The Libor Scam: The Beginning of the End for the Banksters

[Jeffrey]

The LIBOR Banking Scandal





The LIBOR manipulation story has exploded into a major scandal overseas. The CEO of Barclays, Bob Diamond, has resigned in disgrace; his was the first of what will undoubtedly be many major banks to walk the regulatory plank for fixing the interbank exchange rate. The Labor party is demanding a sweeping criminal investigation. Mervyn King, Governor of the Bank of England, responded the way a real public official should (i.e. not like Ben Bernanke), blasting the banks...

Read more here: http://www.rollingstone.com/politics/blogs/taibblog/why-is-nobody-freaking-out-about-the-libor-banking-scandal-20120703



http://www.youtube.com/watch?v=1UG8RowZcks&feature=youtu.be



http://www.youtube.com/watch?feature=player_embedded&v=CI2M1olG2Oo


Barclays Libor Scandal: Rate Rigging Affects Your Loan Payments

In the world of interconnected global finance, when a trader in London uncorks a bottle of Bollinger champagne to celebrate a rate change, there is a decent chance your monthly loan payment also changes in Any Town, U.S.A.

The rate-rigging scandal at London-based Barclays bank will eventually hit home for American consumers -- at least in theory. Everything from adjustable-rate mortgages to private student loans and variable-rate credit cards is linked to the Libor rate, which Barclays -- and other major banks still under investigation -- allegedly tried to influence.

To be sure, there is no evidence yet that Barclays' efforts to manipulate the Libor rate have affected American consumers. Libor, which stands for London interbank offered rate, is the rate that banks use to make short-term loans between themselves. It is calculated daily as an average of 18 banks' rates, with the highest and lowest rates tossed out of the mix. That makes it difficult for any single bank to influence the rate, said Greg McBride, senior financial analyst for Bankrate.com.

"The wrongdoing is the attempt to manipulate," he said. "Whether [Libor] was influenced is very unlikely."

But according to the Justice Department, Barclays' multiple efforts to depress the rate in order to boost its own bottom line were sometimes successful. Last week, the bank came to a $450 million settlement with regulators over the charges following a multiyear investigation. In the wake of the settlement, the bank's CEO, Robert Diamond, resigned this week.

The Libor rate is also the rate that some lenders link to some adjustable-rate products. The banks' alleged attempt to manipulate the Libor rate underscores how closely the financial health of American consumers could be tied to the profits made at corporate banks.

For example, when Libor goes up, associated interest rates and monthly loan payments can also rise. When Libor goes down, adjustable-rate loans could also have lower payments. There's no direct impact on fixed-rate loans.

Nearly half of private student lenders -- including Sallie Mae -- offer variable-rate loans linked to the Libor index, according to FinAid, a student loan information website. In addition, all the top mortgage lenders in the United States, including Bank of America, JPMorgan Chase and Wells Fargo, also use Libor to calculate the amount of interest charged on adjustable-rate mortgages -- or ARMs, according to The New York Times.

For consumers, the only way to know if a loan is tied to Libor is to read the terms of the original loan agreement. Many adjustable-rate loans are tied to other indices such as the prime rate.

In 2008, some American borrowers with ARM mortgages saw the amount of their payments spike because the Libor rate increased, according to an October 2008 USAToday story.

Source: http://www.huffingtonpost.com/2012/07/03/barclays-libor-scandal-rate-fixing-loan-payments_n_1646876.html

[crosby]

this is going to get interesting. can't wait to see how this develops. thanks vivek.
warmest, corson

[Jeffrey]

Oh, Corson, this will excite you too then!




And Finally, the IRS Gets Audited

The federal agency that strikes fear into many U.S. taxpayers is getting a dose of its own medicine – as it is now the focus of a year-long audit for allowing illegal aliens to scam the system and bilk taxpayers out of billions of dollars every year.

Federal employees are blowing the whistle on the Internal Revenue Service, according to a report by Indianapolis television station WTHR-TV.

The scam involves the use of an Individual Taxpayer Identification Number, or ITIN –a nine-digit tax-processing number assigned by the IRS to individuals who are obligated to file a federal tax return but do not have or are not eligible for a Social Security Number. Illegal aliens may obtain an ITIN by sending the IRS documents such as original or notarized photocopies of birth certificates, driving records, voter ID cards, school records and vaccination records – all documents that are easily forged or falsely notarized.

The Center for Immigration Studies reports that in the 2010 tax year alone, more than 3 million returns were filed with ITINs. Approximately 2.3 million paid no federal income taxes and also collected a cumulative $4 billion in tax refunds.

According to the news station, which conducted a four-month investigation, “the ITIN system is plagued by abuse and fraud.”

Howard Antelis, a tax examiner at the IRS’ ITIN processing center in Austin, Texas, explained: “We were being told by upper management to ignore fraud, to assign ITIN numbers and … pay out refunds to people who are lying. It’s a license to steal when you allow that.”

A half dozen tax examiners from the Austin office blew the whistle on the IRS and told WTHR-TV the same story: Every one of them says IRS managers told them to “look the other way” when they processed ITIN applications that appeared to be fraudulent or raised suspicion of criminal activity.

As one example, Antelis explained that he had been given a stack of ITIN applications indicating that dozens of dependent children had been attending a South Carolina school.

But he discovered one major problem: The school didn’t exist.

Antelis said he told his managers about the false information, but they told him to approve the applications anyway.

“C’mon. This is fraud! Those kids weren’t even real and I’m supposed to give out [ITIN] numbers?,” Howard said he asked his bosses.

He told the news station, “We’re tax examiners but the truth is we’re not supposed to look into anything. We’re not supposed to examine anything. It’s like an assembly line. It’s just ‘Get it out of here. Boom. Boom. Boom. Get it out of here and don’t worry about the fraud. Fraud slows us down.’”

Antelis said he reported the scams regularly to his managers – for years – with no result.

Frustrated with the inaction, he called the Inspector General’s office in Washington, D.C.

“I’ve been working for the federal government for 23 years and I signed an ethical standard of conduct when I went to work that says if you see fraud, you need to report it,” he said. “I tried and tried and tried, couldn’t get anywhere so … I went into a quiet room and started making phone calls.”

According to the report, the IG’s office sent auditors to Texas to interview Howard and dozens of other tax examiners.

The auditors made a shocking discovery: IRS employees were, in fact, encouraged to overlook indications of fraud.

The IG’s final audit report is expected to be released this summer.

WND reported in May when one Northern California Internal Revenue Service employee described revelations that millions of illegal aliens are claiming and receiving billions of dollars in tax refunds for alleged family members in Mexico using a loophole in the tax code.

Then, a WTHR-TV report documented illegal aliens filing the IRS Additional Child Tax Credit form for children – often nieces and nephews – who have never lived in the United States. To legally qualify, a child must be present in the filer’s U.S. residence for over half the year.

“We’ve seen sometimes 10 or 12 dependents, most times nieces and nephews, on these tax forms,” a tax preparer-turned-whistleblower told WTHR News. “The more you put on there, the more you get back.”

“Here’s a return right here: we’ve got a $10,300 refund for nine nieces and nephews.”

“We’re getting an $11,000 refund on this tax return. There’s seven nieces and nephews,” he said, pointing to another set of documents. “I can bring out stacks and stacks. It’s just so easy it’s ridiculous.”

Of course, the problem was not a revelation to the Northern California IRS field-office worker who viewed the report: “The fraud has been going on for years,” he told WND. “Business as usual.”

“As the video indicates the Service does nothing,” he said, asking WND not use his name to avoid reprisal.

As a result, illegal aliens who are defrauding the system not only manage to pay no federal income taxes, their abuse of the credit means they get back everything they paid into Social Security and more.

On May 23, 2011, dozens of House Republicans co-sponsored H.R. 1956 “to amend the Internal Revenue Code of 1986 to require individuals to provide their Social Security number in order to claim the refundable portion of the child tax credit.”

But Democrats resisted, and the legislation stalled after only one hearing before the House Ways and Means Committee.

Ironically, IRS Commissioner Douglas Shulman said in April that paying taxes should be considered one of the pathways to citizenship for illegal aliens.

Based on what comes across the Northern California field-office agent’s desk, he has seen the problem burgeon in tax returns filed by Spanish-language tax preparers. Calling them “the enablers and catalyst of this fraud,” he noted their clients are more comfortable working with preparers who speak their language. The preparers educate their clients about greater returns they can receive the following year if they qualify family members for the Additional Child Tax Credit refund. It’s a win-win-lose – the client learns how to get more money back from the IRS, the preparer generates good will and repeat business, and the U.S. taxpayers get soaked. Knowledge of the scam then spreads by word of mouth.

While agreeing the Additional Child Tax Credit was a major problem, he said it should not be the primary focus.

“When reviewing the big picture of this fraud, always remember and never forget that it is the ITIN that opens the portal to obtaining the credit,” he said.

The requirements for obtaining the ITIN for a worker includes submitting original official documentation from the country of origin to the IRS processing center in Austin, Texas, for validation.

But, as WTHR-TV reports, the Texas office has many of its own mismanagement issues, providing more cause for concern.

“It’s pure negligence by management and they’ve been trying to keep it quiet,” Antelis said. “There is a criminal element that is defrauding the U.S. government by filing mountains and mountains of these fraudulent applications. We see them in piles in bulk every day that are obviously not legitimate documents and not legitimate tax returns and not legitimate wages … and [IRS managers] don’t want to deal with it. That’s where all the fraud is. The fraud is in the fake notary stamps and fake documents which we’ve been accepting.”

IRS Deputy Commissioner for Services and Enforcement Steve Miller reportedly met with 100 tax examiners and said he would address the issues reported by workers and the news station.

According to the report, tax examiners will be given additional training and tools to help spot fraudulent paperwork, including ultraviolet lights and magnifying glasses. According to new procedures, illegal aliens will be required to submit original, certified documents – not notarized copies, which are often forged.

“That’s a huge step in the right direction,” Antelis told the station. “Because of the Inspector General and all of the media attention, things are finally starting to change. For the first time in a long time, I feel like this might get fixed.”

But Antelis said the IRS is retaliating against him for exposing the fraud.

The agency reportedly cut his job-performance rating from “exceeds fully successful” to “minimally successful,” reducing the size of his paycheck and causing him to wonder whether he will lose his job for speaking out.

“I’m a little nervous, but not really. I guess they could try to fire me, but I don’t think they will,” he said. “I just want to see things fixed. We’ve been allowing the U.S. taxpayer to get robbed for years now and those days appear to be over.”

Source: http://www.wnd.com/2012/07/and-finally-the-irs-gets-audited/

[crosby]

fantastic. this is the best 4th of july that i have had in quite some time. thank you vivek. perfect!
warmest, corson

[Jeffrey]

VTS___P6APw



Victoria Grant, 12, Hits Lecture Circuit To Explain How Canadian Banking Is A Fraud



Twelve-year-old Victoria Grant of Cambridge, Ontario, has become an overnight Internet sensation after a video of her giving a scathing criticism of Canada’s banking industry went viral.

Grant has been giving a rehearsed speech to audiences at conferences about how “the banks and the government have colluded to financially enslave the people of Canada.”

Her father has been posting the videos to YouTube. One such video, of an appearance by the youthful Grant at a Public Banking Institute conference in Philadelphia, got picked up by various blogs over the past few days.

Apparently Grant was added as an “impromptu speaker” at the conference.

Grant’s argument is one that has been picking up some steam in recent years on the fringes of Canada’s economic debates.

The core of the idea is that Canadian taxpayers are being ripped off by the banks and the government because elected officials are unnecessarily borrowing money from the private banks at commercial interest rates.

Until the 1970s, the government borrowed directly from the Bank of Canada, which is a Crown corporation and issues Canada’s currency. But in recent decades, it has been borrowing from private banks instead. Critics say that the government is unnecessarily paying extra in interest rates to cover private banks’ profit margins.

Or, as Victoria Grant puts it: “It has become painfully obvious … that we are being defrauded and robbed by the banking system and a complicit government.”

Grant is not alone in making this argument.
Read the rest of the article here: http://www.huffingtonpost.ca/2012/05/15/victoria-grant-12-canadian-banking_n_1518953.html

[Hervé]

Big Banks Have Criminally Conspired Since 2005 to Rig $800 Trillion Dollar Market

Posted on July 2, 2012 (http://www.washingtonsblog.com/2012/07/big-banks-criminally-conspire-to-rig-800-trillion-dollar-market.html) by WashingtonsBlog (http://www.washingtonsblog.com/author/washingtonsblog)


… But Receive Only a Light Slap on the Wrist

We noted (http://www.washingtonsblog.com/2012/06/big-banks-conspire-to-game-the-main-interest-rate-indicator-and-to-fleece-cities-and-counties.html) Friday:

Barclays and other large banks – including Citigroup, HSBC, J.P. Morgan Chase, Lloyds (http://online.wsj.com/article/SB10001424052702304830704577493092589081130.html?mod=WSJ_hp_LEFTWhatsNewsCollection), Bank of America (http://mobile.bloomberg.com/news/2011-08-25/bank-of-america-citigroup-depressed-libor-rates-schwab-says-in-lawsuit), UBS, Royal Bank of Scotland (http://www.marketwatch.com/story/four-more-banks-in-libor-probe-report-2012-06-28?link=MW_latest_news)– manipulated the world’s primary interest rate (Libor) which virtually every adjustable-rate investment globally is pegged to.

***
That means they manipulated a good chunk of the world economy.
We actually understated the impact of the Libor scandal.

Specifically, according to the CIA’s World Factbook, the global economy – as measured by the world’s gross domestic product – is less than $80 trillion (https://www.cia.gov/library/publications/the-world-factbook/geos/xx.html).

In contrast, over $800 trillion dollars worth of investments are pegged to the Libor rate. In other words, a market more than 10 times the size of the entire real world economy is effected by Libor.

As the Wall Street Journal reports (http://online.wsj.com/article/SB10001424052702304299704577500982100334286.html?mod=googlenews_wsj) today:

More than $800 trillion in securities and loans are linked to the Libor, including $350 trillion in swaps and $10 trillion in loans.
(Click here (https://www.google.com/search?q=%22More+than+%24800+trillion+in+securities+and+loans+are+linked+to+the+Libor%2C+including+% 24350+trillion+in+swaps+and+%2410+trillion+in+loans%22&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a) if you don’t have a subscription to the Journal).

Remember, the derivatives market is approximately $1,200 trillion dollars (http://www.washingtonsblog.com/2012/05/top-derivatives-expert-finally-gives-a-credible-estimate-of-the-size-of-the-global-derivatives-market.html). Interest rate derivatives comprise the lion’s share of all derivatives, and could blow up and take down the entire financial (http://www.washingtonsblog.com/2010/04/are-interest-rate-derivatives-a-ticking-time-bomb.html)system (http://www.washingtonsblog.com/2010/04/are-interest-rate-derivatives-a-ticking-time-bomb.html).

The largest interest rate derivatives sellers include (http://www.greenwich.com/WMA/in_the_news/news_details/1,1637,1814,00.html?vgnvisitor=eKObnqGNmZM=) Barclays, Deutsche Bank, Goldman and JP Morgan … many of which are being exposed for manipulating Libor.

They have been manipulating Libor on virtually a daily basis since 2005 (http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9359362/Bob-Diamond-forgoes-bonus-as-Barclays-fined-for-Libor-manipulation.html).

They are still part of the group of banks which sets Libor every day, and none have been criminally prosecuted.

They have received a light slap on the wrist (https://www.google.com/search?q=libor+slap+on+the+wrist&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a#hl=en&client=firefox-a&hs=R5q&rls=org.mozilla:en-US%3Aofficial&sclient=psy-ab&q=libor+%22slap+on+the+wrist%22&oq=libor+%22slap+on+the+wrist%22&gs_l=serp.3...10444.11357.0.11406.2.2.0.0.0.0.192.192.0j1.1.0...0.0.qR4K1eF-ODY&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.,cf.osb&fp=f02dca5de27feb08&biw=533&bih=240) from regulators, which – as nobel economist Joe Stiglitz points out – is just the (http://www.washingtonsblog.com/2011/01/settling-prosecutions-for-pennies-on-the-dollar-is-a-type-of-bailout.html)cost of doing business (http://www.washingtonsblog.com/2011/01/settling-prosecutions-for-pennies-on-the-dollar-is-a-type-of-bailout.html) when fraud is the business model.

Indeed – as Bloomberg notes (http://mobile.bloomberg.com/news/2012-06-25/libor-guardians-said-to-resist-changes-to-broken-benchmark-rate) – they’re probably still manipulating the rate:

The U.K. bankers and regulators charged with reviewing Libor in the wake of regulatory probes are resisting calls to overhaul the rate because structural changes risk invalidating trillions of dollars of contracts.

The group, established by the British Bankers’ Association in March after probes into allegations that traders rigged the London (http://mobile.bloomberg.com/topics/london/) interbank offered rate … won’t propose structural changes such as basing the rate on actual trades or taking away oversight of the benchmark from the BBA, the people said.

Libor is determined by a daily poll that asks banks to estimate how much it would cost them to borrow from each other for different timeframes and in different currencies. Because banks’ submissions aren’t based on real trades, academics and lawyers say they are open to manipulation by traders. At least a dozen firms are being probed by regulators worldwide for colluding to rig the rate, the benchmark for $350 trillion of securities.
“I don’t see a significant enhancement to the reputation of Libor without basing it on actual transactions,” said Rosa Abrantes-Metz, an economist with Global Economics Group, a New York-based consultancy, an associate professor with New York University’s Stern School of Business and the co-author of a 2008 paper entitled “Libor Manipulation?” [the manipulation was well-known in England (http://www.nakedcapitalism.com/2012/07/massive-furor-in-uk-over-libor-manipulation-wheres-the-outrage-here.html) in 2007, Shah Gilani (http://moneymorning.com/2008/10/23/mortgage-re-sets/) warned of Libor manipulation in 2008, and Tyler Durden (http://www.zerohedge.com/), Max Keiser (http://www.maxkeiser.com/) and others started sounding the alarm at or around the same time.]

“It would only be disruptive if current quotes are inaccurate,” so resistance “is suspicious,” she said.

***
Traders interviewed by Bloomberg in March at three firms said they were given no guidance on how Libor should be set and there were no so-called Chinese walls preventing contact between the treasury staff charged with submitting the rate and traders who stood to profit on where Libor was set each day. They regularly discussed where Libor would be set with their colleagues and their counterparts at other firms, they said.

“Sadly the response looks to be very consistent with the response of policy makers to the banking disasters we’ve seen over the last four years — cosmetic changes, but nothing substantial happens,” said Richard Werner, a finance professor at the University of Southampton. “It’s insufficient and doesn’t really go to the heart of the problem.”

[ThePythonicCow]

The Daily Bell (http://www.thedailybell.com) has an excellent analysis of this LIBOR scandal -- that it's a sham engineered by the central banking elites, to subdue the financial industry and bring it totally under their control.

Well presented and insightful, as usual for the Daily Bell. You can find their analysis at The LIBOR Scandal Is a Sham Engineered by Central Banking Elites? (http://www.thedailybell.com/4056/The-LIBOR-Scandal-Is-a-Sham-Engineered-by-Central-Banking-Elites).

[steveofengland]

Surely this will serve well to wake even more people. So far its only Barclays but hopefully all the major UK banks have the chance of being brought to book.
This goes much deeper than being a banking fraud. Key figures at the bank of England have been implicated as to encouraging the banks to do this.
Then above that its been said that highh ranking ministers from the last labour government have been accused of instigating the whole thing. (surprise surprise)
oddly it is the labour leader Ed Miliband that is calling for a judge led inquiry into the libor fixing scandal.
But with the possibility of large numbers of high ranking ministers and bank of England figures, this may well yet be swept under the carpet.
Although if it actually came off as a criminal investigation, there could well be quite a few arrests?
Who knows where it could go?
TPTB could do with something to distract everyone from this, oh look the Olympics are just around the corner................