John C Williams — 901 days

SOFR versus LIBOR. (Remember the scandal about manipulating LIBOR? SOFR addresses this.)

BIS
John C Williams: 901 days
John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Securities Industry and Financial Markets Association (SIFMA), New York City, 15 July 2019.

Bill Black — The Most Dishonest Number in the World: LIBOR

The FDIC has sued 16 of the largest banks in the world plus the British Bankers Association (BBA) alleging that they engaged in fraud and collusion to manipulate the London Inter-bank Offered Rate (LIBOR). BBA called LIBOR “The most important number in the world.”....

 Consider the ethical and political implications of what the FDIC investigation has confirmed. The entire barrel of apples is rotten. Every CEO failed the ethical test, and the ethical bar that they failed to surmount was set exceptionally low. That can only happen when a “Gresham’s” dynamic has been allowed to persist for years because of the three “de’s” (deregulation, desupervision, and de facto decriminalization). Such a dynamic can cause “bad ethics to drive good ethics out of the markets.” No one should be able to view the facts the FDIC cites without a sense of horror combined with an urgent commitment to transform the industry that has done so much financial and ethical harm to our nations. The twin emergencies are global....

New Economic Perspectives
The Most Dishonest Number in the World: LIBOR
William K. Black | Associate Professor of Economics and Law, UMKC

Treasury to issue floating rate notes--Morons!!

In another stunning disply of cluelessness Treasury is going to issue floating rate notes in January.

For those unfamiliar with flaoting rate notes they are securities whose interest rate periodically adjusts to some benchmark, like Libor or a T-Bill rate. Usually they have a maturity of anywhere from two to five years. The securities the Treasury will sell are going to be 2-year notes with the interest rate pegged to a T-Bill rate.

Functionally a floating rate note is exactly the same things as the Treasury rolling over a 2-year Treasury note or something similar.

So the question is, why would the government sell floating rate notes when there has never been a problem with rolling over maturing debt, ever, and where the rate is set by the government (Fed) and the payment of any interest is simply a matter of crediting bank accounts?

To give you an example, so far this fiscal year (one month), Treasury has "rolled over" $5 TRILLION. That is not a typo. It's correct: Five T-R-I-L-L-I-O-N. Here is the data. (See Table III-A Redemptions.)

If you can roll over $5 TRILLION every month and you've been doing that, forever, what do you need floating rate notes for?

And by the way...$5 TRILLION per month is about what it comes down to because for the entire FY 2013 Treasury rolled over $62 TRILLION.

$62 TRILLION. Rolled over. In one year. And no spiking interest rates, debt collapse, hyperinflation and the world didn't come to an end. Furthermore, these figures are from the Treasury itself. These idiots apparently don't even look at their own numbers, because if they did they'd know that they don't have to conjure up some brand new security to be able to "entice" investors to buy government debt. There's no enticing. The whole floating rate note scheme is just a big, giant, admission that the guys driving the bus are totally lost.

I never hear Warren Mosler curse, but he called the people at Treasury "morons." That's, like, as bad as you're ever going to hear coming from Warren, believe me.

But the slur is deserved. Morons indeed.

Matt Taibbi — Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps....

Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.
If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want....

The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it's only just coming into view.

Rolling Stone
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
Matt Taibbi

Talk about price-fixing. Delegating a democratic country's monetary policy to politically independent central banks is bad enough, but allowing a few bankers to fix prices with impunity is beyond the pale, especially when the AG tells them that they won't be prosecuted. Same in UK. All investigations have to be approved by George Osborne: Revealed: George Osborne’s secret veto on fraud inquiries. Wall Street and the City are dens of thieves criminogenic environments.

I've just provided the outline in the above excerpts. The details are appalling.

Monopoly capitalism is about price setting rather than price taking. When externalities, transaction costs, and economic rent are ignored in economic models, it's GIGO and transparently just a ploy to dupe the rubes and separate them from their money and labor.

Jan Kregel — The Libor Scandal: the Fix Is in— The Bank of England Did It!

Download or read PDF.

Levy Policy Note
The Libor Scandal: the Fix Is in— The Bank of England Did It!
Jan Kregel
(h/t Scott Fullwiler via Twitter)

Michael Stephens — Which LIBOR Scandal?

In his recent commentary on the LIBOR scandal, Jan Kregel elaborates on a distinction that is crucial to understanding this story. The scandal centers around revelations that financial institutions had been manipulating their LIBOR rate submissions to the British Bankers’ Association (BBA). Questions have subsequently been raised as to whether regulators were aware of and condoned, or actively encouraged, these manipulations. But as Kregel explains, there were two very different types of manipulation that were going on, and the distinction between the two is acutely relevant to evaluating attempts to pin a major share of the blame for this scandal on regulators and central bank officials.

Read it at Multiplier Effect
Which LIBOR Scandal?
Michael Stephens

Mark Gongloff — TV News Is Not Aware Of This Libor Scandal Of Which You Speak

Maybe instead of asking why Americans don't careabout the Libor scandal, we should be asking whether they've even heard of it.
The scandal that has been not-crazily called the biggest financial scandal in history has gotten all of zero minutes' air time on the ABC and NBC nightly news broadcasts and only a little more time than that on CBS and the major cable news channels, according to a report by the progressive media watchdog Media Matters.

Read it at The Huffington Post | Business
TV News Is Not Aware Of This Libor Scandal Of Which You Speak
Mark Gongloff | Chief financial writer, The Huffington Post

Apparently the media has decided that Libor is just too complicated for ordinary people to understand, or too wonky to be interested in.

John Carney — Libor: What Criminal Charges Are Likely?

John Carney explains criminal law related to Liborgate. John is a bank lawyer. In his former position he would have been advising banks about such matters. He cites the statutes.

Read it at CNBC NetNet
Libor: What Criminal Charges Are Likely?
by John Carney | Senior Editor

Chris Cook: Libor and Oil Market Manipulation – Rage Against the Dying of the Light

The End Game
Once the current bubbles collapse, which is only a matter of time, I believe that we will see markets evolve to the next ‘adjacent possible’, which will be the widespread – and necessarily transparent – use of direct Peer to Peer relationships through a new generation of market instruments, of which Enron’s Prepay was the first.

This return to what is in fact an ancient form of financing and funding will complete a cycle which began some 300 years ago when modern money and capital markets began with the foundation of the first Central Banks and the wave of Joint Stock Companies which financed and funded the Industrial Revolution.

Read it at Naked Capitalism
Chris Cook: Libor and Oil Market Manipulation – Rage Against the Dying of the Light
by Chris Cook, former compliance and market supervision director of the International Petroleum Exchange

John Carney — Libor Rates: A Readers Guide

Clear short summary of a complicated topic.

Read it at CNBC | NetNet
Libor Rates: A Readers Guide

by John Carney | Senior Editor

Libor manipulation

Al Jazeera: How Barclays manipulated the libor rates

Bank of England Allegedly Secretly Instructed Barclays To Manipulate Libor Interest Rates

Janet Tavakoli — Financial Journalism: "Sometimes Being Responsible Means Pissing People Off"

Unfortunately, the intimidation was a success. The BBA and Barclays chose their word carefully, because accusing journalists of "scaremongering" suggests they are irresponsible sensationalist hacks. In essence, through lies and intimidation, they threatened to ruin careers 

The Financial Times backed off. As a result, the best coverage of the ongoing scandal came from a controversial blog with mostly anonymous writers called ZeroHedge. It pounded on the story harder than mainstream financial media. Not only are other banks implicated in the scandal, the Bank of England, a bank regulator, is also implicated.

Read it at The Huffington Post
Financial Journalism: "Sometimes Being Responsible Means Pissing People Off"

by Janet Tavakoli | President, Tavakoli Structured Finance

Yves Smith summarizes the LIBOR scandal

In case it isn’t yet apparent to you, the unfolding scandal over manipulation of Libor and its Euro counterpart Euribor is a huge deal. Even though at this point, only Barclays, the UK bank that was first to settle, is in the hot lights, at least 16 other major financial players, which means pretty much everybody, is implicated.

First, Libor is the basis for pricing over $10 trillion of loans. As the CTFC noted: 

"US dollar Libor is the basis for the settlement of the three-month Eurodollar futures contract traded on the Chicago Mercantile Exchange, which had a traded volume in 2011 with a notional value exceeding $564 trillion."

The Wall Street Journal puts total in contracts affected at $800 trillion.

Read it at Naked Capitalism
Massive Furor in UK Over Libor Manipulation; Where’s the Outrage Here?
by Yves Smith

Add this to the financial crisis resulting largely from fraud in housing and securitization, foreclosure fraud, and other control frauds, and where are we? We knew this was coming from prior reports, but this is really, really bad, especially coming at the time that the EMU is in turmoil and the global economy contracting. It will take a Hercules to clean out this Augean stable.

Bloomberg: Libor manipulated by US banks?

Chicago Trading Firm's Lawsuit Claims Banks Conspired To Manipulate Libor

A Chicago trading firm accused Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), UBS AG (UBSN) and Citigroup Inc. (C) of conspiring to manipulate the London interbank offered rate.

The banks drove down Libor to generate billions of dollars in profits from swaps, loans, interest rate derivatives and other financial instruments whose value depended on the rate, Eldorado Trading Group LLC said in a complaint filed July 5 in federal court in Newark, New Jersey. (h/t Mish Shedlock)

This has been out there for awhile, but this is the first actual official complaint, to my knowledge. Thrown in on top of everything else, this is making Wall Street look like a Mafia subsidiary.