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LIBOR rigging: Difference between revisions
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This is the crux of the case: was this ulterior motive ''dishonest'' in light of the “''proper basis for the submission of those rates''”? The Crown alleged it was. | This is the crux of the case: was this ulterior motive ''dishonest'' in light of the “''proper basis for the submission of those rates''”? The Crown alleged it was. | ||
== Other action in the LIBOR == | |||
This is not the saucy carry-0n in the interest rate market. For something that is meant to be dullsville, after school chess club was quite the hotbed. At about the same time, Britain’s commercial bankers were having fun at the hands of the caravan parks, flying clubs and property investment consortia of middle England. The [[interest rate swap mis-selling scandal]] is a many-headed hydra — it turns out most commercial banks in the UK had hit upon variations on the same idea independently of each other and then jammed it down middle England’s gizzard, but the gist was this: rather than just offering them straightforward loans, banks would offer floating rate loans stapled — loosely — to complicated hedging products. | |||
This would be odd enough if it were just a floating rate loan and a fixed rate swap — why not just lend at a fixed rate — but these swaps had all kinds of funky features that didn’t suit any obvious commercial need, and banks sold them often by appealing to the borrowers’ vanity or dubious interest rate risks. A fun example was the “enhanced dual fixed rate protection” under which: | |||
{{Quote|Borrower would pay 5.10%, if interest rates were between 4.75% and 6.25%, and 6% if interest rates were above 6.25% ''or below 4.75%''. Additionally the Bank had the right to terminate without penalty each quarter after five years.}} | |||
It is not obvious who this protects, or what it enhances, but it does not seem to be the borrower. | |||
== The criminal charges == | == The criminal charges == | ||