"The FDIC has sued 16 of the largest banks in the world plus the
British Bankers Association (BBA) alleging that they engaged in fraud
and collusion to manipulate the London Inter-bank Offered Rate (LIBOR).
BBA called LIBOR “The most important number in the world.”
LIBOR is actually many numbers that depend on the currency and term
(maturity) of the loan. The collusion involved manipulating most of
these rates. A vast number of loans and derivatives are priced off of
these “numbers.” Estimates of the notional dollar amount of deals
affected by the collusion range from $300-550 trillion in deals
manipulated at any given time. The LIBOR frauds began no later than
2005 and continued through 2011."
The fact that the FDIC “only” sued 16 of the largest banks in the
world does not indicate that the other elite banks were run honestly.
The other elite banks were not part of the group that set LIBOR so they
could not join in the cartel. The LIBOR conspiracy could only succeed
and persist if none of 16 elite banks was controlled by honest officers
and no regulator acted to end the collusion once they became aware of
the collusion (which happened no later than April 16, 2008). We ran a
real world test of the ethics of the leaders of 16 of the world’s most
elite banks. The scorecard according to the U.S. government agency that
investigated the matter (the FDIC) reports that each of the leaders
failed. Our twin emergencies are financial and ethical.
According to the FDIC investigation, the three largest banks in
America (including the world’s two largest banks), the four largest
banks in the U.K, the largest bank in German, the largest bank in Japan
(plus one of the handful of surviving “main banks”), the third largest
bank in France, the two largest Swiss banks, the second largest bank in
Canada, and the second largest bank in the Netherlands conspired
together to manipulate LIBOR and not only lied about it but also covered
up the cartel and the fraud scheme it used. The 15 surviving banks’
total assets were nearly twice as large as the U.S. GDP as of September
30, 2013."
Here are the data on the banks sued by the FDIC
| Bank | ($ billions, IFRS, as of 9/30/13) |
| Bank of America Corp | 3063^ |
| Barclays PLC | 2275 |
| Citigroup Inc | 2693^ |
| Credit Suisse Group AG | 1643^ |
| Deutsche Bank AG | 2420 |
| HSBC Holdings PLC | 2723 |
| JPMorgan Chase & Co | 3678^ |
| The Royal Bank of Scotland Group PLC | 1829 |
| UBS AG | 1160 |
| Rabobank | 908 |
| Lloyds Banking Group PLC | 1409 |
| Societe Generale | 1698 |
| Norinchukin Bank | 846 |
| Royal Bank of Canada | 825 |
| Bank of Tokyo-Mitsubishi UFJ | 2469 |
| Total: | 29639 |
| Source: SNL Financial | |
...
"Ethics
Consider the ethical and political implications of what the FDIC
investigation has confirmed. The entire barrel of apples is rotten.
Every CEO failed the ethical test, and the ethical bar that they failed
to surmount was set exceptionally low. That can only happen when a
“Gresham’s” dynamic has been allowed to persist for years because of the
three “de’s” (deregulation, desupervision, and de facto decriminalization).
Such a dynamic can cause “bad ethics to drive good ethics out of the
markets.” No one should be able to view the facts the FDIC cites
without a sense of horror combined with an urgent commitment to
transform the industry that has done so much financial and ethical harm
to our nations. "
..
"Crony Capitalism and Politics
There are two possibilities: the Obama administration knew for six
years that the world’s largest banks were endemically led by frauds or
the administration learned of that fact recently when it learned of the
results of the FDIC investigation. The LIBOR scandal became public
knowledge with the Wall Street Journal’s April 16, 2008 expose,
so the Bush administration also knew it was dealing with elite frauds.
If the Obama administration has long known that fraud was endemic among
the leaders of the world’s largest banks, then its policies toward those
CEO and the banks they control have been reprehensible and harmful.
If the administration has just learned from the FDIC investigation
about the true nature of the CEOs that it has refused to hold
accountable and allowed to retain and even massively increase their
wealth through leading control frauds then we can doubtless expect a
series of emergency actions transforming the administration’s finance
industry policies. The FDIC lawsuit provides a “natural experiment”
that allows us to test which of the possibilities was correct.
Let’s review the bidding. The U.S. government, through the FDIC, has
found after a lengthy investigation that the leaders of 16 of the
world’s largest banks conspired together to form a cartel to manipulate
the LIBOR “numbers” and to defraud the public about the scam. This
should have led the criminal justice authorities to prosecute large
numbers of senior officers of these banks – but none of them have been
prosecuted. It obviously poses a grave threat to the “safety and
soundness” of the entire financial system. The endemic frauds led by
elite CEOs demonstrate such a pervasive failure of integrity and ethics
by the leaders of the finance industry that there is a moral crisis of
tragic proportions. "
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