Got that, New York?
I was in the vanguard of progressives decrying the fact that none of the bankers on Wall Street – whose shenanigans caused the global financial crisis of 2008 – were ever prosecuted.
Everybody knows that rank criminality and dishonesty among (predominantly white) casino croupiers masquerading as investment bankers – much of it having to do with misrepresenting their exposure to sub-prime mortgages – caused this crisis. And the whole world is still reeling from and paying for it.
Yet not a single banker has been arrested. By riot-provoking contrast, hundreds of Occupy Wall Street protesters have been thrown in the pokey.
(“Raj Rajaratnam: a Wall Street Crook Goes to Prison … Finally,” The iPINIONS Journal, October 13, 2011)
This is why I thought it amounted to much ado about nothing in 2012, when bankers in the City of London were caught perpetrating shenanigans that rivaled those their Wall Street counterparts perpetrated:
UK bankers were engaged in an institutionalized conspiracy to rig the interbank lending rate (aka the Libor). This is the rate banks pay to borrow from each other and it underpins transactions valued in the trillions.
More crucially, though, this is the benchmark rate banks use to set interest rates for mortgages, credit cards, and loans. In other words, by rigging the interbank rate bankers could make all of these rates more expensive or cheaper.
The bankers caught red-handed in this case are from Barclays. But, just as all major U.S. banks were involved in peddling sub-prime mortgages as AAA investments, there seems little doubt that all major UK banks have been rigging the interbank rate too.
(“Why “Banking Scandal” Is Becoming Redundant,” The iPINIONS Journal, July 2, 2012)
I even dismissed UK Prime Minister David Cameron’s indignant pledge to prosecute all London bankers implicated as no different from the feckless rhetoric U.S. President Barack Obama hurled at New York bankers.
Well, I’ve never been happier to eat a little humble pie. Because I’m heartened to see the chickens finally coming home to roost for bankers – even if only in London:
Former City trader Tom Hayes has been sentenced to 14 years in jail after becoming the first person to be convicted by a jury of rigging the Libor interest rate.
Hayes, from Fleet, Hampshire, was accused of being the ringleader in a vast conspiracy to fix the London interbank offered rate (Libor) between 2006 and 2010.
Motivated by greed and a desire for higher pay, the court heard that Hayes set up a network of brokers and traders that spanned 10 of the world’s most powerful financial institutions, cajoling and at times bribing them to help rig rates – designed to reflect the cost of interbank borrowing – for profit.
(The Guardian, August 3, 2015)
Eleven more bankers are in the dock, awaiting what is bound to be a similar fate. More significantly, UK politicians, of all stripes, are calling on the Serious Frauds Office to go after the senior managers who “created the culture that allowed dishonesty to thrive.”
So here’s to London for defying prevailing presumptions, which have bank thieves going to prison, but bankers who thief walking scot free.
Related commentaries:
Raj…
Banking scandal…