only ignored what was going on, it actually promoted the worst behaviour as “entrepreneurial” and “risk-taking.”

    If you want an example of this you need look no further than “respected” BBC financial reporter Robert Peston’s book “Who Runs Britain?” (Hodder and Stoughton paperback 2008).

    Try this on page 63: “We should of course celebrate the resilience and creativity of capitalism and capitalists” And this on page 336; “I have few qualms about celebrating the creativity of capitalists and capitalism. It may not be pretty, but, on the whole, greed is good.”

    With that as background is it any wonder the BBC hired Murdoch journalists Kelvin Mackenzie and Andrew Neil? Both of whom are handy reminders of the kind of media we would have had if the Nazis has conquered Britain.

    There are many many other examples in all media, and you know it very well.

    The only question now is whether mainstream media will do what it always has done: go along with the establishment and divert attention from the corruption.

  4. Gary says:

    If ‘Bob’ doesn’t go by his own hand then they should sack him. Make a statement that these people are not above the law and they will be made to be held accountable.

  5. Philip says:

    where there’s brass there’s muck….didn’t realise they were such an immense amount of it.Does anyone have confidence in Geo Osborne’s new regulation system…when it’s essentially many of the same players who stood back & did nothing in the LIBOR scandal. How on earth can we clear out these Augean stables? Everyone who could be involved seems compromised. At least, a thousand mea culpas & a resignation from Angela Knight would be a good start to the process. But how do we get people with the relevant knowledge, clean hands & integrity to sort this rats’ nest out?

  6. Garry Anderson says:

    As reported in your previous Barclays story – I won official complaint against FSA for their lack of integrity. The FSA have dumbed this down – say the banks cannot be prosecuted – but they can.

    There may be no SPECIFIC law to defraud using Libor – but it is still fraud – obtaining a pecuniary advantage by deception.

    The same as there’s no SPECIFIC law in the UK against murdering somebody by stuffing a live fish down their throat – but its still murder.

    Why will the FSA not explain why it is not fraud – let us guess.

    How exactly is it not obtaining a pecuniary advantage by deception i.e. fraud?

    1. Did they not make a pecuniary advantage – and not attempt to?

    2. Did they not use deception?

  7. CWH says:

    “”If a Reuters journalist was picking this up – he says even BEFORE the financial meltdown of 2008 – how on earth was it missed by the regulators, the Bank of England, the Financial Services Authority, and the so-called ‘City fathers’ (the old Boys network around the stock exchange and other City institutions)?””

    Surely this begs the question: If a Reuters journalist was picking this up BEFORE the financial meltdown why were our homegrown journalists not picking it up and reporting it?

    Any answers Mr Snow?

    Did any journalists question MMr Brown about what he meant by ‘light touch’ regulation?

  8. Saltaire Sam says:

    Is that the same Angela Knight who never tired of turning up on TV and radio to tell us who much integrity bankers have, how we shouldn’t be nasty to them, and how they are so important to our welfare?

    Tell that to the thousands losing their jobs because of the bank-wrought recessions.

  9. citizen smith says:

    Jon – are you up for this investigative ‘Liborgate’ adventure. We think you are!

    As i said a few days ago we need you and some others to get to the bottom of this. I am not sure the government, the FSA, BBA or any other organisation can be trusted at this stage.

    We need some very independant people (and not old Oxbridge journalists/editors like Peston) to get to the bottom of this pit.

    Go to it Jon.

  10. citizen smith says:

    re independence….when i said earlier no Oxbridge people… i meant Peston AND Robinson.

  11. Kate says:

    Geez – Cameron now saying he wants a Parliamentary enquiry “to get the truth”. Talk about delaying tactics/obfuscation/add your own here.

    A student nicks a few bottles of water and is put away for 6 mths. No Parliamentary enquiry needed.

    Why is the Serious Fraud Office hanging back?

  12. Robert Taggart says:

    Just a thought…
    Did not this LIBOR scandal happen under a LIEBORE government ?!

  13. Citizen Mark says:

    I agree with Citizen Smith about the need for some very independent journalists of Jon’s calibre to bring light where there is darkness as regards the extent of interest-rate fixing and related matters. I suspect that many of those arguing against a public Leveson-style enquiry are afraid of what would be revealed to an unsuspecting public. I doubt if it would restore confidence while in process. If there were such an enquiry, both the judge and the lawyer would need to take a crash course in economics and finance so as not to be bambouzled by these experts and guardians of our finances. It’s partly the obscurity of the subject matter that makes fraudulent practice so easy to conceal. I’ve always thought that the huge glass buildings in the City resemble temples to Mammon. It now seems that the City fathers are as susceptible to corruption as the Church fathers were before the Reformation. Perhaps it’s not a coincidence that both ‘fathers’ wear black – the colour for all clerics – and both speak with an authority that cannot be challenged, in a language that we humble profligate sinners cannot understand. It’s now time for some of these senior clerics to be put to the question.

  14. Garry Anderson says:

    They have known and kept it secret since 2009 – why are the SFO only now looking to see if charges can be brought.

    Something stinks to high heaven.

    1. citizen smith says:

      The SFO said previolsy that wa a case to answer i.e. wrong doing but said they didnt have the resources to do it

  15. Questions says:

    I’m not a Financial Journalist, but here’s part of an e-mail from the Number 10 web team on 18/06/09:

    “Sent: Thursday, 18 June 2009, 15:15
    Subject: Your petition to the Prime Minister has been approved

    Your petition has been approved by the Number 10 web team, and is now available on the Number 10 website at the following address:

    http://petitions.number10.gov.uk/InterveneNow/

    Your petition reads:

    We the undersigned petition the Prime Minister to Intervene to limit the vicious assault by credit card providers & banks upon recession hit Britain by; (1) outlawing the anticompetitive way
    in which banks set the LIBOR rate, in effect operating as a cartel (2) promoting legislation to limit the interest rates charged on all forms of ‘credit cards’ to no more than 3% above the Bank of England Interest Rate.

    Banks operate a cartel when setting the LIBOR rate. There is no prior consultation with those borrowers directly & materially affected by their decision. Both aspects may be illegal…”

    If I could see something was wrong, what did the former Prime Minister do about the subject? It should have set alarm bells ringing.

  16. adrian clarke says:

    There are many questions to be asked,most by the Police and serious fraud squad.An enquiry at whatever level will not find the answers, or be able to punish so i believe the one Cameron wants to set up, will be the quickest and cheapest.It can certainly suggest new regulations and procedures to protect individuals from greedy bankers.
    Really as there is already admitted crime and fraud,it is time bankers faced the courts

  17. margaret brandreth-jones says:

    I hear since the departure of Bob Diamond shares are up by 2%

  18. Questions says:

    I think we need a bit of legislation preventing people from holding more than one paid directorship. I think multiple directorships result in a loss of focus and a lack of due diligence.

    It might avoid situations like the same guy chairing Barclays and, I think, heading up the BBA.

  19. Austin Gayer says:

    This has been going of for years (I used to work in the City in the eighties). However this is only the tip of the iceberg.
    There are so many revelations about on-goings in “The Square Mile” that have yet to come out that could really rock the boat.
    This is the calm before the storm.

  20. IAS says:

    How amazing! We talk about LIBOR and seem to foget about the causation of the recession in 2008.

    Is it only me who is asking the question ‘why is it ONLY NOW that the media and politicians are being outspoken about ‘bankers Fraud’, when there has not yet been any of this same talk or investigation into CEO Bankers ‘Fraudulent’ activities that led to the failure of banks and the banking system in 2008 – creating a recession, the bankruptcy of our Country and the Austerity measures that has seen these same Bankers repossess our homes, stop lending to Small businesses and stagnating growth in our economy – while also hurting those most disadvantaged and vulnerable in our communties??

    What’s really going on here???

  21. ray says:

    i think at the very bottom of all this scandal you will find political donations from banks to labour and conservatives is at the root of it all …cash donations for influence with light touch regulations…i wonder how much has been given nobody seems interested in this part of the story but the amounts given at any particular time relate to the influence gained……” cashgate “

  22. Viva Democracy says:

    Cameron says he hopes Bob Diamond doesn’t get a huge pay off. Is this just a sop to all the people who remain aggrieved by Fred Goodwin’s reward for breaking RBS or does the PM actually intend to take action?

  23. John Maynard says:

    I have now spent the past few weeks after the Libor news broke writing to the Prime Minister and many more of the senior cabinet as well as my own MP. The only reply to date has been my MP which was a long and positive letter. The behaviour and contempt of the banks towards the British citizen is a crime of such magnitude,the harm and decimation inflicted on ordinary peoples lives that these despicable individuals have implemented just out of a lust of greed, has to be addressed with the law. There is no other industry that could do these crimes which nearly bring down countries as well as businesses, as well as individuals and walk away free from prosecution and with millions of pounds to add to the insult to the British people. I am no lawyer but when crimes such as these are directed at a countries people and at the nation itself to the point of near destruction for the benefit of their own ends, is this not treachery? We have now had to endure nearly 5 years of an appalling hardship to our citizens whilst these disgusting individuals live off the fat of the land. Other countries are bringing bent bankers to book, why not this country. The British people deserve JUSTICE NOW!

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