As Barclay’s current CEO engages in a witch hunt to try to find the source of who leaked recordings that showed the European bank was deeply involved in the rigging of Libor rates over the past 10 years, an interesting counter-party was discovered to have also been involved in artificially lowering the rates in which banks lend to one another, and from which billions of commercial transactions depend upon.
According to the recorded accounts from back in 2008, conversations between Barclay’s bankers and the Bank of England show that they were engaging in rigging the Libor rate at or near the time of the Financial Crisis.
A secret recording that implicates the Bank of England in Libor rigging has been uncovered by BBC Panorama.
The 2008 recording adds to evidence the central bank repeatedly pressured commercial banks during the financial crisis to push their Libor rates down.
The recording calls into question evidence given in 2012 to the Treasury select committee by former Barclays boss Bob Diamond and Paul Tucker, the man who went on to become the deputy governor of the Bank of England.
In the recording, a senior Barclays manager, Mark Dearlove, instructs Libor submitter Peter Johnson, to lower his Libor rates.
He tells him: “The bottom line is you’re going to absolutely hate this… but we’ve had some very serious pressure from the UK government and the Bank of England about pushing our Libors lower.”
Mr Johnson objects, saying that this would mean breaking the rules for setting Libor, which required him to put in rates based only on the cost of borrowing cash.
Mr Johnson says: “So I’ll push them below a realistic level of where I think I can get money?” – BBC
The rigging of Libor rates by numerous banks over the past 10 years was the largest financial fraud ever discovered since that rate determines borrowing costs for everything from mortgages, student loans, automobile loans, and of course, credit card interest.
The amount of money affected by Libor rigging was well into the trillions of dollars, but the total amount of fines the banks paid was only around $9 billion dollars. And it is today’s collusion between the banks, courts, and regulators that will see these banks continue to defraud the public and the system because when you are too big to jail, then crime really does pay.
Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.