LIBOR Rigging: who needs a free market anyway

[Starfisher]

I've been wondering when we'd get a thread on this but since no one else has done it yet, here we are.

The gist of what happened is this: various large banks and now perhaps even the British government colluded to manipulate a key overnight interest rate known as the LIBOR (London Inter-Bank Offered Rate). In some cases, the rate was moved either up or down in order to assist traders in LIBOR related instruments, while it appears that in others it was moved to satisfy government demands for lower interest rates.

The scale of this is hard to grasp. LIBOR is used to set rates in a huge swath of the derivatives market - how much seems impossible to say because a lot of it is not well regulated. I've seen hundreds of trillions thrown around, even quadrillions of dollars worth of notional contracts. When you diddle an interest rate by .5% on hundreds of trillions of dollars of contracts, you're having a gigantic impact. This could well be the largest financial scandal in history in terms of "dollars affected". Maybe a couple more banks would have gone down in 2008 if it weren't for favorable borrowing conditions set up by manipulated rates.

Barclays CEO Robert Diamond has already stepped down over this, and the Rolling Stone article implies that he's going to try to take some other people down with him. I wonder what you lot over the pond are hearing about this, since right now at least its all hitting close to London.

[Kirjava]

It's big news over here, but beyond a sense of acute rage at the utter corruption and arrogance of both the banking industry and our government (which is not new), I'm not learned enough on the subject to start a thread on it! We're currently arguing over the limits the inquiry into the scandal will have...

[Codex]

Indeed it is big news over in the UK. Unfortunately it's taking me some time to get up to date on current affairs, as I became reclusive during exam period. I really need to read up on this before I can have an (evidenced) opinion.

[roflmao]

I'm going to withhold judgement until more information is available. But yeah, first impressions, holy ***.

[Skullcap]

I was hardly surprised to see yet another scandal pop up here in the UK, were practically been crawling with them the past 2-3years. First we had MP expenses, then the phone hacking scandal which is still ongoing with the Leverson inquiry and more importantly and related to this aswell the mis-selling of PPI insurances which the banks were getting pretty loaded off, then ofcourse this has now happened with rigging the LIBOR and not to forget the european version of the LIBOR aswell.

2008 seems to have been the clusterfuck point for alot of stuff related to the economy, I'm not particularly surprised the "evil banker" mentality had spread from that time, especially nearly 4 years on since 2008 there is been progressively worsening of the economy as a whole, banks being bailed out of failing and scandals popping up left right and centre.

I wouldn't be surprised if there will be more shocks to come from the banking system as this enquiry ends up digging deeper into the banking system than previous attempts, its been unregulated and unchecked for to long, if sufficient checks and sufficient regulation had been done things like this wouldn't happen, but since the banking system hires on well over a million people and contributes a sigificant margin to the UK economy I doubt the government is going to do much, especially if it turns out the government was willingly assisting this rigging.

It was interesting to watch the arguement for the inquiry into this scandal in the commons yesterday, the government side (might aswell just be called Tories now, Lib dems were doing sweet f all) seemed reluctant to have any kind of fast acting inquiry done, Ed Balls was also implicated by Osborne to have been in on this LIBOR rigging, since at the time, 2008, he was involved in the area, this has been refuted since and Osborne has retracted his comments, but there did seem a certain air of reluctance from the government, especially Tories, to do anything, which Labor on the opposite side cited as being the Tories had something to hide, especially considering how much money actually does flow into the campaign and political coffers of the Tories from big bussinesses and banks.

It will be interesting to see weather the euorpean LIBOR rigging gets tied into another excuse for the euro crisis at the moment with the economy there, if it does get linked the implications could be far more wide spread than originally believed.

As a UK resident am I angry about this? To a certain extent yes, but to another extent I'm saddened and dissapointed that these kind of things can slip past without any notice. It brings to question just how much greed and how lacking regulations and checks are on the banking system as a whole.

I'm sure Barclays won't be the only bank who was involved in this, especially after investigation has done over the coming months, were bound to see alot more resignations, alot more questions being asked and alot more blame and finger pointing, but it'll just pass like all the rest, economy is screwed either way you look at it, another scandal or two won't change that fact.

[Kirjava]

Some numbers I've read which I thought were interesting and relevant:

The British government (and thus the British tax payer) has spent £1.2 trillion propping up British banks.
The value of taxes provided by the City between 2002 and 2008 was £193 billion.
It will take Barclays 13 days to make enough money to cover the £290 million fine it's been slapped with over the LIBOR affair.
Less than a quarter of bank loans prior to 2008 (23.8%) went to non-financial businesses, i.e. the productive part of the economy.

(Guardian article, 'You've Been Bankered', 03.07.2012)

[Flagg]

The general mood of the British public, is not so much the outrage of what has happened, in fact quite depressingly this sort of shit doesn't seem to surprise people anymore, but it's the fact that these guys can do this, and seemingly get away with this. Barclays were fined something like 200 million, which im told for them is peanuts, and Diamond himself will be getting 30 million for resigning from Barclays. He's also declared that he believes nothing has been done wrong and he has been unfairly treated. That's the kind of stuff that's really bothering the British public.

And of course, all the Coalition Government and Labour can do, is use this as an opportunity for point scoring and currying public favour.

How people, no matter how powerful they are, are not being prosecuted for this astounds me. It seems if you work for the Media, the Banks or the Government, you can pretty much do whatever you want.

[Gorb]

Kirjava's post sums up my knowledge on the current affair, and Flagg nails what I feel with regards to what will come out of the situation (and how the public are responding).

It's kinda bad that most people don't seem to get the scale of what has gone on, though. It's just another government/banker's fuckup to your Average Joe.

[LoCo]

I think perhaps, with regards to scale, it's not so much that people don't get the scale, but rather that people just don't care anymore.

What it means for the people is things are going to continue as they are. Nothing has changed. The rich and powerful are going to continue to shit all over everyone else and never be held accountable. And... well, nothing.

When was the last time a government actually did something good for their people? Situations haven't changed and people have reached the point where they don't care anymore. Their lives are still shit, and they have to get through it. It's pointless for them to get upset over this when there is so much more important going on in their lives, like getting enough money to feed their family.

It can only be hoped that once the next generation, being born into a world of despondent apathy, will start a revolution because the current generations just don't have the energy left for anything else but "getting on with it".

[Paladin]

I dunno, I'd happily join in the revolution if we were going to blow up all the credit history systems like in Fight Club. Then we can storm Malibu, and start hanging bankers...

[Proripper]

Sounds like a good idea.... three cheers to a new world government!

[Kirjava]

It's depressing that things have got to this point, but sure, string 'em up. I know that's simple of me but fuck it, I'm sick of government ineptitude and banker amorality. Let's line them up against the wall.

[Jonny]

I think perhaps, with regards to scale, it's not so much that people don't get the scale, but rather that people just don't care anymore.

I'd think rather that people don't know what to do any more. We live in a supposed democracy, we're apparently free, how do you rebel against that? When either Tories or Labour (insert other two party systems) will be in government and there's little difference between them, how do you affect change through your vote? You can protest and sign petitions all you like, but unless it's an issue the politicians don't have a strong interest in you'll be ignored or paid lip service to.

I think the sheer inertia of a governmental system that's been static so long people vote along generational lines (my father voted Labour, my grandfather voted Labour etc.) seems just too big for anyone to change. People are angry but don't know what to do about it, they want change but don't know how to get it. If you live in a free and democratic society, how do you change the structure of government if the democratic process stalls?

[TheDeadlyShoe]

Less than a quarter of bank loans prior to 2008 (23.8%) went to non-financial businesses, i.e. the productive part of the economy.

just to point out, that this is essentially meaningless. all inter-bank loaning is incestuous and it doesnt really matter how much they are doing it. Bank A loans to bank B loans to bank C loans to bank A ad infinitum. Theoretically it should be a form of optimization with little interaction or affect on the rest of the economy. Which is why financial sector activity of this nature is often completely ignored when attempting to generate useful numbers on loans etc.

which is not to excuse anyone or anything.

Robert Reich being very angry on this topic.

[Kirjava]

I don't think it's meaningless- a great many small-to-medium businesses in the UK are struggling because banks simply won't loan to them, hence the fact that so few bank loans go to them is pertinent. It's got to the point where a guy who's made money in providing minibuses to people has actually stepped in to do it himself, and is doing it well, because the main banks are so unwilling. Tragically, because (somewhat counter-intuitively, given the revelations of the last five years) the regulations about being a bank are massively in-depth and lengthy, this business is not actually called the Bank of Dave (say hi to Burnley Savings and Loans), but it's an interesting- and an appropriately capitalist- reaction to the incompetence of the Big Five.

[Starfisher]

all inter-bank loaning is incestuous and it doesnt really matter how much they are doing it.

Well, in the sense that it doesn't do anything for anyone but banks, yes. However, how interleaved banks are with their loans are matters a whole hell of a lot when stressful events happen, ie 2008. If one bank in the chain fails, suddenly everyone is screwed.

[Paladin]

I think the sheer inertia of a governmental system that's been static so long people vote along generational lines (my father voted Labour, my grandfather voted Labour etc.) seems just too big for anyone to change. People are angry but don't know what to do about it, they want change but don't know how to get it. If you live in a free and democratic society, how do you change the structure of government if the democratic process stalls?

Really all you can do is either form an entirely new party, which is difficult, to say the least, or break out the torches and pitchforks, and sharpen the guillotine.

[Melonplant]

The reaction to this breach of ethics is a little overblown. LIBOR is comprised of more than just Barclays overnight quotes so their individual submissions had a small effect on the actual rate. Furthermore, this affected primarily other financial institutions / large corporations that trade in instruments tied to those rates. I can't fathom why desk traders would be allowed to submit rates when it's a clear conflict of interest if they are holding/buying instruments that are tied to it. If other banks were not only also lying about their rates, but colluding with other banks to achieve a specific libor for the sole purpose of profit, then there needs to be lynchings.

As for Barclays lowballing their borrowing costs while the crisis was raging, not that big a deal in the scheme of things. This had the effect of lowering interest rates which is critical in economic contractions. It may have made them look "healthier" but banks don't lend to each other just because a number says to.

[TheDeadlyShoe]

other banks were almost certainly fixing rates. There was money in the collusion. check robert reichs RAAAGE.

[LoCo]

Melonplant: I wouldn't say "overblown" really... or at all. It's a breach of ethics. If they are not only willing to do this, but gladly do it and show no remorse... at what point would the current reaction be deemed justified? Instead of going to jail, a few people step down and get millions for their trouble. So the lesson is... scam and get rewarded.

[Melonplant]

It's a mild breach of ethics at best. The flaw, if any, is in LIBOR in the first place. Banks are supposed to quote realistically but in practice they quote competitively which generally makes for more free market than you might expect. If you quote realistically but your competitor quotes even several basis points below you are at a competitive disadvantage. What do you do, cry foul and tell the ECB to close down Citibank?

I'm fairly confident that no real collusion happened between banks for profit. The government begging banks to bring LIBOR down is essentially the same as the American system with a fed funds rate dictated by the fed reserve. I can't really think of a way someone could make millions by misquoting LIBOR rates to a system that averages other quotes unless every bank agreed to bring LIBOR down dramatically on the same day and all the traders offloaded their LIBOR tied instruments later that afternoon.

Something like that would've been noticed far earlier.

A firm slap on the wrist for everyone involved and, of course, much deeper investigations to assure that nothing severely criminal happened is necessary, but when I say overblown, I mean lets reframe from trying to execute CEOs and sentence VPs to life in prison?

[TheDeadlyShoe]

Something like that would've been noticed far earlier.

it was, by the other banks. Thats how we know they were colluding. Also the part where Barclays stated that every other bank was manipulating LIBOR rates with them. When you know which way interests rates are going to go, you can place bets to make money off it - it's insider trading at its worst.

lets not forget the part where the banking sector collectively misreported their rates in order to disguise how much trouble they were in in the run up to the financial crisis (which, in other words, prevented accurate and timely information from reaching the public re: the mess that everyone was in)

[Melonplant]

By colluding, I mean they were on skype 16 way laughing maniacally as they all agreed that the 3 month should remain at .50 for the next week and a half. That would be criminal and that would be insider trading. The banks may have misrepresented their overnight rates, but so long as they did it independent of each other, I don't see the kind of baby napping a lot of these articles are claiming. Citibank may cut costs with a lower Libor but JPmorgan may be flush with cash so they would like a higher Libor. They will both submit rates and neither should know what actual rate will prevail.

I am not entirely familiar with non american banking practices, but I am certain that just because one bank says they can get a rate for overnight does not mean that bank will get any where near that rate. American banks can get funding from the discount window and need not report their financial condition until quarterly earnings. Libor is not supposed to be an early warning sign for the public and anyone that felt secure with UBS because their in house submitted overnight rates said they could get money on the cheap was fooling themselves even before this scandal.

Furthermore, at the height of the crisis, liquidity was completely dried up and many credit worthy financial institutions could not obtain overnight loans. The spread between US fed funds rate and the LIBOR was at an all time high. If that spread was with tinkering, then that makes me think the Libor should be quietly disassembled over the next decade in place of a less market sensitive index.

[Skullcap]

http://www.bbc.co.uk/news/business-18671255 - Full timescale of Barclays Libor manipulation and what was done. Barclays effected trillions of £s worth of loans and contracts, this is just them on there own, if other banks were also in it then I have to question why the bankers shouldn't be criminally charged. Manipulating the basics of a market and in turn the UK economy, which is pretty much fucked as it is, doesn't particularly put a good taste in my mouth.

Incidentally, the UK job market managed to lose what it gained today, which points at even longer recovery, I'd question if the QE injection Bank of England just done will do anything for us now, especially with EU sitting on there hands and pretending its going to get better for them if they play the 3 evils monkeys.

[Starfisher]

They will both submit rates and neither should know what actual rate will prevail.

Except this isn't what was happening. Read this: http://online.wsj.com/article/SB1000...784443534.html

Money quote:

The investigation found that Barclays's traders communicated with colleagues at some of the 16 banks involved in Libor setting.

As one Barclays trader explained to another one at a rival lender, "the trick is you must not do this alone." This kind of evidence should help regulators prove that others were in on the fix.

They probably weren't on Skype, but they were laughing maniacally as they

promised each other bottles of Bollinger for manipulating a rate used to price as much as $800 trillion of loans and derivatives

If anything, the outcry over this is hilariously, saddeningly muted. We just found out that the people we've been bailing out as essential to the financial system have spent years breaking the law to siphon money out of the financial system at a vast scale, and the response is either "I don't get it" or "meh" or "what are you talking about?"

[Melonplant]

Oh my. I thought the bottles of Bollinger were promised from Barclays employees to other Barclays employees, not to employees at other institutions. This has the potential to be one of the worst insider trading schemes in history. It will be almost impossible to know exactly how much money was made from fraudulent submissions from multiple banks on the same day.

I imagine the fine isn't going to quite cover it. The external memos for collaboration and profiteering mention positions of 85 billion on euribor which with even a 1bp movement would cause millions in profit or loss (unhedged). That was just one day.

My apologies, I was under the impression that all of this conspiring was happening at barclays and staying at barclays. I look forward to the investigation continuing and these traders getting criminally charged.

On the plus side, the banks will probably repay their bailouts with the fines they'll be getting in the coming months.

[Agdune]

I'm pretty well in the 'layperson' category when it comes to the world of finances (I puts the monies in the banks, the banks holds my monies! Now I don't lose my monies in dirty washing so often) and even after reading through a few articles and the thread, I'm not entirely sure what the implications of manipulating the LIBOR had 'out in the real world'. I understand; big fraud, amazing amounts of numbers manipulated, insider trading and general douchebaggery around interest rates, which are a fundamental mechanic of the finance system but... yeah.

I think that I, like the majority of people in the world just can't get too outraged about it because we just don't understand the system. I really can't think of an appropriate analogy, but basically, we understand that it's bad and that a bad thing happened, but hell if we can say why it was bad beyond 'well the monies got taked and the banks peoples did it?'. It's unethical practices in the heart of an incredibly convoluted industry that seems to operate on bizzaro-land abstractions and trying to link those unethical practices to me or my life requires how many steps of association, again? Fuck the 3 weeks it'd take to learn what's going on here; arguing about asylum seekers is way easier. It's an established political scandle, after all, all the talking points have been worked out for the whining masses, we just have to repeat them at each other.

I don't think we'll see all that much being done about corrupt bankers for a while; unfortunately it seems like the only people who have a genuine and thorough grasp of it all are generally the ones involved, or at least not willing to rock the boat too much because they work in the field. It's also hard to demand 'the government' do something about this, because frankly I wouldn't be able to understand what the government did, unless it was dumbed down to the point of being completely ineffectual and harmful. Furthermore, with totally non-sensationalist headline stories like paedophile sexual predators in the millitary ready to take the brunt of the masses outrage, what time do we have left for learning about the internal mechanics of financial institutions?

[Nurizeko]

I wouldn't be surprised if there will be more shocks to come from the banking system as this enquiry ends up digging deeper into the banking system than previous attempts, its been unregulated and unchecked for to long, if sufficient checks and sufficient regulation had been done things like this wouldn't happen

Prevailing wisdom has it that free markets are to be left free to do their thing.

Except...the free market doesn't like a free market.

Odd.

How people, no matter how powerful they are, are not being prosecuted for this astounds me. It seems if you work for the Media, the Banks or the Government, you can pretty much do whatever you want.

Amen.

Doesn't seem like a change from the inside is going to happen, TBH personally I'm wondering how much more the British public can take of a shitty economy while the wealthy just fuck around before someone does something 'stupid'.

If anything, the outcry over this is hilariously, saddeningly muted. We just found out that the people we've been bailing out as essential to the financial system have spent years breaking the law to siphon money out of the financial system at a vast scale, and the response is either "I don't get it" or "meh" or "what are you talking about?"

In their defence, Fish, msot people did not study business and accounting or whatever at university level and their only experience of the financial sector is the Wall Street movies.

To even remotely catch up most people would have to actually go do some research, which just isn't too plausible when most people are concentrating on paying their rent or whatever.

One of the reasons why the response is so muted is not only because the public have resigned themselves to seeing the financial elite as untouchable, but that their practices are often in another world.

If this kind of scandal and the specifics around it more more available to the public they wouldn't have gotten away with it to begin with.

Sadly most people have absolutely no link to the secret world inside the banking sector aside from paying towards bail-outs and getting shafted by their local branch manager.

[TheDeadlyShoe]

theoretically this is what media elites are for; if either trusted-news-source or freakin-everybody establishes a narrative that people should get angry about this, then there will be a lot of public pressure.

[Starfisher]

Ok, super-for dummies version:

All those banks you bailed out in 2008? They scammed you to get that money. Not just a little scam, either - the biggest in financial history, blatantly illegal, completely non-productive to the real economy. If you tried to do the same thing you'd be in jail faster than you can say, "But I'm essential to the world economy so you can't touch me!"

I've been wondering if we're going to follow up this crisis with a depression-like rejection of speculation, greed and endless consumption. It took decades, nearly a half century really, before wider culture began to allow insane speculation like this to take place. Now that we're ramping ourselves up to bigger, better, more hellish Depression to come, I'd like to think that the resulting backlash would shut down derivatives desks everywhere and increase capital requirements to like 50%. But stuff like this makes me wonder how long it's going to take before that breaking point.

[Belgarion]

Banks are supposed to be banks and casinos are supposed to be casinos. These Assholes have used our money to gamble end of story. That is against the law in any civilization. Lowering LIBOR allowed them to leverage more capital that they could gamble and lose with, in my limited understanding of the situation

[Codex]

They didn't gamble with our money (assuming this is the gamble that Belgarion was speaking of, I might be wrong), it's far worse than that. It's one heck of a twisted system. Quick background: most banks (most notably over here the Bank of England) are of the Fractional Reserve setup: the bank only keeps but a fraction of the customer's deposits. The bank is then free to use the rest to lend out, make investments, whatever.

This is all good and well in an ideal capitalist setup. But what they did is they loaned out money to prospective businesses, regardless of merit and potential of the business, at high interest rates in order to make money. On the other hand in a free market, with true capitalism, money and investment should only be put into those businesses that the investor/lender thinks will be successful. The end result is that instead of having to use their brains and figuring out which investments are sound and which ones result in losses, they just throw customer money at every prospective borrower.

This is still not so bad assuming that the bankers and banks are culpable for their losses. Ideally that's the way it should work, thus they would never dream to do such a thing. However, the short version is that they get to privatise profits and nationalise losses. They padded out their results to make them look very positive, since they have many successful businesses to boot. Unfortunately, they cover up the rot that is all the poor, money black hole investments, and these losses, guess what, get paid off with taxpayer money in government bailouts. That's not capitalism, it's a brutal exploitation of the socialist aspect of our banking. They know that we rely on the banks, so they can rely on the governments to bail them out. Yay.

[Melonplant]

They didn't "scam" to get that money per say. LIBOR submissions had nothing to do with who got money and who didn't as far as I know. These desk traders will go to jail, it will just take some time.

50% capital reqs would be counter-productive. Basel 3 is pretty conservative and as I recall from the last stress test most euro banks were even more conservative aside from the problem countries Greece and Spain. More lending, less proprietary trading. Leave the gambling to us normal folks while the banks collect their rate spread.

Belgarion, lower LIBOR during the crisis meant money was cheaper for anyone with an instrument tied to it and essentially meant lower interest rates. That's a good thing in my book. The fact that the banks had to be bailed out means that they didn't have anything to leverage with in the first place. Prior to the crisis, it appears LIBOR was manipulated solely for the derivatives traders, not to boost liquidity.

[Flagg]

The more I read this thread, the angrier I get.

Will it surprise anyone else if Barclays were not the only one's doing this. I'm not just talking about in this country either. Between the original collapse of major economies in 2008, the Expenses Scandals to the Leverson Inquiry and now this, I wonder how much more the common person can take. It just seems politician, banker, media are all in this together.

[Belgarion]

Belgarion, lower LIBOR during the crisis meant money was cheaper for anyone with an instrument tied to it and essentially meant lower interest rates.

See there is where you are wrong. pensioners with large bank balances or frugal people with an interest bearing account would disagree with you. Also lending to anyone who puts their hand out isnt a good business model.
The derivatives trading is not an island of its own and these derivatives either drive up or lower the price of things as the market tries to move with the investments volumes traded

[Shoota Fodder]

I think the sheer inertia of a governmental system that's been static so long people vote along generational lines (my father voted Labour, my grandfather voted Labour etc.) seems just too big for anyone to change. People are angry but don't know what to do about it, they want change but don't know how to get it. If you live in a free and democratic society, how do you change the structure of government if the democratic process stalls?

Sorry, slightly off topic but I thought I'd dive in at this. I have a meanings to write a thread on the Independance movement in Scotland. Suddenly, people up here are realising they CAN get out the loop. However, I personally don't think it will help and will fuck up the constituent parts of the UK immensely. But then I don't know enough about it to really comment on it.

[Melonplant]

My heart bleeds for the pensioners and ridiculously rich, but investing in tbill money markets or 1 year cds isnt doing much to stimulate the economy. In the current environment, they are being adequately rewarded for the risk they take. Obviously, pensioners dont have the luxury to invest in risky assets since they dont have time on their side, but is it really the banks fault that we're all going to die?

Nobody said to lend to anyone with a whim. The credit worthy will get lower rates and those with risky plans will be charged a rate that is appropriate to the investment. It will be less because of universally lower rates. Banking 101

[Belgarion]

These traders raid companies and pillage assets to turn a quick buck and pension schemes have to invest in the money market/stocks to try and stave off declines due to inflation. Just holding on to pension funds is not an option so LIBOR an other lending rates need to be accurate for funds to best compensate their customers ie us in a few years time. Its your money they are playing with Melonplant

[Kirjava]

Tangentially related, a report by the Bureau of Investigate Journalism (covered in- yes, you guessed it- the Guardian today) has revealed that 1/6 of the House of Lords is in the pocket of the City of London and its banking interests.

I know it's starting to sound very tinfoil hat-region, but there's a reason we've got this idea of bankers as being lying cheating parasites feeding off the rest of society.

[Skullcap]

Must have been why 91 torie MPs decided to revolt on the HoL reform yesterday >.>

[Belgarion]

I bet a whole lot of undeclared interests will knock that figure up to 4 in 7

[Nurizeko]

Must have been why 91 torie MPs decided to revolt on the HoL reform yesterday >.>

No that was because the proposed reforms were pointless, we don't need a second elected chamber fighting over mandates and legislative authority etc etc, especially seeing as British democracy has functioned (objectively) well since we decided giving the common man the vote was the way to go.

Don't get me wrong systems can always be measured for improvement (FPTP is probably not ideal etc etc) but the LibDems proposed a massive constitutional overhaul.

The LibDems mean well but like stereotypical idealogical parties they seem to push policies just because they appear to suit their portfolio.

It'd been stupid to force lords reform on the entire country based on the whim of one small party in a coalition government, when they had no mandate to lead themselves.

Plus I'm not surprised the conservatives rebelled sooner, you can't put LibDems and Tories in the same room and expect them to agree, they are thematically different beasts.


the one 6th of lords apparently in the pocket of bankers is probably to do with the fact some of them are wealthy with backgrounds in banking, or know people who know people. Though I wouldn't put it past an incredibly wealthy and influential establishment to try and keep the organs of state on their side.

[Codex]

It'd been stupid to force lords reform on the entire country based on the whim of one small party in a coalition government, when they had no mandate to lead themselves.

On the other hand, supporters of the LibDems are getting more and more disillusioned as there seems to be little to no point of their participation in government. It might be the case that the LibDems have been fighting battles behind the scenes, but as far as the public are concerned they've been enablers for the Tories. Sure, the LibDems had no mandate to lead, but at the same time a minority Conservative government would've been terrible considering the economic instability that it would have brought down on us, with confidence in the UK hitting a low.

The LibDems needed to make a stand and get something out of this coalition, and they chose this. I'm still not happy, and I'm still thoroughly disillusioned with the whole charade that is politics in a 2 party system. I was so excited when I got a vote in the General Election, now I'm not sure if I'd use it come next time.

[Kirjava]

Ok, so we've been wondering about where this was going to go next. In the question of, "How will the major banks next reveal themselves to be utterly utterly corrupt?", who guessed, "Many more banks than Barclays will have been revealed to have colluded in rigging LIBOR"? Ok, a few of you. Who guessed, "Another similar sort of financial scandal"? A few more.

Who guessed, "HSBC will be revealed as having helped launder money for Mexican drug barons and terrorists"?

[Methuselath]

That HSBC case made me spit my tea today when my room mate told me about it. That's some serious stuff. I don't actually know what to say, except that some pockets will be lined, some hands greased, the media having a field day for a couple of weeks before everything dies down without any serious consequences and business continues as usual. I mean, even terrorists and drug barons needs banks no?

It's times like these that we should bring back the old method of tarring and feathering, then chase the people actively involved involved out of the village.

Well, at least I'm happy that I'm not even remotely supportive of HSB- oh shit.

/me looks at his HSBC credit card

[Melonplant]

Wow. The american bank wachovia was fined for something similar a couple years back and that was a BFD. The amount of money moved was no where near what HSBC has supposedly done:

HSBC's Mexican operations moved $7bn into the bank's US operations, and according to its own staff, much of that money was tied to drug traffickers.

Wachovia was fined dollar for dollar for all the money laundered (110 mil) plus 50 mil by US regulators. If that information is accurate, I'd be a little upset if they didn't pay penalties at least similar to what Wachovia paid.

[Carl]

So far just 630 million penalty. And UK papers where talking about the possobbility of much more money involved once other similar activities where factored in.

[Yankov]

... it's not the lib dems only on lords reform. labour and even tories talked about lords reform before election. labour is just doing the usual opposition thing of mucking up the gov.

as it stands.. instead of lords being offspring of someone who shagged the king or was his mates yonks ago, what we have now is basically party leaders stacking the lords in their favour. ie.. his mates or what not.

mind you.. party list is not necessarily the best thing to make things more accountable. because.. you guessed it.. it's more mates.

elected lords does not mean fights over who's boss with the commons. doesn't really matter if they are elected if the rules are such that they can't block stuff.

[Codex]

They can't block stuff but they can be a right pain in the arse when it comes to being able to delay stuff, in that theoretically if the house favours one party it can influence the political landscape leading up to, say, a general election.

I would hardly count that as not really mattering.