Yet More Evidence That Banks Are Too Heavily Regulated

– That’s a tongue-in-cheek a title as I’ve seen in awhile.  

– When you read this, reflect that hundreds of people have spent time in jail recently for demonstrating against inequality and financial malfesance and yet, in spite of the massive global melt-down triggered by Wall Street’s greed in 2008, not one banker or Wall Street type has yet served jail time.

– dennis

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The Wall Street Journal reports today that between 2007 and 2010 a group of six big banks conspired to artificially manipulate a key interest rate, the yen London interbank offered rate, also known as yen Libor:

The yen Libor rate is set daily by a 16-bank panel, organized by the British Bankers’ Association. Around 11 a.m. London time every day, each bank submits estimates to the BBA of what rates it would pay to borrow from other banks for different time periods. The top four and bottom four quotes are then discarded, and Libor is calculated using an average of the middle eight quotes.

The Canadian watchdog [investigating the case] said lawyers acting for the cooperating bank had told it that traders at six banks on the yen Libor panel—Citigroup Inc., Deutsche Bank AG, HSBC Holdings PLC, J.P. Morgan Chase & Co., Royal Bank of Scotland Group PLC and UBS—”entered into agreements to submit artificially high or artificially low” quotes, according to the court documents.

The traders used emails and instant messages to tell each other whether they wanted “to see a higher or lower yen Libor [rate] to aid their trading position(s),” according to a court filing. Each of the traders would then “communicate internally” with the person at their bank who was responsible for submitting the Libor quote, before letting each other know if this attempt to influence the quote had worked.

Just a few rogue traders, I’m sure. Nothing to be concerned about. Move along now.

– To the original story…

 

 

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