A leaked tape that has been obtained by BBC journalists, suggests that the Bank of England pushed commercial banks on numerous occasions to lower their Libor settings.
The recordings are said to be from around October of 2008 and they add to the evidence which supports the notion that the central bank actively took part in trying to engage in the biggest rate-rigging scandal in history.
What's The Libor Scandal?
This was an incident which involved a number of high profile banking institutions being accused of fixing the London Interbank Offered Rate (LIBOR); an important interest rate pertaining to global finance.
The manipulations that took place were said to possibly make financial institutions appear much stronger than they truly were back when the financial crisis occurred in 2007-2008.
At least 6 banks were ordered to pay roughly $6 billion as a consequence to their actions with the manipulation of the market. The list includes well-known institutions like JPMorgan, Bank of America, and Barclays.
In the obtained recording, a senior Barclays manager is seemingly instructing a Libor submitter to lower his Libor rates, citing “very serious pressure” coming from the UK government and Bank of England.
Bank officials have acted naieve on the matter, suggesting that they've only recently become aware of the concept of lowballing; which is the definition of what took place with the Libor-rigging scandal.
Estimates suggest that trillions of dollars was stolen from customers as a result of the actions with the Libor scandal.
So far 6 banks have been heavily fined, although the fines weren't that meaningful in relation to their assets or income, but there were other banks found guilty of being involved as well.
At least 16 banks have been named as taking part in the rigging scandal.
And despite the suspensions and resignations that have already occurred over the matter, private lawsuits by class action lawyers are also taking place; forcing the banks to pay even more for what they are guilty of.
And one judge from a US appeals court has suggested that such lawsuits might have the potential to bankrupt some of those institutions if they are successful.
However, one of those class action lawsuits has already been settled, with at least 7 banks agreeing to pay only about $324 million in compensation over the incident.
At the beginning of this year, the US Supreme Court decided to allow private antitrust lawsuits to be brought forth by investors against big banks for their actions with the Libor scandal.
The ruling comes after the Supreme Court moved to reject an appeal that had been filed by a number of banks (JPMorgan Chase & Co, Bank of America Corp, and others) over a 2016 ruling that allowed lawsuits against them to proceed.
There are said to be numerous lawsuits that have been launched which are looking to hold these financial institutions responsible for billions of dollars in damages over their price-fixing actions.
Pics:
Pixabay
Boston Globe
CNN
IbItimes
Sources:
http://www.investopedia.com/terms/l/libor-scandal.asp
http://www.marketwatch.com/story/bank-of-england-pressured-banks-to-rig-libor-secret-bbc-tape-reveals-2017-04-10
http://www.independent.co.uk/news/business/news/bank-of-england-libor-rigging-scandal-implicate-secret-recording-bbc-mark-dearlove-paul-tucker-a7675831.html
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11617964/Banks-fined-3.5bn-for-rigging-foreign-exchange-markets.html
http://www.bbc.com/news/business-39548313
http://money.cnn.com/2014/11/12/investing/banks-currency-fx-probe/
https://www.usnews.com/opinion/blogs/economic-intelligence/2012/07/23/libor-fraud-may-be-the-mother-of-all-bank-scandals
https://www.theguardian.com/business/2016/may/23/libor-manipulation-lawsuit-hsbc-barclays-ubs-bank-of-america-deutsche
http://www.financemagnates.com/institutional-forex/brokerage/seven-major-banks-settle-swap-rates-fixing-class-action-324-mln/
http://www.reuters.com/article/us-usa-court-libor-idUSKBN15123B