DCSportbikes.net  
» Help Support .NET!
DCSportbikes Premier Membership for 25$ per year. Discounts! Click here for full information.

Now available in the .NET Shop:



Get your DCSBN Gear!
» Shoutbox
Sorry, only registered users have the ability to use our real-time shoutbox to chat with other members.

Register now, it's free!
» Online Users: 544
0 members and 544 guests
No Members online
Most users ever online was 4,519, September 2, 2015 at 03:26 AM.
Go Back   DCSportbikes.net > Non-Sportbike Forums > Non-Sportbike Chat

Reply
LinkBack Thread Tools
Here We Go Again: LIBOR Board Under Investigation For Trade Manipulation
Unread
  (#1)
Your Ad Here
 
Heist's Avatar
 
Posts: 32,592
Join Date: August 25, 2008
Location: Washington, D.C.
Here We Go Again: LIBOR Board Under Investigation For Trade Manipulation - March 6, 2012, 08:13 PM

Not all, but 99% of mortgages throughout the world are set to LIBOR not the Federal Funds rate.
If traders have been manipulating it, it could send shockwaves through the mortgage business and result in another global mortgage crisis.

Stories about the London Interbank Offered Rate (Libor) typically don’t set one’s heart aflutter. This one should: Investigators in the U.S. Canada, Japan, the U.K., and the European Union are trying to figure out if a handful of brokers and traders manipulated a key benchmark rate that affects the price of $350 trillion worth of securities and loans around the world. That may include your car loan or even your home mortgage. No banks or individuals have been charged with any wrongdoing. Yet even if the case fizzles out, there is something weird about an internationally recognized benchmark interest rate set by a small group of financial professionals with little transparency or regulatory oversight.

Libor is the rough equivalent of the U. S. federal funds rate—that is, the interest rate that banks charge each other. These rates, set by a 16-bank panel and calculated and published daily by Thomson Reuters on behalf of the British Bankers Association, cover a variety of currencies and time durations, from overnight to 12 months. In theory, any given Libor rate is the average bank borrowing cost for unsecured funds, based on data supplied by participating lenders and representing market conditions. Think of it as a daily temperature reading of the money markets.

A variety of U.S. mortgage products are directly influenced by these market rates. The typical American adjustable rate mortgage is indexed to the six-month Libor, plus a 2 percent to 3 percent premium, according to Investopedia. Also, when the credit markets are in turmoil, as they were in 2008, a soaring Libor rate raises funding costs for global banks. Lenders in turn typically pass those higher borrowing costs to Main Street.

In mid-February, Bloomberg News broke the story of a court filing from Canada’s Competition Bureau in which an unnamed bank alleged a scheme by bankers to manipulate the yen Libor rate to increase trading profits. Canadian regulators are trying to figure out if traders acted in unison “to see a higher or lower yen Libor to aid their trading positions,” according to the court filing. Since then, other global regulators have joined the hunt.

Money traders in London “regularly discussed where to set the measure with traders sitting near them, interdealer brokers and counterparts at rival banks,” a Bloomberg News story reported, citing money-market traders with direct knowledge of procedures at three firms who asked not to be identified because they weren’t authorized to speak about the subject. The practice became common after the money markets seized up four years ago, according to unnamed sources cited in the Bloomberg piece.

The money quote from the Bloomberg report: “A few hundred people, mostly based in one city and sitting in close proximity to each other, set an index rate for trillions of dollars of securities with little or no oversight,” said Mark Sunshine, chief executive officer and chairman of Veritas Financial Partners, a Florida-based firm that provides loans to businesses and real estate companies.

This story is still evolving, so it’s far too early to say whether anybody on planet Libor broke any laws. Yet that’s almost beside the point. The idea of a clique of money traders setting such a crucial rate without any regulatory oversight is worrisome. After all, global bankers have been known to behave badly when left to their own devices.

Bremner is an assistant managing editor for Bloomberg Businessweek
http://www.businessweek.com/articles...matters-to-you



“Any man who tries to be good all the time is bound to come to ruin among the great number who are not good. Hence a Prince who wants to keep his authority must learn how not to be good, and use that knowledge, or refrain from using it, as necessity requires”.

- Nicolo Machiavelli 1469-1527

  Facebook Page MySpace.com Page Send a message via AIM to  
Reply With Quote
Unread
  (#2)
EFI - 07/C2
 
bcr229's Avatar
 
Posts: 657
Join Date: August 27, 2011
Location: Eastern WV Panhandle
March 7, 2012, 08:12 AM

Very... interesting...


http://www.ExtremeFirepower.com/ - EFI, LLC - Custom Precision Rifles, Gunsmithing, & Machine Gun Rentals

http://www.TankVest.com/ - Attach MOLLE gear to your KLR, KTM, or VStrom gas tank

Each player must accept the cards life deals him or her, but once they are in hand, he alone must decide how to play the cards in order to win the game.
- Voltaire
  Facebook Page Send a message via AIM to  
Reply With Quote
Unread
  (#3)
GP Racer
 
DocZ's Avatar
 
Posts: 868
Join Date: June 22, 2010
Location: Not sure
March 7, 2012, 08:18 AM

A lot of private student loans use LIBOR to determine rates as well.
  Send a message via AIM to  
Reply With Quote
Unread
  (#4)
Your Ad Here
 
Heist's Avatar
 
Posts: 32,592
Join Date: August 25, 2008
Location: Washington, D.C.
March 7, 2012, 08:43 AM

^^^Didn't know this. Wow, that's going to throw a wrench into the non-Federally back student loan market as well. Prospective Grad School students are going to suffer.



“Any man who tries to be good all the time is bound to come to ruin among the great number who are not good. Hence a Prince who wants to keep his authority must learn how not to be good, and use that knowledge, or refrain from using it, as necessity requires”.

- Nicolo Machiavelli 1469-1527

  Facebook Page MySpace.com Page Send a message via AIM to  
Reply With Quote
Reply


Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


Powered by vBadvanced CMPS v3.2.3


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
Search Engine Friendly URLs by vBSEO 3.6.0
vBulletin Skin developed by: vBStyles.com
All logos and trademarks in this site are property of their respective owner. The comments are property of their posters, all the rest © 2002-2010 by DCSportbikes.net. DCSportbikes.net is owned by End of Time Studios, LLC.