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LIBOR LIEBOR on the WALL

AP's Protection of Geithner in 'Lie-bor' Scandal Continues

My, it was awfully nice of Marcy Gordon at the Associated Press, aka the Administration's Press, to give Treasury Secretary Tim Geithner such excellent protection in her report on the New York Federal Reserve Bank's release of documents relating to its knowledge of the manipulation of the "Libor" (London interbank offered rate) used as the basis for the pricing of trillions of dollars of loans.

Her report's second paragraph only tells readers that Geithner, "who was then president of the New York Fed, urged the Bank of England to make the rate-setting process more transparent." What a helpful guy. Readers needed to go to Paragraph 12 to see more about Geithner, and even that information was given kid-glove treatment:

Read more: http://newsbusters.org/blogs/tom-blumer/2012/07/13/aps-protection-geithner-lie-bor-scandal-continues#ixzz22JY4YnJg

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EDVARD MUNCH: I SCREAM FOR ICE CREAM

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LIBOR LIEBOR on the WALL 

The Mosaic Continues Piece by Piece

http://dealbook.nytimes.com/2012/07/19/libor-scandal-shows-many-flaws-in-rate-setting/?ref=global-home

JULY 19, 2012, 7:34 PM

Libor Scandal Shows Many Flaws in Rate-Setting

By PETER EAVIS and NATHANIEL POPPER

It is an open secret in the banking world: the interest rates for many mortgages and loans are based on a benchmark that is largely guesswork.

The flaws in the rate-setting process, which is used to determine the pricing for trillions of dollars of financial products, have been exposed by the latest banking scandal. Regulators around the world are investigating whether big banks gamed the rates for their own benefit before and after the financial crisis.

But even if banks do not deliberately manipulate the rates, the benchmark remains vulnerable.

Banks derive the rates from estimates rather than real market data. So the benchmark, a measure of how much banks charge each other for loans, does not necessarily represent actual borrowing costs. This weakness has only been exacerbated in recent years, as banks have mostly stopped lending to each other.

The Federal Reserve chairman, Ben S. Bernanke, told Congress this week that he did not have "full confidence" in the process, calling it "structurally flawed."  (continue at NYT Deal Book)

LIBOR:Once Again History Repeats Itself

LIEBOR Scandal Widens

Evokes mid 80s Prime Rate Lawsuits

Jackie Kleiner sure knew how to scare the shit out of bankers back in the mid 80s.  Seems banks had forgotten to change their definition of the Prime Rate in the loan docs.  They called it the rate they lend at to their best customers. That was true until it wasn't.  To keep up  with the  Joneses (European banks)  US banks  started moving away from Prime as the base rate.  They started lending to large corporate credits using LIBOR as the base rate which just happened to be hundreds of basis points below prime.   Hence they were lending  to their best customers like Coca Cola at LIBOR plus 50bp say 7.5% when Prime was 13% to the 99%:  the bankers held Prime artificially high just because they could milk the average cow dry.  This definitely came back to bite them in the ass when a small time attroney figured it all out and sued the sons-a-bitches.

Maybe the LIBOR police should take a look at history repeating.  Attorney Generals, time rev up your engines.  

http://www.nytimes.com/1984/02/03/business/suit-tests-prime-s-definition.html