MY blog comments are read globally and after some comments I need to explain a little more.
In the UK there is a furore regarding interest rate fixing by Barclays and the argument is, that the government says it’s a crime and want someone to be prosecuted for it.
However, for those involved in banking and setting interest rates ( I used to be one of them) , all know, that this is not possible to prosecute for wrong doing and maybe this is just a jerk reaction to all that is going on in the UK at the moment.
So let me explain a little.
Each business day at 11am (UK time) interest rates are set by several banks using the average rate of all banks quoting.
Barclays was proven to email the other banks asking for an agreement on the level of the rates before they were fixed. This is officially set by the British Bankers Association. The name of this is LIBOR (London Interbank Offered Rate). This isn’t set by a law but is self regulated. Differences on this rate is about 0.125% each day up or down and it is used to set rates for various periods of time up to a year. This has an affect on personal loans, mortgages etc to the consumer as well as set the rate for banks lending to each other. In today’s market where a single deal can be STG 3billion this can make a large difference.
The government is now trying to prosecute bankers for changing the rates by collusion, because they call it fraud. However, what I am saying is, that it can’t be fraud and therefore no one will be prosecuted and the whole thing is a waste of time.
The reason I say that this isn’t fraud is because of the following:
1. The LIBOR is run by the British Bankers Association
2. It is concluded and shown on systems like Reuters and Bloomberg
3. It is advertised on the internet
4. The rates are published each day in the financial newspapers
5. It is reported to the Bank of England
6. The Bank of England is answerable to the Treasury and the government
So in light of this how is it fraud?
The inference now is that the treasury at the time run by Labour did in fact have words with the Bank of England to lower rates in this way. Funnily enough all of those mentioned in the Treasury and Bank of England deny this was said. Bob Diamond said the conversatrion wasn't recorded as the call was made to his New York office that didn't have a recording machine on. All very convenient and all of the participants trying to deny the conversation was made with Bob Diamond.
That is why I say it all stinks and is a waste of time. Unless the Bank of England wanted to get rid of Bob Diamond at Barclays who has resigned.
I hope that this clears some matters up for my readers
In the UK there is a furore regarding interest rate fixing by Barclays and the argument is, that the government says it’s a crime and want someone to be prosecuted for it.
However, for those involved in banking and setting interest rates ( I used to be one of them) , all know, that this is not possible to prosecute for wrong doing and maybe this is just a jerk reaction to all that is going on in the UK at the moment.
So let me explain a little.
Each business day at 11am (UK time) interest rates are set by several banks using the average rate of all banks quoting.
Barclays was proven to email the other banks asking for an agreement on the level of the rates before they were fixed. This is officially set by the British Bankers Association. The name of this is LIBOR (London Interbank Offered Rate). This isn’t set by a law but is self regulated. Differences on this rate is about 0.125% each day up or down and it is used to set rates for various periods of time up to a year. This has an affect on personal loans, mortgages etc to the consumer as well as set the rate for banks lending to each other. In today’s market where a single deal can be STG 3billion this can make a large difference.
The government is now trying to prosecute bankers for changing the rates by collusion, because they call it fraud. However, what I am saying is, that it can’t be fraud and therefore no one will be prosecuted and the whole thing is a waste of time.
The reason I say that this isn’t fraud is because of the following:
1. The LIBOR is run by the British Bankers Association
2. It is concluded and shown on systems like Reuters and Bloomberg
3. It is advertised on the internet
4. The rates are published each day in the financial newspapers
5. It is reported to the Bank of England
6. The Bank of England is answerable to the Treasury and the government
So in light of this how is it fraud?
The inference now is that the treasury at the time run by Labour did in fact have words with the Bank of England to lower rates in this way. Funnily enough all of those mentioned in the Treasury and Bank of England deny this was said. Bob Diamond said the conversatrion wasn't recorded as the call was made to his New York office that didn't have a recording machine on. All very convenient and all of the participants trying to deny the conversation was made with Bob Diamond.
That is why I say it all stinks and is a waste of time. Unless the Bank of England wanted to get rid of Bob Diamond at Barclays who has resigned.
I hope that this clears some matters up for my readers
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