On The Libor Scandal
Robert E. Diamond Jr.: Former CEO of Barclay’s Bank
Notes on the Largest Financial Fraud in History
Ifanybody doubts that a Republican victory in the coming elections, resulting in the Grand Obstructionist Party gaining control of the White house and Congress, would pose a serious danger to the national interests, we need only look at their plans to scrap the new banking regulations passed by a Democratic Congress under the stewardship of Nancy Pelosi, and signed into law by President Obama.For there is abundant evidence that the financial system is in danger of another meltdown, due to the unscrupulous practices of the big banks.
A dramatic case in point is thescandal brewing around thesecret manipulation of the London Interbank Offer Rate, or Libor, which sets the interest rates on 800 trillion dollars’ worth of loans world-wide – including everything from governments and corporations to student loans. Some financial experts are calling it: “The crime of the century!” But thus far nobody has gone to jail.
This practice is considered so dangerous to the health of the international financial system that government authorities and financial regulatory agencies are conducting wide ranging investigations of everyone who might be involved in Europe and the US. Robert Diamond, the CEO of London’s powerful Barclays Bank – a financial colossus that stands astride the world – has been forced out and Barclays was hit with $450 million in fines.
Barclays, which is at the epicenter of the scandal, has confessed to lying in its financial reports to paint a more favorable picture of the bank’s condition and bolster profits. Aside from the enormous fines, the crisis at Barclays cost them three billion dollars in market value. But nobody has gone to jail.
The fact that it was virtually impossible to find anybody outside of the banking and academic communities except a few elected officials even knew anything about the Libor before this scandal broke – and most of the general public still doesn’t even know it exist – demonstrates why we need strict government regulation of the banking system.
This is why the last thing we need is an anti-regulation plutocrat like Mitt Romney in the White House. While the bankers and financial speculators play Russian Roulette with the world economy on which we all depend for survival, the Republicans in Congress refuse to fund the agency tasked with policing the banks. Nothing exposes the lips to posterior posture the Grand Obstructionist Party assumes toward the financial elite more than this dangerous folly.
Left to their own devices the bankers have created an illusory financial system constructed of smoke and mirrors. And there is a growing danger that as this fact becomes more widely understood people could lose confidence in the banks. Alas the entire financial superstructure is based on confidence; hence it could all come tumbling down again. I got a hint of what this means when I interviewed multi-millionaire Atlanta businessman Hank Thomas and his wife, who is a banker.
I asked them to sum up the present economic crisis so that anybody could understand it. They said it’s fundamentally a banking crisis, and the bottom line is that you can’t trust your banker anymore. Given the volume of money involved, if this financial Humpty Dumpty takes a great fall, all the king’s horses and all the kings’ men may not be able to put it back together again. And virtually no living Americans can envision the troubles we’ll see.
Commentator /Cultural Critic
WBAI News, 99.5 FM. Online at: wbai.org
129 Wall St. New York
August 16, 2012