Jul 21 2012

LIBOR- Not a Theory

Banks Caught Up In Libor Scandal Seek Group Settlement

By: David Dayen, Firedog Lake

Friday July 20, 2012 7:04 am

As regulators and law enforcement officials around the world begin to dig into the Libor scandal, the 15 or so banks who know they’re responsible for the massive rate-rigging are trying to limit the damage. That’s right, it’s time for another round of: let’s have a global settlement!

Reuters did add that regulators would like the idea of a global settlement because they would get to have a big press conference and announce a headline number, and I think that’s right. We saw the appeal of that in the foreclosure fraud settlement.

Yves Smith @ Naked Capitalism

Dudes, we gave you a link last week from Sky News saying the same thing!

Exclusive: Banks in Libor probe consider group settlement – sources

By Katharina Bart and Diane Bartz, Reuters


A group agreement would appeal to financial watchdogs because they would be able to announce a headline-grabbing figure, showing that they were dealing firmly with the banking industry’s misdemeanors, a banker told Reuters on condition of anonymity.

Earlier this year, five top U.S. banks negotiated a $25 billion settlement with the U.S. Justice Department and other federal and state agencies to resolve allegations of mortgage services abuses.

However, if they were able to reach a group settlement it would enable them to share the pain of negative publicity.

Analysts have estimated that the scandal could cost the industry between $20 billion to $40 billion, further damaging a sector that is struggling to work its way through the aftermath of the 2007-2009 financial crisis, economic downturns in Europe and the United States, and increased regulatory demands.

Told you so

Exclusive: Push For Libor Settlement

Mark Kleinman, City Editor, Sky News

Wednesday 11 July 2012

Investors believe that an industry-wide settlement will be necessary if other banks are to avoid a clear-out of their top executives, although one mitigating factor which might assist those who get fined for Libor-rigging is likely to be the fact that many of them have changed their top management since the periods under investigation.

“A drip-feed of Libor-related fines would be hugely damaging to investors with large exposures to international banks,” one leading shareholder told me.

Of course, it’s the view of many that banks which are found guilty of such an important offence as manipulating the rate of Libor should sack those responsible and that they should face further punishment under the law.

Hah hah hah.

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