If you read this space regularly you have heard of the LIBOR rate fixing scandal. Now, Rollingstone's Matt Taibbi reports about the next biggest rigging scheme in world finance. According to Taibbi, word has leaked out from London, the seeming capital of fixed finance, that ICAP, the world's largest broker of interest-rate swaps, is being investigated by the Commodity Futures Trading Commission (CFTC) for fixing a benchmark number (known as ISDAfix) used to calculate the price of interest rate swaps around the world. The market for interest rates swaps is staggeringly huge, about $379 trillion. The alleged perpetrators are familiar names to those following the machinations of the world's new Illuminati, the brokers working for international banks too big to fail. Barclays, UBS, Bank of America, JPMorgan-Chase and RBS are implicated in the latest scandal to break in public. Anti-competitive behavior becomes the norm when lucrative incentives are given to employees to make profits regardless of the rules which are distressingly vague anyway. Both the LIBOR and this new scandal relate to the setting of interest rates central to a myriad of commercial and investment transactions and indicate the existence of an international conspiracy among banksters controlling huge concentrations of capital, to collude in the fixing of prices in supposedly free markets worldwide.
Like the Mafia, these banksters are compounding their anti-social behavior, and getting away with it scott free. At the end of March a federal district judge accepted the twisted logic of the defendants in a significant class action suit for LIBOR fixing when the case was dismissed because the banks never competed against each other in the setting of LIBOR rates; therefore no anti-trust violations could legally have been committed. In fact, LIBOR rates are set in private by a committee consisting of 18 representatives of major banks. No doubt their defense was ably represented by the nations most influential law firms that employ former high-level government officials like the previous chief of the Justice Department's criminal division, Lanny Bruer, the same attorney who told Frontline interviewers he was loath to prosecute bank executives for subprime mortgage fraud. Federal District Judge Buchwald basically told plaintiff investors damaged by LIBOR rate manipulation to get real.
For the LIBOR rigging by banks investigated by both British and American financial regulators, led by an American Justice Department more worried about "collateral consequences" for the economy, the banks were let they off with just relatively small fines: Barclays, $450 million; UBS, $1.5 billion; RBS $615 million. Chump change for banks raking in hundreds of billions in profits every year, and no criminal prosecutions of individuals involved in a scam that affected the entire industrial world. Sadly, with the same officials in charge of federal law enforcement there is no reason to believe this latest example of bankster collusion will be prosecuted to the fullest extent of the law. This will be the case even though pension funds, cities, companies, and individuals may have been damaged by interest rates swaps rigged by a small group of highly paid brokers with few morals, but a big appetite for day old sushi, working at a New Jersey trading desk dubbed "Treasure Island".