Everything Is Rigged: The Biggest Price-Fixing Scandal Ever Page

Chino Kapone

Yo, whats wrong wit da beer we got?

Two of America's top law-enforcement officials, Attorney General Eric Holder and former Justice Department Criminal Division chief Lanny Breuer, confessed that it's dangerous to prosecute offending banks because they are simply too big. Making arrests, they say, might lead to "collateral consequences" in the economy.

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

The Scam Wall Street Learned From the Mafia

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

"It's a double conspiracy," says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. "It's the height of criminality."

The bad news didn't stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry," CFTC Commissioner Bart Chilton said.

But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.

"A farce," was one antitrust lawyer's response to the eyebrow-raising dismissal.

"Incredible," says Sylvia Sokol, an attorney for Constantine Cannon, a firm that specializes in antitrust cases.

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want.

More at the link....


I'm Team Piggy!
There was also a scandal where banks were known to be laundering money on behalf of Mexican and Russian drug cartels and...

Nothing happened. Wouldn't want to destabilize the market.


The two up to their eyeballs in the drug money laundering are CitiGroup and JP MorganChase. Which means nothing whatsoever will happen to them.

There may be fines, but the largest financial companies are unlikely to face criminal actions or meaningful sanctions. The Department of Justice has decided that these banks are too big to prosecute to the full extent of the law, though why this also gets employees and executives off the hook remains a mystery. And theFederal Reserve refuses to rescind bank licenses, undermining the credibility, legitimacy and stability of the financial system.
Too Big To Fail is Too Big To Jail. They made money hand over fist and they'll have to pay a token fine over it.

One of the very worst launderers in human history, HSBC, worked with Mexican narco-terrorists, Iran and Syria. They paid a 2 billion dollar fine and are still operational and profitable. No business license was taken nor was the British-based HSBC banned from doing business in the U.S.


Registered User
Just read that article. It is not surprising in todays world. The story they did about the Libor averages was very good and I say that hating this magazine. Love the excuse you have hilighted in red, just give them free reign and go.


I'm Team Piggy!
Another striking thing to note is that the global GDP is less than 100 trillion and the LIBOR scandal and ISDAfix scandals concern markets worth about a collective
quadrillion dollars. Fraud is endemic in a 1 quadrillion dollar sector of finance. Nothing to see here, moving right along.


I'm Team Piggy!
He can only prosecute middle class White people, didn't you hear?

Yesterdays Hero

She's better than you, Smirkalicious.
I could freak right out over this...

Or I could enjoy my weekend.


I want to fuck your girlfriend.
What is the point of the justice department if they are not going to do their fucking jobs?

Lord Zero

Viciously Silly
It's cute that they went to Holder like he's not part of the problem.
Alternate headline:

High-Ranking Department of Justice Officials Don't Feel Like Doing Their Jobs
"This 'work' thing is too hard," says Holder.


Well-Known Member
Damn it, we all owe Kirk an apology. Fuuuuuuuuucccck.
The trouble is you need a working knowledge of financial engineering/quantitative finance to really understand what is going on. I have dozens of books on the subject sitting on my hard drive. The math in them looks ridiculous. Then you need to build a case against these banks or financial firms. But don't expect a trial because there's no chance a jury would have the aforementioned knowledge of finance to find them guilty. The feds almost always settle for a few million bucks, while the banks pocket billions from this.

And then there's the Wall Street lobby that fights tooth and nail for any type of regulation, they're known as "the blob." Interesting article for those interested: