14 years for rigging Libor?

Blimey:

Tom Hayes, a 35-year-old trader, has been sentenced to 14 years in prison after becoming the first person to be convicted by a British jury of rigging Libor rates following a trial at London’s Southwark Crown Court.
The jury unanimously found Hayes guilty of eight counts of conspiracy to defraud, after a week of deliberations at the end of a two-month trial.
The Serious Fraud Office argued that Hayes was at the centre of a network of traders at 10 firms that conspired to manipulate the Libor benchmark between 2006 and 2010. Since the scandal was uncovered, more than half a dozen banks have paid billions of pounds in fines and several have fired their chief executives.
During the hearings, Hayes claimed that he only admitted dishonesty during interviews with the Serious Fraud Office in 2012 to avoid extradition to the United States. He reversed his position and pleaded not guilty to eight counts of conspiracy to defraud in December 2013.
Mr Justice Cooke told London’s Southwark Crown Court that the sentence was intended to send a message to the rest of the banking world.

So everyone, you’ve got a banker jailed. Hope you’re all happy now?

But this does raise a very interesting little question. There were two sets of Libor rigging. Firstly, the minor stuff like this, shifting the rate to favour one book or another. And different people doing it too, to favour their own book: some of those attempts at least cancelling each other out. The wider world in general wasn’t very much defrauded by it all.

Then there was the systematic rigging of Libor at the depths of the crash. Recall, Libor is the rate at which a bank says it can borrow in size from other banks. But at that bottom there was no interbank market: no one could borrow in size from a bank. Libor was thus infinite. But it wasn’t reported sa being such: thus it was systematically fiddled.

Who is going to go to jail for that?

If justice were to be done there then there’d be more than a few collars being felt at the BoE and the Fed…..for everyone knew and everyone approved of said manipulation.

93 thoughts on “14 years for rigging Libor?”

  1. About double what you get for killing someone. Unless it’s a hate crime, of course.

    Glad to see we’ve got our policies right regarding Lambs, Sacrificial, Media, For the use of.

  2. The Meissen Bison

    Absurdly disproportionate.

    The only ‘message’ this sends is that Mr Justice Cooke should be fired.

  3. Another straw in the wind that British people have turned on
    laissez faire capitalism? Vide Corbyn.

  4. Yes, the British people will continue to vote for the extreme Left in their hundreds, just like the last election.

  5. Mr Justice Cooke told London’s Southwark Crown Court that the sentence was intended to send a message to the rest of the banking world.
    i.e. the sentence has fuck all to do with justice.

  6. If it’s “absurdly disproportionate” then the twat can appeal.

    This blind support for bankers can only help the left.

  7. It was only trivial, right?

    – The banks involved are paying billions in fines. Billions.
    – The investigations and litigation has been going on for years, and will continue to do so.
    – Hayes himself changed his plea, changed his legal team, etc. This has dragged out the case, and will have counted against him.

    Okay, so just another scandal costing these banks billions in fines. A message is required isn’t it?

  8. The Meissen Bison

    Jack C: It was only trivial, right?

    Absurd remark. It was very serious but a custodial sentence is unnecessary and one that is longer than what would be handed down to a murderer is simply a travesty.

  9. If a custodial sentence is unnecessary, what punishment would you give him then?

    100 quid and 3 points on his license?

  10. Bloke in North Dorset

    Presumably Hayes is still some sort of millionaire?

    Maybe he has taken one for the team or maybe its pour encourager les autres, either way I have little sympathy, especially when we consider that the genuinely poor are sent to prison for not paying the BBC license fee.

  11. Meissen Bison,

    Murder carries a life sentence, not 14 years. And if, as seems to be the case, he gained millions from his actions, and, at least to some degree, distorted the market affecting millions of others, then 14 years (and out after 7?) seems reasonable to me.

  12. MB:

    “…one that is longer than what would be handed down to a murderer is simply a travesty”

    The tariff for murder starts at 15 years, I believe. And, when I last looked into this matter, only about one in nine murderers were released after serving less than 10 years. Whatever The Sun might claim.

    Perhaps Hayes has been treated harshly, but he can appeal against his sentence. He committed a serious crime – one which, moreover, could damage the national interest by diminishing confidence in the City – so I can see that a custodial sentence is not inappropriate.

  13. The problem isn’t that he’s been punished too heavily, it’s that almost everyone else is punished too lightly.

  14. @Theophrastus

    ‘only about one in nine murderers were released after serving less than 10 years. Whatever The Sun might claim.’

    Well, that’s OK then.

  15. Seems pretty light to me. The value of borrowings subject to LIBOR interest rate calculations probably runs into trillions.

    Bernie Madoff got 150 years in federal prison plus $17 billion in restitution for a mere $50 billion (gross value) Ponzi.

  16. This is how justice works. Prosecute a small fish and dish out a harsh sentence. Then hope that the plebs and SJW are satisfied and stop asking difficult questions such as why haven’t the big fish been caught and prosecuted.

  17. Dearime,
    Bagging others will take longer than it could have, in this case, because Hayes changed his plea.

    I’m amazed that some on here can’t recognise the damage done by these endless banking scandals, not just to the banks and the wider economy, but to the concept of capitalism itself. Murphy will be in a state of some considerable excitement I’m sure.

    I see my Lloyds and RBS shares are taking further whacks this week. It’s not all LIBOR, plenty of PPI and other misdemeanors in there. What a mess.

  18. All these millions of people with LIBOR tracker mortgages paying less than they should – it’s a scandal all right.

  19. “Bernie Madoff got 150 years in federal prison plus $17 billion in restitution for a mere $50 billion (gross value) Ponzi.”

    Ah yes, but he ripped off lots of wealthy Democrats. Anyway, 14 years = 7 years plus time served, so should be out after 6 and a bit. I believe the average time served for a life sentence is about 10 years.

    http://news.bbc.co.uk/1/hi/magazine/5086978.stm

  20. “Send a message”.

    The law isn’t a fucking post office. Jesus.

    I am no fan of the banking industry as previous comments have made clear; but this is clearly excessive. It looks a lot like scapegoating to me.

  21. Corvus,
    “All these millions of people with LIBOR tracker mortgages paying less than they should – it’s a scandal all right.”

    Oh, good grief. PPI has turned out to be an excellent deal for customers, same as endowment mortgages, etc etc and etc. This doesn’t make fraud a good idea.

  22. Ian B,
    If it’s scapegoating or just generally excessive, then he will get a reduction on appeal.

    One thing is for sure, pleading Not Guilty is always a gamble and you will suffer if you don’t have a decent case. Pleading Guilty, then switching to Not Guilty is a very big gamble indeed. You may as well poke the judge with a stick.

    Besides, whether Hayes should be inside for 5 years or 7 years or whatever is not the big issue here.

  23. Ian B,
    It’s always a factor, and always has been.

    It’s not so much that pleading Not Guilty is punished, more that cooperating and pleading Guilty, thus saving everyone a whole lot of expense and bother, will earn you one or more pats on the back. Also, admitting guilt shows a willingness to make amends and implies remorse.

    Hayes was guilty, and started off by admitting as much. He then switched and stopped cooperating. Not clever, unless he’s being looked after as a result.

  24. A witch hunt? Okay, so what should the punishment have been then?

    Illegal activity resulting in billion pound fines. Seems quite serious on the face of it?

  25. The law should not be there to pat you on the back. Nor does the remorse of the apprehended count for much.

  26. Ian B,
    Maybe, maybe not, but irrelevant to the case.

    If you cooperate, you’ll fare better than if you don’t (if you’re guilty that is). It’s how it is, and Hayes would have been treated as per the norm.

    Of course, I don’t know whether the Judge really did penalise him for this or not. I’m just saying it’s likely given the way he behaved.

    The term is not so extraordinary given the magnitude of the case, and the sentencing guidelines. He may get a reduction on appeal, and good luck to him if he does.

  27. Jack is right a bit – the banking scandals do affect capitalism.

    But mostly it’s because people think they do.

    They’re nothing to do with the kind of free market capitalism most of us support – the whole game is rigged by governments.

    This dude is paying the penalty for a decade’s worth of banker bashing headlines and fulmination by journalists and their readers, most of whom can’t even understand compound interest, never mind the stygian depths of international finance.

    It’s a plainly ridiculous sentence and it will be reduced on appeal.

    Not saying he wasn’t a naughty boy, but he’s been hung out to dry, and the reason he pleaded guilty was because he didn’t fancy being extradited to the US where there is no such thing as a justice system, just a game of ‘plead guilty or we jail you for a thousand years’.

  28. ‘Illegal activity resulting in billion pound fines. Seems quite serious on the face of it?’

    The banks have paid the money because the alternative was to get embroiled in a far more expensive game in the US courts.

    It doesn’t indicate guilt, at all.

    (This isn’t the same as saying they are not guilty, just that nothing should be read into any US fines.)

    BTW the penalty for officers not settling their mess acounts, or fiddling in any way, would be utter and permanent social exclusion. There may be a lesson there for the City!

  29. If the Telegraphs’s mini biog is at all accurate then the guy is clearly Asperger’s and was diagnosed as such in the last year.

    As someone who knows a few people with Asperger’s I doubt there was ever any malice or even comprehension about how his actions might affect others, as he says it was “just about the numbers”.

    Banging up the mentally ill in a normal prison is a bit much at the best of times.

    I’ve noticed a few cases lately where the defendant was described as having autism or Asperger’s and it seems no allowance is made for it at all. And the disgusting tabloids seem to relish it, as though it is an aggravating rather than mitigating factor.

  30. “This dude is paying the penalty for a decade’s worth of banker bashing headlines”

    This rather mystifies me. Given the track record over the last 25 years, why wouldn’t the banks attract criticism?

    The industry needs to put the braces away, and get back to being boring.

  31. Interested, many of the City’s problems can be linked to the breakdown of reputational penalties. In the old days, many markets operated on this basis – the UK Takeover Panel still does – via cold shouldering.

    http://www.thetakeoverpanel.org.uk/the-code/compliance

    Many markets were not properly regulated in our new rule based age because they’d not been under the old system, at least not explicitly – so there might have been some unwritten reputational penalties. We also have the problem of technology moving on. In the old days, the Gold Fix was done in person, it moved to phones and it appears allowed traders to take advantage of information in the gold fixing prior to announcement

    http://www.reuters.com/article/2014/06/10/gold-fix-lme-idUSL5N0OQ3S420140610

  32. @Jack C

    ‘This rather mystifies me. Given the track record over the last 25 years, why wouldn’t the banks attract criticism? ‘

    Are we generally better off or worse off, for all the ups and downs, than we were in 1990?

    The facts suggest we’re better off.

    Assuming (as I do) that the improvment in our standard of living has been at least in part facilitated by international banking, what track record are you on about?

    But anyway, I said ‘bankers’ not ‘banks’.

    Individual bankers do bad stuff and good stuff, but the issue (and I don’t deny there is one) is the ‘banks’ – the system.

    The 2008 crash was systemic – it was created by governments, pressurising central banks to keep the money spigot wide open so that people could live in an illusory boom.

    The people who borrowed money they couldn’t afford to pay back were also to blame.

    Insofar as banks were involved it was mostly household names. Oscure LIBOR traders have nothing for which to answer over any twenty-five year period, so they?

  33. Interested,
    I also think that banks and banking have played a big part in improving our standard of living. That’s been the gradually accelerating case for decades. The track record I’m referring to is; pension mis-selling, endowment mis-selling, PPI, LIBOR, Forex, all leading up to that spot of bother in 2007/8.

    And of course, there’s more to come. Take Lloyds as an example, and not only because my poor shares are getting such a kicking. Next up is litigation resulting from the HBOS takeover, which was done without due process (and to please Gordon Brown). So, not only did the takeover break the bank, there’s another big compo bill on the way.

    And I don’t entirely buy that the crash was just governments and central banks. Yes, they were stupid and irresponsible, but that did NOT mean that retail banks had to provide stupid mortgages and stupid loans. They didn’t used to. (Remember the property crash in the early 90’s? The banks knew exactly what they were on the hook for, wrote it off and moved on. Boring but competent can be a winning combination).

    And bank management can’t have it both ways. You can be a mere functionary doing what your government wants, or you can be a Master of the Universe and take the huge rewards. You can’t be both.

    Btw, go back to the 80’s and try and get a mortgage you couldn’t afford.

  34. Interested:

    “Well, that’s OK then.”

    No. I’m one of the few people around here who argues for capital punishment. I simply wanted to nail the myth that most murderers get away with less than 10 years inside.

  35. @Jack

    Yes, I’m not sure we really disagree all that much. I just don’t like individuals being scapegoated because they drive flash cars. A lot of people – not you I’m sure – are in danger of assuming everyone in the banks behaves like Gordon Gekko and forgetting that they do actually help to grease our lives.

  36. Interested,
    Neither do I, and nearly all bank employees will be blameless, and NOT bathing in champagne. Of course, these people are also affected by sudden redundancy and so on when it all collapses.

    Hayes has been jailed for massive fraud, not for driving a flash car. It wasn’t just him, and we should be seeing some seniors in the stocks. But let’s not sugarcoat it.

    For the left, our banks have become the gift that keeps on giving.

  37. Alex said:

    Seems pretty light to me. The value of borrowings subject to LIBOR interest rate calculations probably runs into trillions.

    Nobody was forced to tie their borrowing or lending to Libor. The thing was little more than a subjective view a bank had of itself. It should never have been afforded the benchmark status it was given.

    This from the BBC in 2008:

    The Libor number is compiled by putting together the estimates of the cost of borrowing from at least eight banks, discarding the highest and lowest of the sample to leave an average rate which then becomes the daily ‘Libor Fix’.

    An estimate. Not real lending. You can even see the muddled thinking in the quote from James Ferguson of Pali International in the BBC article – “So few banks are actually trading with each other at the moment so the Libor rate is representing a very small number of transactions” Libor didn’t necessarily represent *any* transactions but that mythology had built up around it.

  38. “Nobody was forced to tie their borrowing or lending to Libor. The thing was little more than a subjective view a bank had of itself. It should never have been afforded the benchmark status it was given.”

    Yes, let’s have a Wild West banking system. No rules, and caveat emptor.

    Moron.

  39. It wasn’t a massive fraud, but in any event all I was saying in respect of him was that IMO the fourteen year sentence at least partly reflected a lot of tabloid headlines over a long time.

    I’m sure it will be reduced on appeal; if it isn’t I’ll be happy to accept I am wrong (CoA judges I believe are above reproach).

  40. Seriously, it was a MASSIVE fraud. Have you not seen the figures involved? Tens of billions. Even a billion euros is still worth bending down for.

    OT, but it’s amazing what people will put in an e-mail isn’t it?

  41. Gareth,
    How did I get there? Here’s what you wrote:

    “Nobody was forced to tie their borrowing or lending to Libor.”

    Okay, so as no one HAD to use Libor, there’s no reason why the rate shouldn’t be manipulated. Is that what you’re saying?

    “The thing was little more than a subjective view a bank had of itself. It should never have been afforded the benchmark status it was given.”

    Maybe, probably, Libor shouldn’t have been the benchmark. So what? It was.

  42. Surreptitious Evil

    but that did NOT mean that retail banks had to provide stupid mortgages and stupid loans

    Not here, true. But in the USA it was “change your approvals system to approve mortgages to people the Govt want to get mortgages and you think can’t afford them” or you would be investigated repeatedly if not continuously until they found something they could justify, however briefly, suspending your banking licence for*.

    And then, when you win the inevitable court case and get your licence back, you’ll find the Feds had down the fields with salt in your absence.

    * All organisations have at least one employee who has done “something wrong”.

  43. Surreptitious Evil

    “Sown”, not “down”, as should be obvious to everybody except Arnald.

    Damn auto-incorrect!

  44. I’ve got to be honest, 14 years for *repeatedly* manipulating a major financial rate over several years across multiple jobs and with significant personal benefit seems about right to me.
    Especially if you can get 6 months for stealing a £3.50 case of water in a spur of the moment theft as your first offence…
    Obviously in both cases, the greater context and a desire to send a message plays a part.
    But I didn’t see anyone here commenting on the second case when it happened.
    Hayes got what he deserved IMHO.
    Out of honest curiosity, how would people view the appropriate sentencing for
    1) I electronically steal £65M from a multi-billion institution – (multi-billion to ensure it would not cause them a fatal problem)
    Vs
    2) I manage to siphon off £1 from every single persons bank account in the UK (assume 1 account per person for the sake of the thought experiment), giving me ~ £65M

    Same amount in both cases. Sam lack of violence. (Obviously a good brief would argue for 65M-1 cases to be taken into consideration on sentencing)

  45. SE,
    En masse, the banking industry could quite easily have seen off the US government. A couple of calls, that’s all. The industry, however, was happy to go along with it. If you take the rewards, you have to accept the responsibility also.

    And, of course, they didn’t manage the risk properly. Banks ended up not being able to trust each other, resulting in intra bank lending grinding to a halt, because none of them had a clue what their potential liabilities were.

    How much exactly was lent to unsuitable mortgagees? Was the bad debt element of that really enough to break so many banks?

    Don’t forget, the crash didn’t happen because x number of people stopped being able to pay their mortgages. Is it even relevant?

  46. Bernie Madoff got 150 years in federal prison plus $17 billion in restitution for a mere $50 billion (gross value) Ponzi.

    The USA’s legal system is notorious for its deranged sentencing in this regard.

  47. Hayes has been done for conspiracy.

    Tim, no-one has jailed for submitting a false number to the British Bankers’ Association because there was no law against it. Secondly, lots of banks could borrow overnight even at the peak of the crisis, it was a minority who struggled.
    Some of you think it was a crime to lie about the rate at which you could borrow – it just wasn’t except in the eyes of Murphy and his like. LIBOR (it has capitals) was used by bankers because it wasn’t manipulated by governments. LIBOR could, and occasionally was, manipulated but it was honest the vast bulk of the time – government-set rates were manipulated *all the time*.

    The crime was conspiracy.

  48. Ian B,
    Americans, eh!

    It’s not so much “deranged”, as adding up the various penalties for the various crimes. I suppose “logical” might also fit.

    Is it National Fluffy Kittens day or something?

  49. From Tim’s original post:

    “The wider world in general wasn’t very much defrauded by it all.”

    Artificially high rates cost individuals and institutions tens of billions of dollars.

    This, it seems, is not a lot to many on here, and especially not to Forbes contributing Rare Earth Oligarchs. But it seems almost like serious money to me.

    It’s going to keep impoverished legal aid lawyers off the street though.

  50. “En masse, the banking industry could quite easily have seen off the US government. A couple of calls, that’s all.”

    That’s rather droll. The evil banks should have gone and bribed someone to stop the regulators from imposing their insane anti-redlining schemes? You can get thrown in jail for doing that!

  51. Err … no.

    Think about it.

    A couple of calls to the government, stating that they would not be playing ball.

  52. I have thought about it and it doesn’t make any sense. The govenment isn’t going to give up its crazy, utopian social-engineering schemes just because some fatcat smoking a cigar makes a few discreet phone calls. That’s Holywood, not real life.

  53. Yes the (Tory) government is going in for crazy social engineering by raising the minimum wage hoping to sort the demand deficit or what Marx called the problem of surplus value. Osborne the Marxist.

  54. Philip Scott Thomas

    Mr Justice Cooke told London’s Southwark Crown Court that the sentence was intended to send a message to the rest of the banking world.

    That’s the real injustice here.

    Whether fourteen years is reasonable for the crime committed is irrelevant. A man is to be deprived of some portion of his liberty, not a result of what he himself has done, but, by the judge’s own words, because of what some hypothetical man, at some hypothetical point in the future, may or may not do. In what way is this justice?

    Also, whether he has shown remorse in the courtroom is utterly, utterly irrelevant. Repentance, contrition, and so on are the province of the church, not of the legal system.

  55. JerryC.
    Go on then, how does the government go about forcing an entire and very important industry to do absolutely the wrong thing?

    Walk us through the process, if you don’t mind.

  56. “Repentance, contrition, and so on are the province of the church, not of the legal system.”

    No, they are not the province of “the church”. To which one are you referring anyway?

  57. Surreptitious Evil

    It’s not so much “deranged”, as adding up the various penalties for the various crimes

    A term sentence for more than a natural lifespan, especially for a relatively elderly man (over 70 at sentencing) is deranged. As Ian B says, something the USA are particularly keen to demonstrate their commitment to.

    “Life without parole.” It’s simpler. But, oh, wait. Would that be unconstitutional? Ah, so 150 years (which is nowhere near the longest sentence) before parole somehow ticks all the legal acceptability boxes.

    Candidly, you might want to visit TRUK, where you can be cacooned in the knowledge that people who can think past 0th level effects (ie neo-liberal and libertarian trolls) are banned.

  58. Here’s how it worked. The government looked at mortgage loan approval rates for each bank by zip code and if your bank was approving, say, 75% of mortgage loan applications in mostly white area A while approving only 40% in mostly minority area B, regulators would take note and ask you to do better, using all the carrots and sticks at their disposal. They might say, for instance, that you couldn’t open any new branch banks until minority lending increased to acceptable levels. The fact that applicants from area A may have been more creditworthy than applicants from area B was not (and is not) considered an excuse.

    As you can see from the links below, there is still strong government pressure to continue making mortgage loans to people who don’t have strong credit histories, despite how badly it all ended last time.

    http://mobile.nytimes.com/blogs/dealbook/2014/09/02/new-york-set-to-accuse-evans-bank-of-redlining/?referrer=

    http://www.bloomberg.com/bw/magazine/content/11_20/b4228031594062.htm

  59. Bloke not in Cymru

    As its a conspiracy charge when can we expect to see his co conspirators facing justice ?
    With 14 years being established as a sentence there is plenty of scope for lesser sentences for all involved

  60. @ Bloke not in Cymru
    When the governments of the states in which they resided at the time of the conspiracy pull their fingers out.
    The UK does not claim extra-territorial jurisdiction – it is only the anti-colonialist Americans who do so (and Murphy, of course – but he is not a UK citizen).

  61. Jack C said:

    Okay, so as no one HAD to use Libor, there’s no reason why the rate shouldn’t be manipulated. Is that what you’re saying?

    No. Alex had mentioned the enormous sums of borrowings tied to LIBOR. Having previously read how LIBOR is produced I couldn’t (and still can’t) understand why anyone would rely on what is a subjective and vulnerable benchmark. Even the simplest explanation of how the numbers are produced makes it sound to me like an odd way of doing things.

  62. SE,
    “It’s simpler”. And that’s the difference between “deranged” and not deranged?

    At what point is it simpler? What is Madoff were younger and the sentence much shorter?

    What are these amazing next level effects?

  63. Gareth,
    It was at least simple, even if it did depend on honesty (as much does in business).

    However odd, it doesn’t excuse Hayes.

  64. Bloke in North Dorset

    @PST

    Sentencing contains 3 elements: protection of the public, punishment and deterrence. It’s not unreasonable to say that a sentence should send a message that a crime is considered beyond the pail.

  65. @ Gareth
    Why should anyone use a subjective benchmark?
    Because they trusted it better than the ones set by governments which could jump to 15% in a second when a government panicked because another governmenmt welched on its obligations under the ERM. LIBOR never did that.
    LIBOR was created by bankers for bankers as a useful and honest (because one guy lying wouldn’t affect the outcome and since borrowers and lenders had to be equal in £ terms any temptations to cheat would balance out) measure for ultra-short neligible risk (the London Clearing Banks were a lower risk than the average central bank) interest rates.
    The government saw no need to regulate as it seemed similar to what are now the FTSE indices which had been run by a sub-committee of the Insitute of Actuaries for a couple of decades.
    Quite a long time later a lot of people wanted a free ride by using LIBOR + x% as an interest rate for a variety of transactions. Only when the free riders had come to dominate the use of LIBOR, did a temptation arise to cheat.

  66. It’s not so much “deranged”, as adding up the various penalties for the various crimes

    That doesn’t happen, though. For example, the US prosecutors treat individual emails as separate cases of wire fraud, and apply the sentencing tariffs to each email separately. So if wire fraud carries a 5 year sentence, and you sent 10 emails in the course of conducting one scam, they’d hit you with 50 years. It’s a travesty.

  67. Go on then, how does the government go about forcing an entire and very important industry to do absolutely the wrong thing?

    Threaten the executives with arrest and prosecution should they ever set foot on US soil or even an area subject, however briefly, to US jurisdiction. This is precisely how they lean on banks to cooperate with FATCA requirements.

  68. “That’s pressure to abide by existing anti-discrimination laws.”

    Well, quite. The problem is that all demographic groups in the US are not, on average, equally creditworthy. Therefore, when one insists on equal lending across said demographic groups, bad loans inevitably follow.

  69. @ Jerry C
    There is one alternative – refuse loans to 90% of white people so that 90-odd% of whiteys can only buy houses for cash.
    Quite legal and the mortgage lending sector would be profitable before overheads.
    That 90% of citizens couldn’t buy a house is trivial compared to establishing racial equality

  70. This will be lost in the noise but I am reminded of Beachcomber…In England justice must not only be seen to be done it must sometimes to be seen to be believed.

    According to the Jeremy Vine programme yesterday, LIBOR was set by 1800 financial institutions supplying data in 5 currencies on a dozen or so interest rates.

    Compute the permutations.

    This court has decided beyond reasonable doubt that this one man was able to influence the result of this combinatorial exercise.

    And. of course, it is worse than this. Depending on whether the company he worked for was a net lender or borrower, there would be a tendency to lowball the quotes or highball them. Maybe over time it all balanced out.

    Some people, such as Jack C, are convinced that it worked to the detriment of some class of society…how can you possibly prove that?

    A joke sentence. I accept that it woulod be good to jail a banker or 2…but please let us not fabricate justice in this stupid way.

  71. Diogenes,
    Where to start?

    You may not believe it possible that one man could influence the rate, but he certainly did. This was a conspiracy remember.

    One of the tricks was to increase the rate on the 1st of the month to the detriment of those refinancing.

    You need to look at the figures involved.

  72. bloke (not) in spain

    @JackC
    “From Tim’s original post:

    “The wider world in general wasn’t very much defrauded by it all.”

    Artificially high rates cost individuals and institutions tens of billions of dollars.”

    There’s a presumption here that all the manipulation has been in one direction, resulting in LIBOR rates being higher than they otherwise would have been.
    I wouldn’t pretend to be any sort of expert on interbank lending rates but I am quite a connoisseur of scams. Sorry, but this just isn’t how they work. You can’t consistently manipulate any market in one direction. Because it’s a market. If you’re overvaluing, you have the entire market pressure pushing in the other direction. Your scam gets priced in & your return is zero. The trick is to push the market very slightly in the direction it wants to go anyway, then clean-up as it corrects the overhang. So with interest rates, you’d be as likely manipulating lower as higher. You’re making small increments out of all the straight players. But the net result must leave rates unchanged in anything but the very short term. Or the scam won’t work. The market won’t let it.

  73. Quite so.

    There’s what our lad here has been jugged for. Moving rates a teensie bit in one or another direction in order to benefit trading positions. This would be for one fix only, could have been in any currency or term, and would have been small (basis points at very best) and was as likely to be up as down.

    Then there’s the institutional manipulation in the middle of the crisis, where rates were grossly under reported. Not by basis points but by percentage points at least, if not tens of percentage points. And no one at all is going to get charged on that.

  74. Quite not so.

    Wikipedia has a good summary of what was lost and gained.

    Then you need to consider the ramifications, the lawsuits, the fines, lost reputations, the this, the that and the other.

    I don’t pretend to know if 14 years was appropriate or not, but this was anything but trivial.

  75. bloke (not) in spain

    One thing I learned a long time ago, Jack. Never sell a motor to someone you know. They’ll always be blaming you for their poor choice.

  76. bloke (not) in spain

    And to emphasise something I said above.
    ” You’re making small increments out of all the straight players”
    That’s the banks. They were the source of his loot, not the punters. The same banks, as Tim says, were manipulating LIBOR for whole percentage points. Actually pushing up real rates for real borrowers.
    We have to weep for them? In picoliters, maybe.
    .

  77. “The same banks, as Tim says, were manipulating LIBOR for whole percentage points. Actually pushing up real rates for real borrowers.”

    Err, no, down. borrowers made out like bandits on this.

    Think it through. Libor is the self reported rate at which a bank can borrow in size.

    Financial chaos is going on, no bank can borrow in size at any rate.

    So, they report lower rates than the actual market. Lower rates means collectors of interest get screwed, not payers of it.

    Borrowers linked to Libor made out like bandits from this.

  78. bloke (not) in spain

    You’re quite correct Tim. Borrowers benefited, substantially. Presumably, savers lost?
    Like I hinted, my disinterest in the mechanics of LIBOR are profound. I’d agree with Gareth above. The whole thing’s illusory. Prices are like Schrodinger’s cat. You can never know what they are ’til you open the box.

  79. Tim, B(N)IS,

    Rather than keep groping around for a reason to excuse the riggers, why don’t you read up on the background?

    It’s a pretty big deal.

  80. bloke (not) in spain

    It’s a sense of proportion, Jack. Ask yourself what you’d want in interest to lend money to someone who’s insolvent & on the point of going bust. I’d want about 20% overnight. That’s what the banks were & the sort of risk their depositors were exposed to & should have been compensated for. ‘Cept the banks finessed the LIBOR to give the impression everything in the garden was rosy. Where I come from, that’s fraud. In ginormous amounts of money.
    I really can’t get too excited about sunshine & a few measly millions. More of a hero figure, round here.

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