Many Wall Street executives says wrongdoing is necessary: survey
Tue Jul 10, 2012 10:07am EDT
(Reuters) - If the ancient Greek philosopher Diogenes were to go out with his lantern in search of an honest man today, a survey of Wall Street executives on workplace conduct suggests he might have to look elsewhere.
A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday.
In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.
Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.
"When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk," Jordan Thomas, partner and chair of Labaton Sucharow's whistleblower representation practice, said in a statement.
http://www.reuters.com/article/2012/07/10/us-wallstreet-survey-idUSBRE86906G20120710
Quote
24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.
It's pretty sad when "success" is measured solely in dollars and cents. We have come to discount honesty, integrity, work ethic and our personal reputations in our quest for the fast buck.
Call me cheesy, but if there is one movie line that haunts me, it's the end of Saving Private Ryan, when he looks to his wife and says "Tell me I've led a good life. Tell me I'm a good man."
75% say it is unnecessary...
Quote from: finehoe on July 11, 2012, 11:22:08 AM
Quote from: fsquid on July 11, 2012, 10:38:34 AM
75% say it is unnecessary...
Not very good odds.
Better than half. ;)
Just to ask the questions:
Is there a poll that asks contractors if they routinely skip/shortcut (in essence, lie) parts of the job to keep them on time and on budget?
Is there a poll that asks cops is they feel the need to (sometimes) break the law in order to protect better?
Is there a poll that asks teachers if sometimes they feel the need to break school rules in order to get their message across to students better?
Just sayin'.
^^^^+ 1,000
There is greed/rule breaking everywhere. For a while it was only Big Oil that was evil. Now it is Big Wall Street. It's always Big Something [private] and soon it will be some other Big Industry du jour.
One thing never changes - the amount of crooks running the country, aka Congress. They "inside trade" more than anyone on earth, and get away with it! They write the laws that impact Wall St and every industry!
Quote from: simms3 on July 11, 2012, 12:53:13 PM
They write the laws that impact Wall St and every industry!
So who do you think is pulling their strings? Or do they write these laws just for the hell of it?
Quote from: finehoe on July 11, 2012, 12:56:47 PM
Quote from: simms3 on July 11, 2012, 12:53:13 PM
They write the laws that impact Wall St and every industry!
So who do you think is pulling their strings? Or do they write these laws just for the hell of it?
Their Campaign donors, of course.
We can call them "Big Money."
That's at least partly tongue-in-cheek, but mostly true nonetheless.
Quote from: Doctor_K on July 11, 2012, 01:09:34 PM
We can call them "Big Money."
You mean
this big money?
http://www.huffingtonpost.com/2012/01/27/wall-street-political-donations_n_1237573.html
finehoe, wrong premise. The lobbying system we have has developed as a response to the complicated nature of 20th/21st century markets, industries and regulations, and largely because Congress has incubated the lobbying system themself for personal gain as has been documented time and time again.
Do you really think members of Congress know enough about the financial markets, currency, f/x, trade, transportation, marketing, and various industries to write laws about them, let alone simple 10 page laws? Do you think if things were that simple Congress would choose to do its job and keep things clean and simple and return home to the PRIVATE SECTOR when all is said and done (rather than live off their lifelong extreme benefits/pay they pass for themselves)?
I say no to either question.
Most industries/corporations have little chance to operate outside of the lobbying world nowadays, and even if they could Congress has made it much easier and more rewarding to come to them through lobbyists rather than duke it out traditional ways or suck it up with tough luck. Congress is the hand that feeds everyone now, so of course "Wall St fat cats" would ultimately go through Congress to ensure certain laws that benefit them pass...and who else benefits? Congressmen who can legally trade on that information and basically take legal bribes.
Chicken or the egg. Who was evil first - Congress or Wall St? I say Congress as power trumps money as a corrupting factor.
There are people who lack ethics in every profession be it finance, teaching, construction, government, or any other industry.
To those of you who think that having (at least) 25% of our financial system run by crooks is acceptable, would you be so cavalier if the headlines read
A quarter of construction executives see shoddy workmanship as a key to successA quarter of physicians see malpractice as a key to successA quarter of child care workers see wrongdoing as a key to successWall Street is hardly the villain
du jour. The only thing different is that their crimes are now being exposed, despite the lack of coverage in the mainstream media.
The financial system has become a culture of white collar crime and control fraud. We all know it by now.
Bad behavior drives out the good, if the bad behavior is seen to be a quick route to success amongst the morally weak and ambivalent.
The government, the regulatory bodies, the media, economists, and the corporate executives bear a heavy responsibility for this.
They will not admit it, and they cannot reform it, because they themselves are caught in the credibility trap.
Right now white collar crime in the financial system is all carrots and no sticks. The problem is obvious.
Quote from: simms3 on July 11, 2012, 01:26:37 PM
Chicken or the egg. Who was evil first - Congress or Wall St? I say Congress as power trumps money as a corrupting factor.
I disagree. He who pays the piper calls the tune.
I personally don't find any of it acceptable, I was just pointing out that it happens in all industries, across the board.
I also wouldn't find any of the three headlines completely shocking. It's just that the other industries that have been mentioned tend to reveal their true selfs sooner rather than later due to the nature of exposure.
I agree with you that the corruption seems to run all the way to the penthouse (or white house, same difference); so how do you tamp it down? How do you prevent the next crisis?
Quote from: Non-RedNeck Westsider on July 11, 2012, 03:24:33 PM
so how do you tamp it down? How do you prevent the next crisis?
My personal opinion is it won't be tamped down until another crisis does happen. Nothing was fixed after the '08 meltdown, nobody of any consequence went to jail, so the shananigins continue, business as usual. My fear is that the next crisis will result in huge numbers of people losing everything they own and will make the current economic difficulties look like boom times before any real measures will be taken to reel these criminals in.
And of course by then it will be too late for many of us.
I don't think anyone is saying it is acceptable, just saying that Wall Street isn't "special" in this instance.
Quote from: fsquid on July 11, 2012, 04:28:40 PM
I don't think anyone is saying it is acceptable, just saying that Wall Street isn't "special" in this instance.
They're "special" in that their actions effect almost everyone in ways that most other professions don't.
"He who controls the money supply of a nation controls the nation." President James A. Garfield
I see corporate and wall street abuse worse than murder rape or treason...the repercussions are far and wide yet he or she has no hide off of their ass at all...at lease a murder will more than likely go to jail the same with rapist...these guys go home and have dinner with their hookers and worries for nothing.
Quote from: finehoe on July 10, 2012, 04:31:08 PM
Many Wall Street executives says wrongdoing is necessary: survey
Tue Jul 10, 2012 10:07am EDT
(Reuters) - If the ancient Greek philosopher Diogenes were to go out with his lantern in search of an honest man today, a survey of Wall Street executives on workplace conduct suggests he might have to look elsewhere.
A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday.
In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.
Sixteen percent of respondents said they would commit insider trading if they could get away with it, according to Labaton Sucharow. And 30 percent said their compensation plans created pressure to compromise ethical standards or violate the law.
"When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk," Jordan Thomas, partner and chair of Labaton Sucharow's whistleblower representation practice, said in a statement.
http://www.reuters.com/article/2012/07/10/us-wallstreet-survey-idUSBRE86906G20120710
Bernard Madoff thought wrongdoing was necessary as well. He'll have over a hundred years in a cell to possibly rethink that.
Quote from: finehoe on July 11, 2012, 04:32:22 PM
Quote from: fsquid on July 11, 2012, 04:28:40 PM
I don't think anyone is saying it is acceptable, just saying that Wall Street isn't "special" in this instance.
They're "special" in that their actions effect almost everyone in ways that most other professions don't.
"He who controls the money supply of a nation controls the nation." President James A. Garfield
"Ways other professions don't?"
Are you for real, hoe?
So when a teacher molests a student, causing that poor child's life to be changed forever when it comes to their sexual life, trust, and their own state of mind...
When a doctor harms or kills a patient due to their negligence, causing the victim's family distress....
Wrongdoing in any profession negatively effects many people. Does not always have to involve a financial profession.
Quote from: Tamara-B on July 11, 2012, 05:59:36 PM
Bernard Madoff thought wrongdoing was necessary as well. He'll have over a hundred years in a cell to possibly rethink that.
Madoff isn't even in the same league as these people. The fact that you would think he is an example shows you need to educate yourself on the crimes of the TBTF banks.
Quote from: Tamara-B on July 11, 2012, 06:14:32 PM
Are you for real, hoe?
So when a teacher molests a student, causing that poor child's life to be changed forever when it comes to their sexual life, trust, and their own state of mind...
When a doctor harms or kills a patient due to their negligence, causing the victim's family distress....
Wrongdoing in any profession negatively effects many people. Does not always have to involve a financial profession.
Yes I'm for real. Are you? Do you really think a single teacher molesting a student or even a string of students is the equivalent of a broker manipulating stock trades so that millions of people have the values of their 401k's wiped out? Do you actually think that banksters knowingly packaging worthless mortgages together and selling them as AAA rated securities that later lead to a crash in the housing market when it turns out they are valueless, throwing millions of people out of their homes, is the equivalent of a negligent doctor? Are financial crooks manufacturing a run on a country's currency which drives millions into poverty the moral equivalent of someone robbing a convenience store?
That you can't see the difference in the scale of these crimes is baffling to me. It's like saying there is no difference between a murder on the street and the holocaust because they both resulted in death.
Quote from: finehoe on July 11, 2012, 06:41:59 PM
Do you actually think that banksters knowingly packaging worthless mortgages together and selling them as AAA rated securities that later lead to a crash in the housing market when it turns out they are valueless...
On this point alone, how many of these
fraudsters banksters - the ones that knew everything was worthless - hedged against the securities actually failing by short selling the whole lot, essentially running the gambit twice in one play. I really hope there's a special place in hell for those mother fuckers to rot. (if you believe in hell, if not... can we just bury them in the desert where we know it will be hot.)
Quote from: finehoe on July 11, 2012, 06:41:59 PM
Quote from: Tamara-B on July 11, 2012, 05:59:36 PM
Bernard Madoff thought wrongdoing was necessary as well. He'll have over a hundred years in a cell to possibly rethink that.
Madoff isn't even in the same league as these people. The fact that you would think he is an example shows you need to educate yourself on the crimes of the TBTF banks.
Quote from: Tamara-B on July 11, 2012, 06:14:32 PM
Are you for real, hoe?
So when a teacher molests a student, causing that poor child's life to be changed forever when it comes to their sexual life, trust, and their own state of mind...
When a doctor harms or kills a patient due to their negligence, causing the victim's family distress....
Wrongdoing in any profession negatively effects many people. Does not always have to involve a financial profession.
Yes I'm for real. Are you? Do you really think a single teacher molesting a student or even a string of students is the equivalent of a broker manipulating stock trades so that millions of people have the values of their 401k's wiped out? Do you actually think that banksters knowingly packaging worthless mortgages together and selling them as AAA rated securities that later lead to a crash in the housing market when it turns out they are valueless, throwing millions of people out of their homes, is the equivalent of a negligent doctor? Are financial crooks manufacturing a run on a country's currency which drives millions into poverty the moral equivalent of someone robbing a convenience store?
That you can't see the difference in the scale of these crimes is baffling to me. It's like saying there is no difference between a murder on the street and the holocaust because they both resulted in death.
NO! I actually think a wounded child, physically and mentally, is worse. Not EQUAL!
"These people?"
Bernard Madoff was a sociopath who thought wrongdoing was necessary, as well and look where that got him. That's the point I was trying to make. Wrongdoing only goes so far, but it always catches up to you eventually.
finehoe, no offense, but you don't even know how the financial systems, more particularly the intricacies of domestic equities trading or what not works. Neither do I. Therefore I'm not going to make accusations that i have no place making, and neither should you.
I assume you don't subscribe to the Journal (I do), because if you did you would see that regulators across the globe have been cracking down hard and it is difficult to get away with anything longer than a year (every other front page is someone getting in trouble now). There is a major LIBOR interest rate manipulation scandal ongoing and regulators in multiple countries are investigating much more rigorously than regulators of other industries typically investigate and people who "technically" didn't do anything wrong are still getting into a boatload of trouble, etc. Not only that, their faces and names are plastered across the largest news publications and their private lives are now completely public.
I'd say they face much more pain from "wrongdoing" than you or I would in our respective industries (well I'm in private finance myself, but regardless...a peion analyst at that).
As you say, those in charge of money have greater responsibility that affects more lives, but as such, they also face not only greater rewards for doing things well and correctly, they face much harsher punishment and greater likelihood of getting caught than most. The door swings both ways.
Quote from: stephendare on July 11, 2012, 08:30:35 PM
Actually, none of the Wall Street bankers that enabled Madoff have ever been charged with a single crime.
Neither have the bankers in the Enron scandal, but regulators dropped the ball there and so it is difficult to bring charges. Now regulators are a lot more on top of things. Bernie's brother just got 10 years or something like that for being complicit.
Quote from: Tamara-B on July 11, 2012, 08:29:35 PM
NO! I actually think a wounded child, physically and mentally, is worse. Not EQUAL!
Harming one child is worse than harming millions of people.
Whatever.
Quote from: simms3 on July 11, 2012, 08:31:50 PM
finehoe, no offense, but you don't even know how the financial systems, more particularly the intricacies of domestic equities trading or what not works.
I don't? I worked on Wall St. for twenty years and have seen the fraud and white collar criminality up close and personal. I can assure you I know the intricacies better than most.
Quote from: simms3 on July 11, 2012, 08:31:50 PMThere is a major LIBOR interest rate manipulation scandal ongoing and regulators in multiple countries are investigating
Yes, I am aware of the LIBOR scandal. That you think you need to tell me about it just shows how little attention it has received in the US press. For the most part the reaction this side of the Atlantic has been a collective shrug, but it is a very big deal. Hopefully it will result in some crackdowns, but the London banksters control their government to an even greater degree than the Wall St. banksters control ours, so I wouldn't count on it. The best hope is that EU regulators latch on to it and refuse to back off. We'll see.
Your insight could add to our understanding (or lack thereof). Hypothetically of course... suppose you saw or detected fraud by one or a group of individuals in your firm... what is your recourse? What would one do to stop a bad practice? Do you call up a regulator? Go to the CEO? HR?
Just tryin to understand... :)
Quote from: BridgeTroll on July 12, 2012, 10:21:37 AM
Your insight could add to our understanding (or lack thereof). Hypothetically of course... suppose you saw or detected fraud by one or a group of individuals in your firm... what is your recourse? What would one do to stop a bad practice? Do you call up a regulator? Go to the CEO? HR?
You leave, which is what I did. The rot is so entrenched, so pervasive (see original article that started this thread), and the regulators are in the pocket of the industry, there really isn't much one person can do. Cowardly perhaps, but that was the choice I made.
Quote from: finehoe on July 12, 2012, 07:37:08 AM
Quote from: Tamara-B on July 11, 2012, 08:29:35 PM
NO! I actually think a wounded child, physically and mentally, is worse. Not EQUAL!
Harming one child is worse than harming millions of people.
Whatever.
A wise man once said "People who have nothing intelligent to say, say 'Whatever!' "
Perhaps I should have worded my argument differently. My point is there are worse things in life than financial loss. I don't claim to be the most intelligent about such cases, as I'm sure you are the most intelligent one on this entire site. Then again, I havent been dealt with such heavy financial loss. So, if I ever find myself in that situation, perhaps I'll sing a different tune. I can admit that.
Quote from: finehoe on July 12, 2012, 10:46:42 AM
Quote from: BridgeTroll on July 12, 2012, 10:21:37 AM
Your insight could add to our understanding (or lack thereof). Hypothetically of course... suppose you saw or detected fraud by one or a group of individuals in your firm... what is your recourse? What would one do to stop a bad practice? Do you call up a regulator? Go to the CEO? HR?
You leave, which is what I did. The rot is so entrenched, so pervasive (see original article that started this thread), and the regulators are in the pocket of the industry, there really isn't much one person can do. Cowardly perhaps, but that was the choice I made.
Not cowardly as far as I can tell. What would a person do who chose to confront or report abuse or fraud. I know you said not much but there must be at least a "sham" system in place to report these things.
Quote from: BridgeTroll on July 12, 2012, 02:22:41 PM
... there must be at least a "sham" system in place to report these things.
Sure, for blatant things like, say, depositing a clients funds in your personal account or something like that. But you have to understand that the whole system is built on skirting the law, not breaking it. This results in things like the big trading houses paying more to the exchanges to get trade information a half-second before the public. May sound trivial, but in an age of High Frequency Trading, those milliseconds can result in everyday investors being bilked out of millions. Illegal? Maybe, maybe not. The regulators know; they look the other way. The whole edifice is built on little tricks like this that can be plausibly denied, yet when you add them all up, they make a lot of money for those inside the club. And when they're making money, it means somebody else is losing money. Three guesses on who the losers are.
Quote from: finehoe on July 12, 2012, 02:37:41 PM
Quote from: BridgeTroll on July 12, 2012, 02:22:41 PM
... there must be at least a "sham" system in place to report these things.
Sure, for blatant things like, say, depositing a clients funds in your personal account or something like that. But you have to understand that the whole system is built on skirting the law, not breaking it. This results in things like the big trading houses paying more to the exchanges to get trade information a half-second before the public. May sound trivial, but in an age of High Frequency Trading, those milliseconds can result in everyday investors being bilked out of millions. Illegal? Maybe, maybe not. The regulators know; they look the other way. The whole edifice is built on little tricks like this that can be plausibly denied, yet when you add them all up, they make a lot of money for those inside the club. And when they're making money, it means somebody else is losing money. Three guesses on who the losers are.
So which is a more accurate portrayal, "Wall Street" or "Boiler Room"? ;D
Quote from: Non-RedNeck Westsider on July 12, 2012, 02:51:33 PM
So which is a more accurate portrayal, "Wall Street" or "Boiler Room"? ;D
This one: http://www.sonyclassics.com/insidejob/
Quote from: finehoe on July 12, 2012, 02:37:41 PM
Quote from: BridgeTroll on July 12, 2012, 02:22:41 PM
... there must be at least a "sham" system in place to report these things.
Sure, for blatant things like, say, depositing a clients funds in your personal account or something like that. But you have to understand that the whole system is built on skirting the law, not breaking it. This results in things like the big trading houses paying more to the exchanges to get trade information a half-second before the public. May sound trivial, but in an age of High Frequency Trading, those milliseconds can result in everyday investors being bilked out of millions. Illegal? Maybe, maybe not. The regulators know; they look the other way. The whole edifice is built on little tricks like this that can be plausibly denied, yet when you add them all up, they make a lot of money for those inside the club. And when they're making money, it means somebody else is losing money. Three guesses on who the losers are.
This sounds like it must be a worldwide phenomenon....
Quote from: BridgeTroll on July 12, 2012, 03:57:18 PM
This sounds like it must be a worldwide phenomenon....
Oh, it's by no means a US-only phenomenon. As I mentioned above, the desks in London are manned by just a big of crooks as the ones here. But the American equities market is the worlds biggest and richest, so naturally it attracts the biggest scammers.
The Market Has Spoken, and It Is Rigged
In the aftermath of the Barclays rate-fixing scandal, the most surprising reaction has been from people in the financial sector who fully understand the awfulness of what has happened. Rather than seeing this as an issue of law and order, some well-informed people have been drawn toward arguments that excuse or justify the behavior of the Barclays employees.
This is a big mistake, in terms of the economics at stake and the likely political impact.
The behavior at Barclays has all the hallmarks of fraud â€" intentional deception for personal gain, causing significant damage to others.
The Commodity Futures Trading Commission nailed the detailed mechanics of this deception in plain English in its Order Instituting Proceedings (which is also a settlement and series of admissions by Barclays). Most of the compelling quotes from traders involved in this scandal come from the commission’s order, but too few commentators seem to have read the full document. Please look at it now, if you have not done so already.
The commission’s order portrays a wide-ranging conspiracy (or perhaps a set of conspiracies) to rig markets, including, but not limited to, any securities for which the price is linked to a particular set of short-term interest rates.
The collective term for these rates is the London Interbank Offered Rate, known as Libor, but the use of this nomenclature sometimes hides the fact that there is a separate Libor daily for each of 10 currencies at 15 maturities, from overnight to 12 months, according to the British Bankers Association. The notional size of the derivatives involved is on the order of $360 trillion.
Barclays could not have manipulated those rates by themselves â€" and that is not what the C.F.T.C. found or the basis of the Barclays settlement. Rather, some Barclays employees colluded with people at other banks in a way that, over a period of years, moved Libor rates up and down, depending on what would favor the trading positions of the people and organizations involved.
Each Libor “panel†of banks involves seven to 18 banks. Participating banks submit the rate at which they can supposedly borrow at a particular maturity and in a specified currency, and an average is calculated (taking out high and low values). No one bank is likely to be able to move the calculated Libor rates by itself.
Once the global financial crisis began to bite, there appears to have been a more systematic manipulation of Libor reporting by Barclays management in a particular direction â€" downward, to make it seem that the bank was healthier and therefore able to borrow from other banks at a cheaper rate.
George Osborne, Britain’s chancellor of the Exchequer (the equivalent position to the secretary of the Treasury) and a Conservative Party member, said recently, “Fraud is a crime in ordinary business; why shouldn’t it be so in banking?†The answer, of course, is that fraud is not allowed in any well-run country.
Anyone who takes personal responsibility seriously should want all those involved to be held accountable â€" to the full extent of the law in all jurisdictions. Anything that lets individuals escape consequences will further undermine the legitimacy that underpins all markets. Bankers should be leading the charge to clean up their industry.
Nevertheless, five arguments put forward in the last 10 days, singly or collectively, attempt to provide some sort of cover for what happened at Barclays. None of these arguments have any merit.
First, it is argued that this kind of cheating around Libor has been going on for a long time. This may be true, but it is a sad and lame excuse that is unlikely to get anyone off. The bigger question must be: Is the financial sector crooked at its core? Statements about a pattern of behavior only strengthen the case that incentives, culture and organizations are all badly broken at the heart of the world’s financial system.
Second, it is also asserted that “everyone does it.†This is not any kind of defense â€" try it next time you are accused of fraud. But the perception that many people could be involved is part of the reason why this scandal has legs. A broad range of involvement across the financial sector is consistent with what is in the C.F.T.C. order â€" although the full scope of the conspiracies has not yet been made clear.
There are three United States banks involved in Libor panels: JPMorgan Chase, Bank of America and Citigroup. Are they also implicated in some aspect of rigging interest rates and therefore securities prices?
Barclays was the first to settle with the C.F.T.C., presumably enabling investigators to gain better access to information about who else is involved. It would not be a surprise if bigger fish are still to come.
Third, Libor-rigging is defended as a “victimless crime.†This is untrue. Traders at Barclays and other banks gained from this series of manipulations, so someone else lost. That may have been investors, who received lower returns than they would have otherwise. Or it may have been borrowers, who paid higher interest rate and related costs than would have been necessary in an honest market. Other losers are presumably everyone who was effectively overcharged by all the intermediaries involved in crooked behavior. Some local governments have also lost heavily, at a time when these losses put pressure on essential services and will tend to increase taxes.
Honest people in the financial sector should be up in arms about the behavior of Barclays and other megabanks.
Fourth, some contend that it is the regulators’ responsibility and fault that there was cheating on Libor. It is certainly the case that there was regulatory capture at work â€" that is, officials in Britain, the United States and perhaps elsewhere should have been paying closer attention. I made exactly this point on National Public Radio’s “All Things Considered†last Saturday.
The mystique of the financial sector wowed many people â€" including many prominent policy intellectuals, Democratic and Republican â€" in the years before 2008. But who does the capturing in regulatory capture? Big banks work long and hard and lobby at many levels to push regulators toward paying less attention.
Fifth, the weakest argument is, “It was only a few basis points, here and there†(where a basis point is a hundredth of a percentage point, i.e., 0.01 percent). Either the Libor reporting process and, consequently, the pricing of derivatives has been corrupted by a criminal conspiracy, or it has not. There is no “just a little†in this context for the enormous global securities market.
Robert E. Diamond Jr., who resigned last week as chief executive of Barclays, reportedly said, “On the majority of days, no requests were made at all†to cheat on Libor. The Economist, which does not make a general habit of criticizing prominent people in the financial sector, observed, “This was rather like an adulterer saying that he was faithful on most days.â€
Mr. Diamond has fallen. Who is next? How will this play in American politics? There is still time for politicians on the right and on the left of the political spectrum to get ahead of the issue. Digging in around specious arguments in favor of price-fixing cartels is not the way to go.
Power corrupts, and financial market power has completely corrupted financial markets. Barclays and the other global megabanks involved in fixing Libor have brought their own industry very low â€" completely destroying the legitimacy on which sensible financial intermediation needs to be based.
Who trusts a banker at this point? The collateral damage is enormous. Who in their right mind would buy a complex derivative product from Barclays or anyone else implicated in this growing scandal?
http://economix.blogs.nytimes.com/2012/07/12/the-market-has-spoken-and-it-is-rigged/