13 April 2017

OK, this is a Big F%$#ing Deal

Recently revealed tape recordings indicate that the Bank of England actually ordered some of the illegal manipulation of the LIBOR rates:
A secret recording that implicates the Bank of England in Libor rigging has been uncovered by BBC Panorama.

The 2008 recording adds to evidence the central bank repeatedly pressured commercial banks during the financial crisis to push their Libor rates down.

Libor is the rate at which banks lend to each other, setting a benchmark for mortgages and loans for ordinary customers.


The recording calls into question evidence given in 2012 to the Treasury select committee by former Barclays boss Bob Diamond and Paul Tucker, the man who went on to become the deputy governor of the Bank of England.


In the recording, a senior Barclays manager, Mark Dearlove, instructs Libor submitter Peter Johnson, to lower his Libor rates.

He tells him: "The bottom line is you're going to absolutely hate this... but we've had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower."

Mr Johnson objects, saying that this would mean breaking the rules for setting Libor, which required him to put in rates based only on the cost of borrowing cash.

Mr Johnson says: "So I'll push them below a realistic level of where I think I can get money?"

His boss Mr Dearlove replies: "The fact of the matter is we've got the Bank of England, all sorts of people involved in the whole thing... I am as reluctant as you are... these guys have just turned around and said just do it."


Banks have been fined more than £6bn for allowing submitters to be influenced by requests from traders or bosses to take into account the bank's commercial interests, such as trading positions.
Central bank independence, and central bank secrecy have led to corruption, as evidenced by the this incident, as well as the resignation of the resignation of Richmond Federal Reserve President Jeffrey Lacker for leaking insider information to Medley Advisors,  a so-called "Expert Network".  (An expert network is basically a cut out to supply inside information to speculators, most notoriously by Steve Cohen).

It is the inevitable result of how this organizations are structured:  When you combine extreme power with a complete lack of accountability, corruption follows.


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