Categorized | Crime, National

California Counties Claim LIBOR-Rigging Cost Them Millions

 

What’s in Your Wallet?

 

Skippy Massey
Humboldt Sentinel

 

 Eight California counties and public entities sued UBS Bank, Barclays Bank, Bank of America, Citibank, JP Morgan Chase, and other banks alleging they defrauded
and lost millions of dollars because the financial institutions
manipulated, fixed, and lied about the benchmark LIBOR rate.

bag of moneyComplaints were filed today in federal court in Los Angeles, San Francisco and San Diego on behalf of the counties of San Diego and San Mateo, the city of Riverside, the city of Richmond, and four other entities against 22 current and former banks that set LIBOR rates, law firm Cotchett Pitre & McCarthy LLP said in a statement.

The lawsuits filed today allege violations of antitrust laws, negligence and unjust enrichment and seek to recover losses and triple damages.  The plaintiffs claim they were cheated out of higher interest payments on investments such as interest-rate swaps and corporate bonds tied to LIBOR.

libor2LIBOR, or the “London Interbank Offered Rate,” is the world’s benchmark interest rate used for setting short-term interest rates on a wide range of financial instruments – from simple car loans, mortgages, student loans, and credit cards to complex municipal derivative investments by public entities.

LIBOR-based investments are in the trillions of dollars every year.  About 90 percent of US commercial and mortgage loans are linked to the index

LIBOR is based on a self-reporting British Bankers’ Association daily survey that asks lenders to estimate
and average how much it would cost to borrow money from each other for various periods in 10 different currencies.  It is accepted by the global financial system as the true cost of borrowing between financial institutions because it was believed to represent the true interest rate at which borrowers are able to borrow money.

lie boreJohn C. Beiers, County Counsel for San Mateo County, said in the statement Wednesday, “LIBOR was manipulated on a global scale, and it’s a sad fact that the rigging of LIBOR is just another outrageous example of how self-regulated financial markets take advantage of average hardworking people and Main Street public entities.”

San Mateo County Supervisor Don Horsley added, “It’s the local taxpayers and those that need services such as healthcare that suffer when these global institutions think only about their bottom line, and nothing about who they might harm.  We are going to aggressively pursue this lawsuit and others to ensure that these faceless and heartless
institutions do not benefit at the expense of those in need.”

Banks already face 30 lawsuits by U.S. homeowners and other plaintiffs seeking to hold them responsible for alleged manipulation of the rate used as a borrowing-cost benchmark.  A class-action lawsuit filed in Manhattan in October by homeowners alleges a conspiracy among financial institutions drove up the cost of mortgage loans.

fixed ratesBarclays Bank last year settled criminal allegations of fixing LIBOR rates, leading to multiple lawsuits and investigations of major banks on at least two continents.

Between 2005 and 2007, Barclays, UBS and other banks systematically conspired and inflated their borrowing cost estimates to the LIBOR board in order to drive up the LIBOR rate and increase their profits on derivatives linked to it.  After 2007, when the global financial crisis intensified, the banks lowballed their submissions to LIBOR in order to mask their financial weaknesses and lower their borrowing costs.

By manipulating the rate upward, the banks robbed countless millions of people of billions of dollars in inflated loan costs.  By manipulating the rate downward, they deprived states, cities, pension funds and retirees with fixed investments of untold billions in revenues from bond holdings.

* * * * * * * *

If you haven’t heard of LIBOR– or the LIBOR scandal yet– you will.  It’s a very, very big deal.  Knowledgeable insiders are begging the question as to whether US interest rates have been equally and similarly fixed.

There has been so much crime, collusion, and corruption lately between banks and Wall Street it’s been hard to keep up, friends.  Greed and gluttony have no boundaries, few regulations, and even fewer still have gone to jail.

Corruption is worse than prostitution.  The latter might endanger the morals of an individual, but the former invariably endangers the morals of entire institutions.

(Posted by Skippy Massey)

Leave a Reply

HumSentinel on Twitter

RSS Progressive Review

  • Pocket paradigms
    You meet alot of process people in Washington. They're like vehicles without a drive belt. They make a lot of noise; they just can't go anywhere. Getting things done is now a radical act. Then there are the virtual people. They only exist as images of themselves. Talking to one of them is like watching a bad cable show without a zapper. Some scient […]
  • Word
    It's what you learn after you know it all that counts -- Baltimore Orioles manager Earl Weaver […]
  • William Burroughs getting in the Halloween spirit
    VIA CURTIS KISE […]
  • Down East Notes
    PUBLIC INFORMATION ANNOUNCEMENT Town of Freeport, MEOn Monday evening, October 27, 2014, the Maine State Police informed Freeport’s Police and Fire Departments that Ms. Kaci Hickox would be stopping in Freeport for one night on her way to her home in Fort Kent. Ms. Hickox is a healthcare worker who recently returned to the United States after caring for Ebol […]
  • The new Middle Ages
    Some readers may recall our occasional thesis that we are living in a new Middle Ages in which the masses are up against a relatively few paranoid lords in well moated castles aka Washington and NYC. We were please to find that Monty Python was on this case some time ago.VIDEO […]
  • Mid and late career teachers are underpaid
    Center for American Progress:Mid- and late-career teacher base salaries are painfully low in many states. In Colorado, teachers with a graduate degree and 10 years of experience make less than a trucker in the state. In Oklahoma, teachers with 15 years of experience and a master’s degree make less than sheet metal workers. And teachers in Georgia with 10 yea […]
  • What's happening
    What happens when you criticize Teach for America? Over 214,000 doctors won't participate in the new plans under the Affordable Care Act analysis of a new survey by Medical Group Management Association shows. It's about a quarter of the total number of 893,851 active professional physicians reported by the Kaiser Family Foundation.The 29 states whe […]
  • FBI comes up with new assault on Constitution
    Guardian - The FBI is attempting to persuade an obscure regulatory body in Washington to change its rules of engagement in order to seize significant new powers to hack into and carry out surveillance of computers throughout the US and around the world.Civil liberties groups warn that the proposed rule change amounts to a power grab by the agency that would […]
  • How corporations staged a coup against America
    Vox - In September, a proposal to amend the US Constitution to allow tougher campaign finance and election spending restrictions went down to defeat in the Senate, on a party-line vote. Now, a new analysis by Common Cause rounded up the latest lobbying filings to find which interest groups disclosed lobbying against this amendment.There are no great surprise […]
  • US kept jailing people despite drop in crime
    OFF THE CHARTS […]
  • White House coverup of the day
    Washington Post - Bloomberg White House correspondent Margaret Talev noted how the White House stopped giving details on the fine wines served at state dinners, an opaque measure that she exposed in this story. In pursuing the piece, said Talev, she got the runaround from White House press officials, making her “so mad at them.” […]
  • Word: The space explosion could have been worse
    Karl Grossman - This event underlines again the folly of using nuclear power in space — something the United States and Russia are again actively planning. An explosion on launch is not unusual — indeed, one out of 100 rockets fail on launch. But, consider if radioactive materials were on board — as will be the situation for the proposed U.S. and Russian nuc […]
  • The real Clinton story: 1982
    Stories the media doesn't tell you about the Clintons and the state that made them  A DEA report uncovered by Ambrose Evans-Pritchard will cite an informant claiming that a key Arkansas figure and backer of Clinton "smuggles cocaine from Colombia, South America, inside race horses to Hot Springs." The London Telegraph's Ambrose Evans-Pric […]
  • Real economics: Wages
    Among all employees nationally, 56 percent are hourly workers, and 32 percent of these, or more than 21 million, earn less than $10.10 per hour, according to University of Virginia researchers in the Weldon Cooper Center for Public Service’s Demographics Research Group. The Labor Department reports that the 13 states that raised their minimum wage in 2014 ha […]
  • Pocket paradigms
    A real simple rule on privatization: Ask the following question: Is this something about which citizens should have a say? If the answer is yes, don't privatize. - Sam Smith […]