Simon Carter
The ongoing trial of former UBS and Citigroup trader, Tom Hayes, has revealed the huge scale of the 2012 Libor rate fixing scandal perpetrated by the major banks.
Eight banks and finance houses including Barclays Bank, JP Morgan, Swiss bank UBS, Royal Bank of Scotland and Deutsche Bank have already been fined billions by UK and US authorities over the scandal.
Many of these banks are also facing another tranche of hefty fines for fixing the Forex – the foreign exchange currency rates – for at least a decade.
Libor stands for the London Inter-Bank Offered Rate. It is an average interest rate calculated through submissions of interest rates by major banks in London.
The Libor prices the loans made to either building societies or commercial loans to small companies. An increase in Libor can add hundreds of pounds to households’ annual mortgage repayments or to small business loans. Libor is used in pricing $800 trillion worth of financial contracts.
Rigged
In attempting to fix the Libor rate, the banks rigged the market in its favour, making bigger profits.
During the 2007-08 world financial capitalist crisis, and subsequent credit crunch, banks were anxious about lending to one another and the Libor rate rose accordingly. If a bank looked as if it might collapse, the rate they were charged to borrow went up.
Barclay’s top management told staff to lie, saying that they could borrow at lower interest rates than they could, in order to cast the bank in a better light.
A further 20 traders have been charged following a Serious Fraud Office investigation but there were probably hundreds more involved, and none of the banks’ top fat cats have been charged.
As expected, the banks and the UK government have issued the usual statements about “tighter rules”, being “more rigorous” and ensuring “transparency”, etc.
But it’s clear that even when news of the scandal first surfaced the banks’ traders continued their crooked dealings. And, furthermore, what are the chances of new dodgy dealings of finance capital being exposed in the coming years?
It’s equally scandalous, but completely in character, that establishment party politicians ignore the only meaningful course of action to prevent these money grubbing parasites re-offending, ie nationalisation of the banks, under democratic workers’ control and management.
Then, instead of lining their pockets at our expense the huge financial funds of the banking sector could be used to finance a vast expansion of jobs, vitally needed council housing, environmentally friendly infrastructure projects, and public services as part of a socialist plan of production.
