Just as there are serial murderers in large cities that must be caught out and put away, there are serial financial criminals in vast impersonal banks who keep on defying the rules for personal gain. It has been trading on inside information, selling the public rotten investments, trying to fix the market in government securities-- and now fiddling the world on the set of interest rates by which the cost of borrowing is established from maturity to maturity. And we know the traders in global banks are not members of the criminal underworld.
Will it never end? I mean the smarmy, unethical, illegal fixing of the financial markets by the great names of finance.
This time it is the holiest market of the the London Interbank Offering Rate-- LIBOR-- the rate the major banks of the UK and Europe charge each other to borrow funds from each other. This is the equivalent of a cheating conspiracy in the US discount rate-- at which banks borrow from the Fed and from each other to grease the daily trading of securities. It is roughly similar to the conspiracy to control the Treasury note auctions that nearly sent Salomon Brothers into the bankruptcy courts in the early 1990s. No wonder a Gallup poll shows only 21% of Americans have a high confidence in US banks, the lowest figure in the past 30 years. Banking has been betraying the public trust time after time after time. As British Chancellor of the Exchequer Osborne decries; The cheating by Barclays on the LIBOR rate-- a sacrosanct guidepost to global finance-- has corroded the public's confidence in the cornerstone of capitalism--banking.
Who can blame Chancellor of the Exchequer George Osborne from the ultimate outrage-- now that he knows the Bank of England's milk has been soured by sleazy, grasping thieves like the great house of Barclays which has admitted guilt in conspiring with the likes, it appears, of Royal Bank of Scotland, UBS, Deutsche Bank, Citigroup and others. Their goal--- chisel the interbank rate down a notch or two to widen the spreads on trading gilts and derivatives and other securities. Obtaining a deal that others could not use, because they were not in on the game.
The shocking bottom line' we are learning not to trust the major banks which are household names of finance. Barclays just paid a $300 million fine for trading illegally with Iran, Cuba and Libya. Now it will pay another fine for cheating on LIBOR, and witness its already depressed share price sink another 11%.
Credit Suisse also paid $536 million for using Iranian deposits in its US banking operation in violation of international sanctions. So did ABN Amro and Lloyds. UBS paid $780 million for hiding American taxpayers money in Europe. Goldman Sachs settled an SEC complaint for not communicating the risks of a mortgage bond offering and paid $550 million. Another 5 major banks owe $25 billion for illegally foreclosing on mortgages in the US. JP Morgan Chase had such rotten risk controls in its chief investment office that it could lose as much as $9 billion on derivative trades-- though no law or regulation was obviously violated.
There is no excuse for this perversion of the banking culture. Banks in Europe are already in fragile shape due to the continents'
sovereign debt problems and the dangerous leverage at banks, holding depreciating securities. WE need to know how endemic the corruption goes and whether it began long before this recent crisis.
I would not want my son working for one of these banks. I would not want the placement offices of the Stanford, Harvard, Pennsylvania business schools placing their top students in these banks. This is an horrific statement about what banking has become. Whatever the Rothschilds, and the Morgans and Medici did, it could not have equalled the smarminess of all this sordid matter.
