A group of banks being investigated in an interest-rate rigging scandal are looking to pursue a group settlement with regulators rather than face a Barclays-style backlash by going it alone, people familiar with the banks' thinking said….
If they were able to reach a group settlement it would enable them to share the pain of negative publicity [as well as revealing the depth of the scandal to the public].
While Barclays received a 30 percent "discount" on the fines for cooperating fully with authorities, it sustained far more serious damage with the subsequent loss of its top management and a public pillorying at the hands of politicians….
Analysts have estimated that the scandal could cost the industry between $20 billion to $40 billion, further damaging a sector that is struggling to work its way through the aftermath of the 2007-2009 financial crisis, economic downturns in Europe and the United States, and increased regulatory demands….
Libor rates are set daily in London for a range of currencies and maturities [affects credit care interest, mortgage interest, all loans]. Banks submit rates for unsecured loans to one another and the rates after high and low rates are thrown out, are averaged.
Among the Barclays disclosures that sparked outrage were emails that showed employees asking for the submitted rates to be changed.
"Done ... for you big boy," read a message sent by a Barclays banker to one of the lender's traders, who had asked him to fix Libor at an artificially low level.
"Dude, I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger," a trader from another firm emailed a banker at Barclays, showing his thanks for the rate set artificially low.
The unfolding scandal also has raised questions about what the regulators knew and what actions they took to rein in the activity. Documents released by the Fed show it was repeatedly warned about Libor manipulation.
Ya think this could have something with saving the butts of Geithner and Bernanke who knew about this since 2008?