UPDATED:The banking scandal you may not have heard about

bank vaultby Luke Hayfield Photography

Let’s end this rotten culture that only rewards rogues | Will Hutton | Comment is free | 
[Via The Observer ]

Investment banking is an organised scam masquerading as a business. It is defined by endemic conflicts of interest, systemic amoral behaviour and extreme avarice. Many of its senior figures should be serving prison sentences or disgraced – and would have been if British regulators had been weaned off the doctrine of ” light touch” regulation earlier and if the Serious Fraud Office’s budget had not been emasculated by Mr Osborne. It is a tax on wealth generation and an enemy of honest endeavour – the beast that is devouring British capitalism.

The £290m fine on Barclays for rigging the interest rates in the inter-bank market is a defining moment. Not just for Barclays but for every bank with which it colluded. Barclays had the wit to come clean first – the first of many banks to suffer political and moral opprobrium for illicitly inflating its profits. It was also trying to protect itself from “reputational damage” – not wanting other banks’ assessment of its creditworthiness to become public .

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UPDATE: Here is some more background/info on this scandal.

The London Interbank Offered Rate (LIBOR) is the investment rate that many US adjustable home mortgages are based on. Barclay’s just admitted rigging the LIBOR for its own benefit. Yes, the interest rate was not where it was supposed to be based on their scam.

They and others manipulated the very interest rate that underpinned much of our economy. All for their own benefit, not for ours. A citizen who did something like this – perhaps a three card monty operator working the odds – would be hit up big time. A casino that used fixed tables to alter the odds would be put out of business.

Not so with banks.

For taking billions from us, they will have to pay $160 million. They also had to pay a $200 million penalty to the Commodity Futures Trading Commission and a large amount to the Financial Services Authority. Between the US and UK regulators, the bank will have to pay over $450 milion.This will only be worthwhile if Barclay’s is used against others. The DOJ states as much:

The Justice Department’s criminal investigation into the manipulation of LIBOR and EURIBOR by other financial institutions and individuals is ongoing.  The agreement requires Barclays to continue cooperating with the department in its ongoing investigation.

Romney had been planning on holding a fundraiser in London which was going to be hosted by the CEO of Barclay’s. Bad timing. Very intelligently, this CEO has stepped aside, as his name is now mud for politicians. 

The British seem even more up in arms and are calling for criminal investigations. They are looking at 18 banks for criminal activities. Maybe something will come out of this.

Not likely. JPMorgan looks like it lost over $9 billion by “operating a hedge fund with federally insured deposits within a bank.” That is tax payer money, yet the CEO was feted in front of a Congressional committee.

Perhaps it is about time that these guys who played with our money and put us in desperate straits do some hard time. Some of these guys need to be regulated into a 6 foot prison cell.

Why should we follow the lead of the British?

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