Matt Taibbi, of the Rolling Stone has been writing articles on the corruption of the banks over the past few years. Matt has written some very terrific articles and gives us a “no holes barred” insight into the “culture” that the banks subscribe to when it comes to how they run their businesses. Many of Matt’s articles have been posted here on the SOP’s Blog pages.
This article once again informs us about how the banks have “rigged” interest rates on their back end derivative financial instruments. The concept of “derivatives” is of course quite complex, but those details are not the relevant point here. The discovery of just how the banks think, operate, and behave is just bone chilling. Yet, we the tax payers bail them out of their own self created problems. What would the courts do to you if it was found out that your were involved in “price fixing”, let along something of this magnitude? Yet, the global banks do this type of thing as a daily routine, standard operating procedure. Thank you Matt for bringing this story to light for all to see!
Here are some direct quotes from Matt’s article;
“The story from last year about how the banks “rigged” the LIBOR index was monumental in scope (as quoted in this article) “You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that’s trillion, with a “t”) worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it “dwarfs by orders of magnitude any financial scam in the history of markets.”
Now we are learning about another monumental issue in Matt’s article;
“That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.”
“Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It’s about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.”