So it’s official, bankers lie and illegally manipulate interest rates …
Are you surprised?
You’d be the only one.
Today, former city trader Tom Hayes was jailed for 14 years at Southwark Crown Court for manipulating the Libor rate, This is the the lowest rate available and generally what banks charge for interbank borrowing on a huge scale.
You or I won’t see this rate, but if we are lucky our mortgage rates could be as low as Libor plus 2%.
Interesting reading in the report from the BBC, apparently this guy is the “first” to be prosecuted, so it begs the question who else knew?
The article goes on to reveal that everyone including the CEO of the bank knew .. but it was all a big secret and Hayes was even told not to send emails on the subject .. Obviously because this was traceable and eventually used in his prosecution.
Even more interestingly, this criminal was initially cooperating with investigators from the Serious Fraud Squad but then changed his plea to Not Guilty and his legal team.
Does that smell to you?
That perhaps someone else became a bit frightened of the repercussions and made him an offer?
I often work in banking on the IT side and have frequently dealt with traders and what a bunch of obnoxious arrogant bastards they are.
Some of these guys and one in particular that I know fairly well are paid more in annual bonuses than most of us wil earn in 10 years.
With that kind of money on top of your already high income, then what is their motivation to manipualte the Libor rate.
Pure and simple greed.
The most basic failing of human nature, do you think because this prosecution has went through it will stop?
No, because you’re forgetting, people are greedy, people who are driven by money are greedier than the rest.
The complexity of today’s banking world of complex financial instruments, makes the regulation and detection of financial crime even more difficult.
14 years is a hell of a sentence, even if he only does 7, but as a deterrent, it’s not enough.
Even if they do go after him and the others involved under the proceeds of crime act, it still isn’t enough.
Love this scene from The Wolf Of Wall Street … Sing with me. … Hhhhhmmmmmm mm mm .. Waah! 🙂