Libor

The Global Banking Game Is Rigged, And The FDIC Is Suing

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GlobalResearch  April 13 2014

Ellen Brown
Ellen Brown

Taxpayers are paying billions of dollars for a swindle pulled off by the world’s biggest banks, using a form of derivative called interest-rate swaps; and the Federal Deposit Insurance Corporation has now joined a chorus of litigants suing over it. According to an SEIU report:

Derivatives . . . have turned into a windfall for banks and a nightmare for taxpayers. . . . While banks are still collecting fixed rates of 3 to 6 percent, they are now regularly paying public entities as little as a tenth of one percent on the outstanding bonds, with rates expected to remain low in the future. Over the life of the deals, banks are now projected to collect billions more than they pay state and local governments – an outcome which amounts to a second bailout for banks, this one paid directly out of state and local budgets.

It is not just that local governments, universities and pension funds made a bad bet on these swaps. The game itself was rigged, as explained below. The FDIC is now suing in civil court for damages and punitive damages, a lead that other injured local governments and agencies would be well-advised to follow. But they need to hurry, because time on the statute of limitations is running out.

The Largest Cartel in World History

On March 14, 2014, the FDIC filed suit for LIBOR-rigging against sixteen of the world’s largest banks – including the three largest USbanks (JPMorgan Chase, Bank of America, and Citigroup), the three largest UKbanks, the largest German bank, the largest Japanese bank, and several of the largest Swiss banks. Bill Black, professor of law and economics and a former bank fraud investigator, calls them “the largest cartel in world history, by at least three and probably four orders of magnitude.”

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Zero Prosecutions Of Elites For Most Destructive Frauds In World History [Video]

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USAWatchdog  March 31 2014

White collar crime expert Professor William Black thinks the nation’s top bankers continue to get away with massive financial crime. The most recent $10 million fine of former Bank of America CEO Ken Lewis for fraud illustrates the ongoing problem.

[youtube=http://youtu.be/Rn5JclFHglc&w=500]

Professor Black says, “He’s not paying $10 million. Bank of America is paying the $10 million. So, he could care less, and he didn’t have to admit anything. And, unlike the typical Securities and Exchange settlement, he didn’t have to agree not to disparage the settlement. So, immediately he disparaged the settlement as a bunch of junk that wasn’t true. . . .

In this case, the fact came out that Lewis testified, the subject of this complaint was allegedly securities fraud at hiding the losses at Merrill Lynch which was acquired by B of A and said hey, it’s not me, it’s Ben Bernanke and Hank Paulson . . . who ordered me to cover this up.

Professor Black goes on to say, “So the web is very tight and very protective of all these people, and they will trade off any amount of money in settlement that will be paid by the bank to insure the officers, even the ex-officers never have to pay and never are prosecuted. Even today, we are well into 2014, and the Department of Justice record is intact. There have been zero prosecutions of the elite officers who led the epic epidemic of fraud. It was the most destructive in world history, zero of them even unsuccessfully prosecuted, much less prosecuted.”

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The Detroit Bail-In Template: Fleecing Pensioners To Save The Banks

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GlobalResearch August 5 2013

Bank of AmericaThe Detroit bankruptcy is looking suspiciously like the bail-in template originated by the G20’s Financial Stability Board in 2011, which exploded on the scene in Cyprus in 2013 and is now becoming the model globally. In Cyprus, the depositors were “bailed in” (stripped of a major portion of their deposits) to re-capitalize the banks. In Detroit, it is the municipal workers who are being bailed in, stripped of a major portion of their pensions to save the banks.

Bank of America Corp. and UBS AG have been given priority over other bankruptcy claimants, meaning chiefly the pensioners, for payments due on interest rate swaps they entered into with the city. Interest rate swaps – the exchange of interest rate payments between counterparties – are sold by Wall Street banks as a form of insurance, something municipal governments “should” do to protect their loans from an unanticipated increase in rates. Unlike ordinary insurance, however, swaps are actually just bets; and if the municipality loses the bet, it can owe the house, and owe big. The swap casino is almost entirely unregulated, and it is a rigged game that the house virtually always wins. Interest rate swaps are based on the LIBOR rate, which has now been proven to be manipulated by the rate-setting banks; and they were a major contributor to Detroit’s bankruptcy.

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“George Washington” ~ Big Banks Have Criminally Conspired Since 2005 To Rig $800 Trillion Dollar Market

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ZeroHedge | July 1 2012 | Thanks Thomas!

We noted Friday:

Barclays and other large banks – including Citigroup, HSBC, J.P. Morgan Chase, Lloyds, Bank of America, UBS, Royal Bank of Scotland– manipulated the world’s primary interest rate (Libor) which virtually every adjustable-rate investment globally is pegged to.

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That means they manipulated a good chunk of the world economy.

We actually understated the impact of the Libor scandal.

Specifically, more than $800 trillion dollars worth of investments are pegged to the Libor rate. As the Wall Street Journal reports today:

More than $800 trillion in securities and loans are linked to the Libor, including $350 trillion in swaps and $10 trillion in loans.

Remember, the derivatives market is approximately $1,200 trillion dollars. Interest rate derivatives comprise the lion’s share of all derivatives, and could blow up and take down the entire financial system.

The largest interest rate derivatives sellers include Barclays, Deutsche Bank, Goldman and JP Morgan … many of which are being exposed for manipulating Libor.

They have been manipulating Libor on a daily basis since 2005.

They are still part of the group of banks which sets Libor every day, and none have been criminally prosecuted.

They have received a light slap on the wrist from regulators, which – as nobel economist Joe Stiglitz points out – is just the cost of doing business when fraud is the business model.

Indeed – as Bloomberg notes – they’re probably still manipulating the rate:

The U.K. bankers and regulators charged with reviewing Libor in the wake of regulatory probes are resisting calls to overhaul the rate because structural changes risk invalidating trillions of dollars of contracts.

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