- Fishing For LIBOR Malfeasance

This is an interesting graphic, but most of it is just cool looking noise.

(You can get a better look at it by following the original link to Zerohedge Below)

The regulators seem to be implying that when a trader speaks to some other trader or executive at the bank where he works, this constitutes 'manipulating' LIBOR. It doesn't. Back in the 90's when I was still working at a bank we called that sort of thing "working at a bank". In fact, the pretend JPMorgan scandal was alleged because there wasn't enough communication between traders and management. Maybe the regulators need to decide if they want people in the big banks to be talking to each other or not.

There is only one reference I can see on this entire chart which even comes close to meeting a standard worthy of questions, let alone an investigation. About two thirds of the way down they claim there was a communication from one bank to another (in 2005) indicating some sort of communication about what the first bank would like to see for a LIBOR fixing. "what's up with ur guys 34.5 3m fix... tell him to get it up!" I can't imagine telling someone you'd prefer a higher rate amounts to collusion, so this fact alone doesn't really prove anything. And absent collusion there is absolutely no crime here. But the inquest grinds on all the same.

It's fair to say that the method used for LIBOR fixing may be worthy of an update. But so far the regulators haven't produced anything that even comes close to meeting the standard of a crime. There is a ton of innuendo, and a lot of propaganda. And all the actual data is certainly presented in as dark a frame as possible to make the banks look bad.

But claims that "we may soon discover that other banks were complicit" should be a signal to the reader that the regulators are on a fishing expedition, and haven't managed to hook anything yet. This is all just politics and anti-bank bias run wildly amok.

I got this graphic from Zerohedge. In that piece, the author claims "The evidence we have collected is quite telling, so I'm pretty sure this investigation will not be closed without results." I couldn't disagree with this conclusion more. I think all they have so far is a bunch of people from Washington learning how international banking works, and not liking what they are discovering.

I have no stake in any of the banks, so it's really no sweat off my back. But I don't like to see the press and the regulators trying to lynch people who, so far at least, don't seem to have done anything wrong. Evidence of the truth of this view is that the rest of the industry who also understand how things work, didn't see this as a problem at all either.

But the regulators seem pretty determined to bring the banks under their thumb. That I think, is the real point of this regulatory farce. Meanwhile, actual crimes like what happened at MF Global, remain unresolved.