Are Diamonds forever?

It’s looking increasingly unlikely that any regulation will come to US banking in the foreseeable future. Contemporary financial data suggest that banks are spending more money than ever in Washington….lobbying against any legislation to do with their business.

A report in the Charlotte Observer reveals that lobbying has gone up 12% during 2011 so far – around $47 million. Wells Fargo, for example, is spending 80% more on lobbying this year than they did in 2010.

While the banks ‘make’ more money than ever, the IRS don’t seem to see too much of it. And the customers are hit with rising fees during a recession….while every bankster is a big bonus bonanza banana.

The connection between Washington and Wall Street is being made more and more clear. And of course, we already knew the connection between Wall St and the Fed. And between Goldin Sacks and the Fed. And Greece, Italy, the EU Central Bank, (cont. P. 45,093).

However, as The Slog reported earlier today, even the Fed boss Tim Geithner realises that nothing less than an audit of every bank’s cupboards and dark corners is going to satisfy the markets….not to mention the voters.

Should regulation ever come, however, the British/European experience of the last few years suggests that it will be perverted. The suspected Libor rates scandal has been bubbling under for some time now – and been the subject of Slog posts.

Libor is based on what each participating bank says it would have to pay to borrow money from another bank. Produced under the auspices of the British Bankers’ Association (BBA) it represents the average of the collected figures, minus several of the highest and lowest quotes.The resulting benchmark determines interest rates on an estimated $360 trillion of financial instruments around the world – according to the Bank for International Settlements.

The Libor panel is, however, barely regulated and completely unelected. The panellists have come under increasing scrutiny from the victims of rigging scams, those who accuse them of leaking, and the legal/watchdog authorities.

A plethora of lawsuits filed this year show investors accusing a number of banks represented on the Libor panel of distorting market prices by hiding the banks’ true borrowing costs since as early as 2007. (Bob Diamond’s Barclays is allegedly implicated in this). Two months ago, US brokers Charles Schwab brought a civil case claiming that, when Libor banks conspired to depress the rate (and narrow spreads), they “reaped hundreds of millions, if not billions, of dollars in ill-gotten gains”. Heavily implicated along with Barclays are Credit Suisse Group AG, HSBC Holdings Plc, Bank of America, JPMorgan Chase and RBS.

In March 2011, the BBA issued a media release saying, ‘We are committed to retaining the reputation and integrity of BBA Libor, which continues to be the authoritative benchmark of the wholesale money market’.

Every time I see a corporate statement beginning, ‘We are committed to’, I think ‘protesting too much’. It’s all too ‘zero tolerance policy’ bollocks for me: the whining, mendacious tone adopted by Newscorp, the Greek Government, and Goldman Sachs. Reputation, integrity, authoritative, pillar, honesty, impeccable, unimpeachable, blah blah blah blah blah.