Editor’s Note: Each week we cross-post an excerpt from Katrina vanden Heuvel’s column at the WashingtonPost.com. Read the full text of Katrina’s column here.
“Banksters,” the cover of The Economist magazine charges, depicting a gaggle of bankers dressed as extras off the “Goodfellas” lot. The editors were reacting to Libor-gate, the collusion among traders of major banks to fix the London interbank offered lending rate, the most recent, most obscure and the most explosive revelation from what seems a bottomless pit of corruption in global banks.
Once more the big banks are exposed in systematic fraudulent activity. When Barclays agreed to a $450 million fine for trying to rig the Libor, its CEO offered the classic excuse: Everyone does it. Once more the question remains: Will CEOs and CFOs, as well as traders, be prosecuted? Or will they depart with their multimillion-dollar rewards intact, leaving shareholders to pay the tab for the hundreds of millions in fines?
The Barclays settlement exposed that traders colluded to try to fix the Libor rate. This is the rate used as the basis for exotic derivatives as well as mortgages, credit card and personal loan rates. Almost everyone is affected. Fixing the rate even a few hundreds of a percentage point could make Barclays millions on any single day—money taken out of the pockets of consumers and investors. Once more the banks were rigging the rules; once more their customers were their mark.
Editor’s Note: Each week we cross-post an excerpt from Katrina vanden Heuvel’s column at the WashingtonPost.com. Read the full text of Katrina’s column here.
