Barclays Bank
By now most everyone has heard of "LIBOR" and Barclay's Bank of England involvement in manipulating interest rates.
Yet the Barclay's Bank scandal over LIBOR, the London Interbank Offered Rate, that affects some $800 trillion in interest rates including mortgages, credit cards, student loans et al, is just the tip of the iceberg of the financial fraud hitting the headlines.
Now there are new revelations the New York Federal Reserve knew about Barclay's manipulations of LIBOR way back in 2007 and did nothing to stop it. Apparently, a Barclay's employee sent an e-mail to the New York Fed saying, "Draw your own conclusions about why people are going for un-realistically low rates". He indicated other big banks were also manipulating the rates and that Barclay's just wanted to "fit in with the rest of the crowd". Remarkably the bank itself was aware of the manipulations and in an internal report that same year said, "Our feeling is the LIBOR"s are again becoming unrealistic and do not reflect the true cost of borrowing".
Of course the Barclay's scandal became known just months after the JP Morgan Chase trading loss story broke revealing some $2 billion in losses (now estimated to be $7 billion) by the bank from high risk hedging trades that went sour and then compounded when the traders didn't reveal the true extent of the losses. These losses involved "complex derivatives" that still are completely unregulated even as they were at the center of the sub-prime mortgage bubble bursting in 2008 and the subsequent financial meltdown that brought the great recession.
Also on Thursday Wells Fargo Bank settled a bias suit for $175 million brought against it by the City of Baltimore (see "Baltimore City the Catalytic Force in Bias Suit Won Against Wells Fargo", OPEDNEWS, July 13, 2012).
Now one can say the Barclay's scandal, the JP Morgan trading debacle and the Wells Fargo bias suit are all separate and unrelated occurrences that just happen to involve the big banks. And to some extent that is true.
But if nothing else, all these cases reveal regulation and oversight of their activities is wholly inadequate and these banks are gaming the system in their favor and unless serious regulations are enacted to curb their excesses, it is all but guaranteed they will continue their fraudulent activities.
And in the end the people, not the bank perpetrators, will be the ones caught holding the bag and suffer the consequences in harsh austerity measures, loss of jobs, foreclosures, bankruptcy and economic calamity.
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