Econintersect: It was reported today (13 December 2012) that UBS (Union Bank of Switzerland, NYSE:UBS) is about to reach a deal with U.S. and U.K. authorities to settle for its malfeasance in the LIBOR interest rate fixing scandal. The amount the bank will pay to resolve allegations than it tried to manipulate the widely used interest rate is rumored to be more than $1 billion. According to The Wall Street Journal the details are not complete and previous discussions have fallen apart before reaching completion. At present sources indicate a final agreement could be announced before Christmas.
Click on cartoon for larger view of modern banking operations.
A billion dollar settlement would be much larger than the payment made by Barclays, the bank whose activities broke the entire scandal, which may involve 16 or more of the world's largest banks. Barclays has made a settlement payment of $450 million to U.S. and UK regulators. The potential for fines in this case seems to be in the range of $20 billion (+/-). With fines and settlement costs for various aspects of illegal mortgage activities in the U.S. seemingly headed into the $50 billion to $100 billion range, a billion dollars for an individual megabank might be call "chump change." Econintersect would suggest that the one making such payment is not the chump.
Two days ago three traders were arrested in London in connection with the scandal. (See GEI News.) The three have not been identified, but are believed to be current or former employees of Barclays Bank. Many believe that Barclays has been able to get a lower settlement payment because of its cooperation with investigators.
Click on image below to watch video at The Wall Street Journal.
The collossal nature of this fraud proves that crime does pay. The banks invovlved pay off the cops with a billion here and a billion there and go unscathed. It's merely a cost of doing business.
From Larry Doyle at Sense on Cents blog:
It is insulting to those who have even an ounce of decency in their body to think that institutions such as Barclays, UBS, and certainly many more can engage in the “biggest financial fraud of all time” and simply write a check for their complicity.
It seems that the going price for the ounce of decency Larry mentions may be about $1 billion.
- UBS Faces $1 Billion Fine Over Libor (David Enrich and Jean Eaglesham, The Wall Street Journal, 13 December 2012)
- UBS Faces $1 Billion Fine Over Libor (Video, The Wall Street Journal, 13 December 2012)
- Bank Fraud: Underlings Arrested, Banks Too Big to Indict (GEI News, 12 December 2012)
- Libor Scandal: “Biggest Financial Fraud of All Time” (Larry Doyle, Sense on Cents, 13 December 2012)