Yes, it puts LIBOR to shame. Or more specifically Libor was but a part of the larger culture of fraud, collusion, and lies. Matt Taibbi lays it all out in his latest article. The breadth of this is simply stunning. There has quite possibly never been a case of fraud so widespread and so deeply embedded in our financial system.
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.
Yep, it's a double reverse fraud. Because one level of fraud just wasn't enough. No, they need to go deeper. They needed to manipulate the interest rates, interest rates that affect any of us that have debt or a loan, or even an interest bearing bank account. But they also needed to manipulate interest rate swaps. Not only that, but they have all but straight out admitted this. Yes, it sounds absurd, but when a case was brought against them you know what their defense was? You really won't believe it. Really. It was that their customers shouldn't have ever assumed that the banks were competing. That's right. It wasn't fraud because everyone should have
assumed the banks were colluding with each other in secret and not actually competing.
All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. 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.
Yep, it's not a conspiracy if they're doing it in the open. It's not fraud because we should
assume that they are working together to screw us. That's really all I have for now. The magnitude of this is really hard to get my head around. The blatant, outrageous fraud is just incredible.
They aren't even pretending anymore. They're just openly trying to screw over as many people as possible as much as possible and then defending themselves by saying that everyone should have known it was happening in the first place. So, now we know. The question is what we're going to do.
Please Read the whole article. Taibbi is obviously a much better and more thorough writer than I am.