BrushType4
Western Thunderer
Ok, so Bob Diamond has resigned and taken a golden handshake of £30million so he hasn't got too much to worry about. Could someone explain to me what Barclays did that was so wrong?
Diamonds Are Not Forever.
- Thread starter BrushType4
- Start date
marsa69
Western Thunderer
From the way I understand it they colluded with other banks to make the LIBOR rate that they pay on borrowings that they make look lower than it actually was. In other words if they had to pay 12% on a loan they were actually pretending that they were only paying 6%. So this made them look healthier and more solvent than they actually were.
Warning! I'm no financial expert so if anyone here can explain it better then please do so as I'd be interested as well.
Warning! I'm no financial expert so if anyone here can explain it better then please do so as I'd be interested as well.
BrushType4
Western Thunderer
Yeah, that's how I understood it.
I dont quite get how that is not good for customers?
I dont quite get how that is not good for customers?
mickoo
Western Thunderer
Because it makes them look like lying two faced snakes....ohh wait!, they are
.Point is, if they are prepared to lie and rig things like that then what else are they prepared to do?.
Kindest
S
SteveO
Guest
Basically correct. The LIBOR is an interbank rate so is interest charge between banks. This is then passed on to customers through their products. In some, but not all, cases customers were charged higher rates than they should have. This is fraud and stinks of a cartel, which is also illegal. Just because these people have resigned doesn't mean they will avoid criminal charges, it's almost certain they will.
In a twist of fate, Cameron has placed ex-bank seniors (who may also be involved in this) in lucrative consulting and management roles within Government agencies... It's a big one!
In a twist of fate, Cameron has placed ex-bank seniors (who may also be involved in this) in lucrative consulting and management roles within Government agencies... It's a big one!
7mmMick
Western Thunderer
Oh and in addition Tom Winsor who recently reviewed the Police Service and subsequently tore it to pieces has today been appointed Cheif Inspector of Constabularies !!!!
Strange these twists of fate ........
BrushType4
Western Thunderer
Ok, I get that, but Barclays said they could borrow money for less than they actually could, so what customers based on a incorrectly lowered LIBOR rate where out of pocket? It would make sense if they had tried it inflate the LIBOR rate...
marsa69
Western Thunderer
It boils down to the fact that Barclays was not as healthy a bank as they were making out. For customers read other banks, financial institutions and not just Joe Bloggs. So lots of people were investing into an apparently healthy bank not realizing it was actually a bank with a bad dose of flu bordering on pneumonia 
iploffy
OC Blue Brigade
If I remember right Barclay's bank had to sell a significant holding of it's shares to stay afloat to pay for the losses it ran up due to bad deals and LIBOR dealing. The significant piece of legislation that came about was the higher capital required for all banks to have before they could begin lending again at an affordable rate to small businesses and home owners and if I read this right the government gave them breathing space and quantitative easing so they could start to fulfill the lending obligation. Fat chance they have been heavily criticized due to them not lending.
That's all I'll say on that matter 
BrushType4
Western Thunderer
I'm not sure its as clear cut as that mate. On what we know, a guy rung around all the banks asking them for borrowing rates, some lied (Barclays for a short period more than 5 years ago), some didn't. Then on this information a weighted average of sorts was created to make the weekly LIBOR rate. Everyone knew it was not that reliable as a consequence no one in big business takes any notice of the LIBOR rate and it has little impact on mortgage rates anyway. The 'outraged public' as such haven't lost a bean.
I'm confused, but I think it been whipped up by the media as Banks are the easy target just now, it will be the England football team next week or some other such non actual news.
I know one thing, I'd love a job that paid me £20,000,000 per year!!
iploffy
OC Blue Brigade
It is supposed to be regulated by the FSA so any breach of the regulations or lying as has been previously muted is strictly against the law. The Conservative gov have a lot to answer for as it was the iron lady who removed the banking controls in the mid 1980's. I don't understand why no-one has stated this fact it would be nice to see the front bench of the con-dems squirm again just like they did when they where asked who was going to benefit from the 45pincome tax bracket
S
SteveO
Guest
The problem is that several banks were involved. If they all submitted unusually high LIBOR statements, that would push up the average enough to generate millions for the banks - remember, they lend in £trillions so it would only take a small adjustment. This would push up the rate of some tracker products, not enough to make a major difference to notice, but enough to make money from.
I've never trusted Brown, I'm sure he was trying - and failing - to make his political mark. I even suspect that he did authorise NOTW to use his family for public sympathy. His word against the word of a filthy empire and there's always doubt.
I've never trusted Brown, I'm sure he was trying - and failing - to make his political mark. I even suspect that he did authorise NOTW to use his family for public sympathy. His word against the word of a filthy empire and there's always doubt.
BrushType4
Western Thunderer
But Steve, Barclays didn't push up the rate, they lowered it!!
It's bizarre, Diamond denied it today, but it looks like Alistair Darling basicly asked Barclays to report lower figures.
S
SteveO
Guest
No, they lowered AND raised it. They lowered it to borrow when they were short, and by Gov approval to increase fluidity, and then raised it to generate cash, in collusion with at least 4 other banks. There's two issues here - one which looks like they acted on behalf of or with the government, and one without. That's why it's such a major problem. To prosecute one they will have to disclose their involment of the other. Hot potato!
S
SteveO
Guest
It's very ironic that legislation is being brought to track, trace and record all forms of electronic communication. I wonder if they realise they'll also uncover their own fraud and conspiracies?