With the latest revelations of a telephone call between Diamond and Tucker, the talk of shadowy Whitehall figures asking why Barclays’ LIBOR submissions were so high and the content of e-mails sent by the ex Barclays Chief Executive it is now pretty obvious that rigging took place and that ‘everyone’ knew.
And when I say everyone I mean everyone that ‘mattered’, not the guy on the street who will eventually have to pay for it all.
But the real clincher is the Bloomberg graph of Barclays’ LIBOR submissions that SKY News has published.
This is not so much because it shows that the LIBOR Barclays submitted fell off a cliff so quickly and soon after the Diamond / Tucker phone call, but because this should have raised extremely loud alarm bells with every regulator and authority that received the data. Especially the British Bankers’ Association that collates the data, decides the rates and then publishes them. They will have seen the huge change and should have dropped Barclays as a data source pending investigations, which would have prevented any manipulation. Did this happen?
Not only that it has now emerged that Barclays had actually been warning the regulators across the world that other banks must have been manipulating the rates.
From the mounting evidence it seems that there were many authorities that received this information. Do none of them run graphs such as the one Bloomberg created? Do none of them monitor the rates for obvious manipulation? Do none of them report their suspicions and get them acted on straight away? To whom do they report? What explanations did Barclays submit with the data to support the sudden change and would they have been believable? Was it this event that triggered the FSA investigation? Why was the practice not spotted and slapped immediately, unless 'they' were happy with it for some reason? Were Barclays rates actually included in the BBA rate setting procedures during this time even though there was a massive questionable drop in the rates Barclays submitted? If so on what grounds? Surely the easiest way to stop the rigging would be for the BBA to simply discard the Barclays figures. The list of questions goes on.
Without the collusion of these bodies how could Barclays have got away with rigging LIBOR? It now matters not what these regulators say, let’s see the paperwork.
Someone very senior somewhere must have sent out a distinct message that LIBOR rates were too high. But the only method of getting things changed was to by-pass the normal written instructions and minuted meetings/telephone calls. No, as I said a couple of days ago, it would have been sent out more as a “who will rid me of this troublesome high LIBOR rate” message. And just like the four knights that went and murdered Thomas Becket, senior politicians, Whitehall mandarins and bankers (not just Barclays) swung into action; but without the protection of an auditable paper trail.
How can it be otherwise? The figures are there to be analysed and they will have been analysed. So what went wrong and where?
Or is this one of the ways that the whole system was prevented from collapsing so dragging the world back into the economic dark ages? And are techniques of this sort still being used in other areas to keep the system from crashing down?
Let us hope that we learn something concrete from Bob Diamond when he gets grilled by MPs this afternoon.