Another point to consider - LIBOR rate is set by using 16 banks, haircutting the top and bottom 4, and then taking the average rate offered. How can 1 bank overly influence this process? It has to be a collective effort.JR8 wrote:BillyB wrote:It was a big shock on the street. Diamond transformed the IB division and turned barcap from a laughing stock to a well respected and slick 'almost tier 1' player (Acquiring LB helped) - he had the vision and personality to really change the status quo from a high street plodder, to a bank that now competes with MS, JPM etc.
It sounds like yet another huge operational risk issue where traders do what they want and there are no internal controls to keep an eye on things. Similar to the JPM fiasco last month. Ultimately, in these situations, the buck stops at the top of the tree.
I believe there'll be more banks exposed as part of the LIBOR collusion in the coming weeks.
It's turning into a bit of a shocking story. Apparently there are several more banks involved. The linked is an interesting though long article. It points out the perversity of RBS/HBOS who were on ELS (that could be an acronym for emergency life support) from the BOE, because they could not raise funds in the interbank market, reporting lower LIBOR figures than Barclays who had far less material liquidity issues. And apparently the BOE knew about this... well, hard not to notice you'd have thought.
Apparently Diamond got taken out my Mervyn King himself. Oh the BOE knew LIBOR was not representative, under-reported, as long ago as 2007.
Tucker the Dep-Gov of the BOE faces the Treasury Select Committee tomorrow. This story has legs!
http://www.telegraph.co.uk/finance/news ... -heed.html
Is Barcap the first domino to fall, hmmm, I think so