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Barclays LIBOR news

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    http://www.telegraph.co.uk/finance/n...e-28-2012.html

    I'm sure most are aware of what has happened, seems to be being heavily publicised.

    What do people think? Talks that Diamond should resign, but sincerely doubt that will happen.
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    It's been fixed for years has it not ?
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    This is causing a massive stir in the news...in 2009 no bank wanted to lend and LIBOR and EURIBOR effectively ceased up.

    The irony is that this 'manipulation', actually probably served to ease lending (to a very small degree), and may have actually had some public/ social benefit. On top of this is actually very unlikely that Barclays actually benefited but rather a few traders were looking to protect their books (and jobs) rather than trying to directly benefit the bank.

    However, this will just serve as another whipping stick for those who subscribe to the politics of envy to embrace.

    The UK is doing an effective job at biting off the hand that feeds it.
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    (Original post by gangst)
    This is causing a massive stir in the news...in 2009 no bank wanted to lend and LIBOR and EURIBOR effectively ceased up.

    The irony is that this 'manipulation', actually probably served to ease lending (to a very small degree), and may have actually had some public/ social benefit. On top of this is actually very unlikely that Barclays actually benefited but rather a few traders were looking to protect their books (and jobs) rather than trying to directly benefit the bank.

    However, this will just serve as another whipping stick for those who subscribe to the politics of envy to embrace.

    The UK is doing an effective job at biting off the hand that feeds it.
    Yar absolutely, couldn't agree more tbh.
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    Personally, I don't think Diamond should resign myself..

    I have plenty of reasons and can explain if people want, to me, this whole thing seems like a witch hunt by an angry public..Stephen Hester is next on the list..

    As far as I can see, Diamond wasn't even involved, he wasn't CEO at the time, he apparently had no idea that any of this was even going on which is probably likely and some are even saying this actually benefited us all as well? And stopped a run on the bank and another bailout? Not that it justifies lying, but you know..

    Not that I completely agree with huge bonuses, but I think it's ridiculous the way something goes wrong in a bank that is completely unrelated to the CEO such as an IT meltdown and then all of a sudden all the senior executives have to drop their bonuses for something they had could not foresee or have any control over..

    Why should the CEO lose his job over something he wasn't even managing at the time? I think it's pathetic.

    In my opinion, everyone is just looking for an excuse to crucify Bob Diamond and all the other banking leaders..Especially when you read some of the comments on the BBC News Website, truly hated, some people literally want to see that man lose everything he has and be put in prison with the key thrown away..

    More understandable if it was the traders facing the action which I think they should, I think this has nothing to do with the CEO. Even more so, if the company has a policy in place which traders then go onto ignore and do there own thing to make them look good..

    To be fair, he is probably one of the best leaders the bank has, resigning wouldn't do much good for stability..
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    Traders benefit, Barclays benefit. The spread between Libor and BOE base rates were sustained and large for a couple of years and we the public paid the costs for that.

    I hope you know that 1-2% can mean millions in terms of overcharges on loans.
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    (Original post by Zenomorph)
    Traders benefit, Barclays benefit. The spread between Libor and BOE base rates were sustained and large for a couple of years and we the public paid the costs for that.

    I hope you know that 1-2% can mean millions in terms of overcharges on loans.
    Libor rates were 'manipulated' lower. Making wholesale borrowing costs lower. The public would have benefited from that.

    I hope you know that most LIBOR rates are actually fractions of a percent, not 1 or 2%.
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    No, go look up the spread post 08 to about 2010 I think and you will see the big gap btwn Libor and BOE base.

    They are quoted as fractions but the gap in that period was indeed about 2 % I think w/o looking at the chart.
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    (Original post by Zenomorph)
    No, go look up the spread post 08 to about 2010 I think and you will see the big gap btwn Libor and BOE base.

    They are quoted as fractions but the gap in that period was indeed about 2 % I think w/o looking at the chart.
    But the point is that the effect the "manipulation" had on the rates was in the order of less than 1 basis point (ie. <0.0001%).
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    (Original post by amazonian)
    But the point is that the effect the "manipulation" had on the rates was in the order of less than 1 basis point (ie. <0.0001%).
    I was referring to something else.

    But to this point LIBOR being fixed lower actually helped Barclays as they were also lending from the market at the time. Lower Libor - cheaper funds.
    Also It does not mean they won't profit as much since old muggins , Joe Public that is will still be charged a big spread from wherever Libor is.
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    (Original post by amazonian)
    My point was that, if you were trying to blame the spread between BoE base rate and LIBOR on the actions that have come to light, their effect would have been so tiny that it would have made barely any difference to the rate and, hence, that spread. What if other banks sought a higher fixing, and made their submissions accordingly?

    It's probably also worth pointing out that the setting mechanism for LIBOR is such that half of the rates submitted for each [ccy,maturity] are eliminated from the final calculation anyway.

    Tiny ? Diff btwn Libor - BOE 08 -10 = [ 2% x 100,000 ( 0.02)^ 2] x million ] is no small deal .

    I believe The top and bottom 4 are discarded and this done according to size of business and ' repute '. This is decided by the BBA who are in effect controlled by the biggest banks in UK ( for sterling libor)
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    (Original post by Zenomorph)
    I was referring to something else.

    But to this point LIBOR being fixed lower actually helped Barclays as they were also lending from the market at the time. Lower Libor - cheaper funds.
    Also It does not mean they won't profit as much since old muggins , Joe Public that is will still be charged a big spread from wherever Libor is.
    Are you sure its that simple? LIBOR is a survey of multiple banks, not a rate that banks would deal at, so how was it having an effect? In other words, it is more plausible that Barclays was doing it either to manipulate the fix on trades already done or to try and get other banks to lend to it cheaper. Also, if LIBOR went down variable rate borrowers benefit, savers lose out.

    Comment from anyone who knows the detail on any of these questions would be interesting. From what I have read it seems that the point was to try and manipulate LIBOR to get a better fix on trades already done. Also, I thought RBS and Citi had been investigated, and found "guilty", for this stuff last year?

    EDIT: looking at it closer, most of the lawsuits have been brought, unsuprisingly, by people who had bought swaps. i.e. it basically seems banks were long rates and trades were going against them.
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    I predict this thread will rather rapidly be flooded by people yelling and screaming and hooting and making noise despite the fact they'd never even heard of libor rates before today.
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    (Original post by crcr)
    Are you sure its that simple? LIBOR is a survey of multiple banks, not a rate that banks would deal at, so how was it having an effect? In other words, it is more plausible that Barclays was doing it either to manipulate the fix on trades already done or to try and get other banks to lend to it cheaper. Also, if LIBOR went down variable rate borrowers benefit, savers lose out.

    Comment from anyone who knows the detail on any of these questions would be interesting. From what I have read it seems that the point was to try and manipulate LIBOR to get a better fix on trades already done. Also, I thought RBS and Citi had been investigated, and found "guilty", for this stuff last year?

    EDIT: looking at it closer, most of the lawsuits have been brought, unsuprisingly, by people who had bought swaps. i.e. it basically seems banks were long rates and trades were going against them.

    Libor IS the rate that banks deal with each other, not called London interbank offered rate for nothing LIBOR.
    Barclays were manipulating the rate every which way but lose, or 3 ways to be precise as I've already explained - reread posts please.

    Libor up Libor down, some customers may gain some may lose, but what is sure all will lose or lose out MORE if the rate if fixed and that is potentially an abuse of the system.

    BTW, I am an ex treasury guy, so I have an idea how Libor operates.
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    (Original post by Zenomorph)
    Libor IS the rate that banks deal with each other, not called London interbank borrowing rate for nothing LIBOR.
    Barclays were manipulating the rate every which way but lose, or 3 ways to be precise as I've already explained - reread posts please.

    Libor up Libor down, some customers may gain some may lose, but what is sure all will lose or lose out MORE if the rate if fixed and that is potentially an abuse of the system.

    BTW, I am an ex treasury guy, so I have an idea how Libor operates.
    I don't get it, LIBOR is an estimation (so not based on an actual trade) of what a bank thinks it can borrow funds at, how is that something that can be traded (the point here is that Barclays moved LIBOR away from where it could actually borrow to make money on swaps it had already closed, isn't it?)? if the LIBOR submission is some kind of contract, why are the people who submit "seperate" from traders? Most of your earlier points about what Barclays were doing don't make sense a whole lot of sense (i.e. your point about Barclays getting cheaper funds), i'll take my evidence from the actual lawsuits in the US/CAN/JPN.

    EDIT: it also isn't clear that "all" will lose out more, the net result of Barclay's action was nothing, it changed the distribution of funds but not the amount (stating the obvious but...).
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    (Original post by Zenomorph)
    Libor IS the rate that banks deal with each other, not called London interbank borrowing rate for nothing LIBOR.
    It's not called the London interbank borrowing rate at all...
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    Offered / borrowed = semantics
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    (Original post by crcr)
    I don't get it, LIBOR is an estimation (so not based on an actual trade) of what a bank thinks it can borrow funds at, how is that something that can be traded (the point here is that Barclays moved LIBOR away from where it could actually borrow to make money on swaps it had already closed, isn't it?)? if the LIBOR submission is some kind of contract, why are the people who submit "seperate" from traders? Most of your earlier points about what Barclays were doing don't make sense a whole lot of sense (i.e. your point about Barclays getting cheaper funds), i'll take my evidence from the actual lawsuits in the US/CAN/JPN.

    EDIT: it also isn't clear that "all" will lose out more, the net result of Barclay's action was nothing, it changed the distribution of funds but not the amount (stating the obvious but...).

    Whilst I don't mind discussing, I simply have not the time to take everyone through IR/ LIBOR/ Euromrkt basics. Hope you understand, I'll try but no guarantees.

    So anyway the LIBOR setters are theoretically supposed to be isolated and separate from any other bank department especially sales and trading.

    They collate all the info from all the branches to see if the bank needs to borrow or can lend funds to other banks, that day. Hence with that they will put in an offer price for ST money.

    If the traders know about this, they can profit in may ways, if I know Libor pound is going down for sure cause the rate setter just told me , then I can long SSterling x million - sure profit.

    Or if a client of mine wants to put 10's of million on GBP going up and before he takes the trade , I tip him off that Libor is going up for sure cause the RS dept. just told me , then I stand to gain an take from the spread I charge. Win - win, except that the market is rigged and the smaller customers and joe public pays for this through higher expenses ( spreads ), not to mention the illegality.

    Of course there is blindingly obvious way, if the big 4 banks act in tandem and keep the Libor - customer rate spread big then obviously the higher spread is passed on to muggins joe public who pay x millions more through higher interest charges. This despite the BOE dropping base rates to all time lows - it basically defies public policy.
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    (Original post by Zenomorph)
    Whilst I don't mind discussing, I simply have not the time to take everyone through IR/ LIBOR/ Euromrkt basics. Hope you understand, I'll try but no guarantees.
    No information there, you shouldn't have bothered.
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    These banksters are playing with people's lives again. A lot of people's mortgages (including my own actually) and index linked to what the LIBOR is doing. Take these greedy pigs out, put them in front of a brick wall, and machine gun them.

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