There were two new developments in the ever unfolding crime drama known as the Anglo-American financial system.
Peter Madoff, brother to infamous Bernie and long time 'chief compliance officer' for the Madoff fund, is pleading guilty to the charge of 'falsifying documents.' As you may recall Harry Markopolos had attempted to call the fraudulent nature of the Madoff investment model to the attention of the regulators for years and was ignored, ridiculed, and threatened.
The bigger news of the day was the settlement with Barclays in the absolutely egregious fraud of fixing the LIBOR market rate. The Bank will pay a $450 million fine and incur no criminal penalties or trading sanctions. The American CEO Bob Diamond says he will forgo his personal bonus as well.
Other banks were involved, but Barclays has settled. Barclays Pays 450m to End LIBOR Prove
Bart Chilton of the CFTC was on the news claiming victory for the regulators.
A read of the some of the emails discovered in the case shows that the manipulation was almost as blatant and obvious as placing food orders at a takeaway restaurant.
Ah hey old boy, our positions are up against it, so would you be a good chap and knock 50 basis points off LIBOR for us tomorrow morning please.The Bloomberg TV crowd had fun with this story about Barclay's, with Matt Miller chuckling that the fine is 'only six weeks profits' for the Bank, and the market obviously doesn't take it seriously because 'look at the stock price.' Barclay's stock finished the day down 3 cents.
Anything for your my good man. Consider it done.
Manipulating LIBOR is a BIG deal, one of the worst and most pervasive frauds to actually come to light since the widespread fraud in the CDO market.
That the firm faces no criminal charges, will not be barred from any markets, and is taking what the financial commentators dare to taunt openly as a minor fine is a disgrace.
And those who say that the markets should be without regulatory oversight and set the key interest rates without outside interference are living a romantic or ideological fantasy.
Do governments manage rates? Of course they do. That is a role of the Fed. They do it for policy decisions, and spend some time announcing and discussing those actions.
But this is not the same thing as private firms manipulating rates secretly for their private profit at the sake of other's losses. People who say they are equivalent are serial self-deceivers, and probably blinded by ideology.
Have no illusions. The fix is in, and often, in these markets. Those who scoff at such assertions as 'conspiracies' might bear both Madoff and Barclays in mind, not to mention Enron.
There will be more revelations of criminal conspiracies to defraud the public and the markets in the coming months. But LIBOR is very significant. It is a market touchstone. And it was foul for a long time.
