Kucinich Explains "LIBOR"

"Late last month, Barclay's Bank, a multinational bank and financial institution based in the United Kingdom, admitted to regulators that it tried to manipulate something called "Libor" before and during the financial crisis in 2008. "Libor" is an acronym for London Interbank Offered Rate. It is a rate used as a benchmark for the cost of lending throughout the financial system, and it is also used as a reference rate for a wide range of financial products like car loans, adjustable-rate mortgages, student loans and credit cards.

"The Libor is not based on an objective measure of the interest for bank-to-bank loans. It is the average of a daily poll of the Association's member banks, who give an estimate of the interest rate they think they would pay if they sought to borrow from another bank.

"It is supposed to be the way the financial system assesses the overall health of the financial system, because if the banks being polled feel confident about the state of things, they report a low number, because they assume that if they had to borrow from another bank, their cost of borrowing would be low. If member banks feel a low degree of confidence in the financial system, they report a higher interest rate. And from that the Libor is calculated, affecting the interest rate on financial products around the globe.

"What has emerged from the Barclay's Bank inquiry is evidence that banks may have in fact been deliberately manipulating Libor rates for years. The evidence so far is that one arm of a bank responding to the Libor poll would change their number based on what another arm of the same bank wanted—and that other arm could consist of the bank's traders who make their money on whether the rate goes up or down. This means that millions of consumers, investors and businesses have been paying the wrong interest rate. Or rather, they haven't been paying an interest rate that is set according to some legitimate benchmark. Instead they are paying a rate based on a gentlemen's agreement at financial institutions, a method that practically incentivizes those banks to game the system to maximize their profits.

"And remember, the British Bankers Association, the group that is responsible for setting the rate, is not a government agency. It is just a trade group of big banks-- Bank of America, JPMorgan Chase and Deutsche Bank and others--whose decisions on such a crucial number are not based on honest accounting or rules or regulatory oversight, but on a gentlemen's agreement of honesty.

"We don't know just how deep this scandal goes. But the fact is that if a fundamental component of our financial system has been or is being manipulated, we have the right to know about it. Banks are not above the law and they should not be allowed to operate in secrecy, especially when they have a history of taxpayer bailout and when we are forced to rely on them to provide capital for economic growth."

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[Kinkspace]

The act was dismantled in 1999 by Bill Clinton. Consequently, the distinction between commercial banks and brokerage firms has blurred; many banks own brokerage firms and provide investment services.

[Kinkspace]

Definition of 'Glass-Steagall Act'

An act passed by Congress in 1933 that prohibited commercial banks from collaborating with full-service brokerage firms or participating in investment banking activities.

Explanation 'Glass-Steagall Act'

The Glass-Steagall Act was enacted during the Great Depression. It protected bank depositors from the additional risks associated with security transactions.

cont...

[xsithos]

Agree with most of what he says... except the "forced to rely on them for capital for economic growth".

We're not forced to rely on them. Its time to make it a fair market where they compete properly.

[Leopold Shu Wu Wilson]

This is cool. But he is apparently reading from a piece of paper.

[67jedi67]

In international law, odious debt, also known as illegitimate debt, is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable. Such debts are, thus, considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state. In some respects, the concept is analogous to the invalidity of contracts signed under coercion

[cyberage100]

We keep hearing that Banks and Government Official aren't above the law yet they are free to cause US many problems and go unscathed! It's sickening what has become of Governments!

[binzsta86]

That a boy Kucinich! You get'em!!! Make sure you put on a good Jerry Springer Show when you investigate this

[worldphilosopher101]

Why can't anyone see this for what it is? It's just scapegoat diversion disinformation. So disappointing Kucinich is in on it too. What's next? Buzz Aldrin will finally admit he never walked on the moon?

[Allergic2StupidAchoo]

Here's me idly thinking out loud and playing armchair legal expert, but doesn't the LIBOR scandal mean that any loans taken out through banks involved in the scandal, including mortgages, student loans, credit cards etc. can now be declared null and void due to the fact the banks involved did not operate in good faith and did in fact engage in fraud, thereby voiding any contractual agreements made with them. No idea but i'd be damned fascinated to find out.

[Caelidh]

Robert Holmes, the father of James Holmes (from the Aurora Colorado shooting) was apparently the software developer that created the algorithms that these banks used and was supposedly going to testify in the LIBOR case.

[monadbornslippy]

We are pretty much fucked! The Establishment won! "Go back to bed America, your government is in control"

[ariuszarim]

sep semper tyrannis