Libor Interest Rate Scandal

  • Aired:  07/19/12
  •  | Views: 16,783

Traders set bank-lending rates after weighing factors like investor confidence, the money supply, the human anus and yanking things out of it. (5:17)

OKAY?

SAY I HAD TO PEE WEE.

OKAY.

NOW WITH THE TOP STORY OUT OF THE WAY-- (LAUGHTER) I NOW NEED TO ADDRESS THE

GROWING CRISIS OF CONFIDENCE IN OUR NATION'S BANKING SYSTEM.

WHOA.

CRISIS OF CONFIDENCE IN OUR BANKING SYSTEM, DEJA VU.

IS THIS 2008?

NO, IT'S THURSDAY.

(LAUGHTER) OKAY.

ALL RIGHT.

(CHEERS AND APPLAUSE) YOU SEE BACK DURING THE MORTGAGE CRISIS, PEOPLE WERE REALLY NOT TRUSTING THE BANKERS.

I'LL ADMIT EVEN I GOT SWEPT UP IN IT.

BUT NOW I KNOW THAT THAT STORM IN THE CASTLE WAS THE OLD PITCHFORK WAS UNCALLED

FOR BECAUSE MY FINANCE BUDDIES AT THE COUNTRY CLUB TELL ME THE BANKS WERE THE REAL VICTIMS.

AND THOSE GUYS CAN BE PRETTY CONVINCING IN THE STEAM ROOM.

NOW IT TURNS OUT THE WHOLE THING WASN'T THAT BAD.

CONFIDENCE WAS EVENTUALLY RESTORED, THE BANKS REBOUNDED.

AND I'M SURE THEY'LL ALSO REBOUND FROM WHATEVER THIS NEW THING IS, JIM.

>> THE LIBOR SCANDAL IS SPREADING LIKE WILDFIRE.

>> FUN LICK OUTRAGE IS GROWING OVER ALLEGATIONS THAT FOR YEARS BANKS ALL

OVER THE WORLD MANIPULATED WHAT IS CALLED LIBOR.

>> THE LIBOR SCAN CALL.

>> LIBOR.

>> NOW IT'S PRONOUNCED IGOR.

(LAUGHTER)

>> Stephen: WELL, HOWEVER IT'S PRONOUNCED, HERE'S WHAT WE KNOW.

THE BRITISH MEGABANK BARCLAYS MADE SOME MAD DOLLAH DOLLAHS ILLEGALLY MANIPULATING THE SO-CALLED

LIBOR WHICH STAND FORCE THE LONDON INTERBANK OFFERED RATE, NOT TO BE CONFUSED

WITH THE EUROPEAN INTERBANK OFFERED RATE OR EURIBOR.

EURIBOR OF COURSE ALSO WHAT YOU SAY TO ANYBODY TALKING ABOUT LIBOR.

NOW HERE'S HOW LIBOR WORKS.

EVERY MORNING EACH OF THE BIG LONDON BANKS HAS TO TELL THE BRITISH BANKING ASSOCIATION THE LOWEST

INTEREST RATE AT WHICH IT THINKS ANOTHER BANK WOULD LEND IT MONEY.

NOW HOW DOES EACH BANK DETERMINE THEIR OWN RATE?

IT'S A COMPLICATE PRODUCT SES THAT IS OF VOS A MULTITUDE OF FACTORS LIKE

INVESTOR CONFIDENCE, THE MONEY SUPPLY, THE HUMAN ANUS AND YANKING THINGS OUT OF IT.

(LAUGHTER) BUT MOSTLY JUST THOSE LAST TWO.

THEN-- (CHEERS AND APPLAUSE) ROUND OF A PLAUS FOR THE HUMAN ANUS.

THEN, THEN THAT LIBOR RATE IS USED TO SET INTEREST RATES EVERYWHERE ON EARTH.

WELL, OF COURSE NOT EVERYWHERE.

JUST PLACES THAT USE MONEY.

I BELIEVE EMPEROR PENGUINS ON THE ROTH ICE SHELF ARE NOT AFFECTED.

NOW HERE'S THE WRINKLE.

THE BANKS THAT DETERMINE LIBOR ALSO EMPLOY TRADERS WHO MAKE BETS ON WHAT THAT RATE WILL BE.

THEY'RE NOT SUPPOSED TO TALK TO EACH OTHER BUT YOU'LL NEVER GUESS WHAT HAPPENED.

>> TRADERS AT BANKS LIKE BARCLAYS WERE ESSENTIALLY CONSPIRING TO FUDGE THE DATA

TO BOOST THEIR OWN TRADING PROFIT.

SO ONE PART OF BARCLAYS WOULD SAY TO ANOTHER PART OF BARCLAYS YOU CAN PLEASE SUBMIT DATA THAT MAKES

US-- THAT EITHER IS HIGH HOOER OR LOWER THAN IT REALLY IS IN ORDER TO BOOST OUR PROFITS.

>> Stephen: NOW PERSONALLY I DON'T SEE ANYTHING WRONG WITH SOME WORK BUDDIES DOING

EACH OTHER A SOLID.

YOU KNOW THE OLD SAYING, YOU SCRATCH MY BACK, I MAKE THE GLOBAL FINANCIAL SYSTEM YOUR BITCH.

IT'S ALL DETAILED IT IN E-MAILS BETWEEN BARCLAYS TRADERS AND RATE SETTERS

LIKE PLEASE GO FOR 5.36 LIBOR AGAIN.

VERY IMPORTANT THAT THE SETTING COMES AS HIGH AS POSSIBLE.

THANKS.

AND DUDE, I OWE YOU BIG TIME.

COME OVER ONE DAY AFTER WORK AND I AM OPENING A BOTTLE OF BOLLINGER.

NOW I KNOW WHAT YOU ARE THINKING.

IT WAS UNETHICAL FOR THE TRADER TO OFFER THE RATE SETTER A GIFT OF CHAMPAGNE,

BUT NO HOOKERS.

(LAUGHTER) NOW ADMITTEDLY BARCLAYS FUDGED A COUPLE OF THINGS TO PUMP THEIR PROFITS.

BUT WHAT'S THE POINT.

IT WAS JUST BARCLAYS IN THE U.K., RIGHT?

>> HERE'S THE POINT IT WASN'T JUST BARCLAYS IN THE U.K..

>> Stephen: ALL RIGHT, ANGRY CLUSTER OF TEETH.

(LAUGHTER) SO IF IT WASN'T JUST BARCLAYS IN THE U.K., WHO ELSE?

>> THE REGULATORS ARE ALSO LOOKING AT MORE THAN A DOZEN OTHER BANKS AND THOSE

INCLUDE CITIGROUP.

>> Stephen: WHAT?

SO, SO CITIGROUP IS AN AMERICAN BANK.

NO BIG DEAL.

>> IT'S A BIG DEAL.

[BLEEP].

>> YOU CAN'T TRUST LIBOR.

YOU CAN'T TRUST ANYTHING IN BANKING.

>> I KNEW I SHOULDN'T HAVE TRUSTED THOSE GUYS!

I AM NEVER, EVER-- (APPLAUSE)

>> Stephen: I TELL YOU