Barclays Bank To Pay $450 Million To Settle Charges That It Manipulated Interest Rates

Barclays Bank has agreed to pay out more than $450 million in settlements with the U.S. Department of Justice, the U.S. Commodities Futures Trading Commission and the British Financial Services Authority. Those entities said the bank had tried to manipulate key interest rates, which in turn affect mortgages, student loans and more.

Investigators said the bank manipulated the London InterBank Offered Rate, known as LIBOR, and the Euro Interbank Offered Rate, or EURIBOR. Those interest rates are a vital part of the world’s financial markets, notes the Los Angeles Times.

“LIBOR and EURIBOR are critically important benchmark interest rates,” Assistant Atty. Gen. Lanny Breuer said in a statement. “Because mortgages, student loans, financial derivatives and other financial products rely on LIBOR and EURIBOR as reference rates, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide.”

Here’s how the money will be split up under the settlement, which will allow Barclays to avoid prsoecution: The DOJ gets $160 million and cooperate with its ongoing investigation, $200 million goes to the U.S. Commodities Futures Trading Commission and the rest will go to the British Financial Services Authority.

In addition, Barclay’s Chief Exeuctive Bob Diamond says he and other head honchos will go without bonuses this year.

“The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business,” Diamond said. “When we identified those issues, we took prompt action to fix them and cooperated extensively and proactively with the authorities. Nothing is more important to me than having a strong culture at Barclays; I am sorry that some people acted in a manner not consistent with our culture and values.”

Barclays to pay more than $450 million in interest-rate settlement [Los Angeles Times]

 

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  1. Sarek says:

    Gasp! No bonuses?! That’s cruel and unusual punishment!

    Heaven forbid one of these white collar crooks should spend 10 minutes in jail….

  2. Coffee says:

    Stories like this make me want to throw things. Someone steals an item from a grocery store and they go to jail. A company systematically works to manipulate interest rates, potentially causing additional pain for millions of borrowers, and their CEO goes without his bonus. For a year.

    • Quirk Sugarplum says:

      “The majestic equality of laws, which forbids the rich as the poor to sleep under bridges, to beg in the streets and to steal bread.” – Anatole France

    • Blueskylaw says:

      “I am sorry that some people acted in a manner not consistent with our culture and values”

      But they did act in a manner consistent with big bank culture, they just got caught and now they have to pay the price.

      WINNERS:
      1). DOJ gets $160 million
      2). $200 million goes to the U.S. Commodities Futures Trading Commission
      3). British Financial Services Authority gets any leftover money
      4). CEO loses bonus but will get special increase in base pay and stock options and a foreclosed house will be given to each of his children as an early Christmas gift

      LOSERS:
      1). Millions of people who are now stuck paying higher interest rates for 30 years on the homes they bought and the student loans they took out

      Fu*k you because we can!!!

      • Evil_Otto would rather pay taxes than make someone else rich says:

        “Because fuck you, that’s why!”

      • Coffee says:

        I think the biggest issue I have with this kind of thing is that the monetary damages – even if they are 100% of the benefit received by the bank, do not accurately show the real world damage that has occurred.

        Metaphorically speaking, it’s as if a crackhead stole $3,000 worth of copper wire from city street lights, then sold it for $1,500, was caught, and was subsequently fined for $1,500. The city, in the meantime, had to replace the wire at the cost of $30,000.

        Banks – and more importantly their CEOs – should be prepared to cover the full cost of the damage they cause, even if it means bankruptcy, the loss of personal assets, and prison for the individuals involved.

  3. Hotscot says:

    Since corporations are people can we all buy our way out of prosecution?

    • Torgonius wants an edit button says:

      Yes. Make the largest possible contributions to your local DA and political party machine every year. They’ll be too busy counting the donations to see you did something wrong.

  4. dush says:

    And $0 goes to the consumers that were hurt by these practices.

  5. Blueskylaw says:

    I’m waiting for the day when a bank is found guilty of a minor thing, like failing to pay their water bill.The only thing I see banks being found guilty of is MAJOR things like manipulating world-wide interest rates, illegally robo-signing millions of mortgages, foreclosure fraud, re-arranging payments to increase the fees of millions of people, home seizures made without proper paperwork, conspiring with the dairy industry to decrease the size of my eskimo pies, etc.

    At least I can find solace in the fact that they will never change their ways, thereby saving
    me the effort to try and prove that they have changed.

  6. gman863 says:

    The one thing not mentioned in the article is how much Barclay’s may have profited from manipulating the LIBOR. My guess is well above $450 million.

    The only way to get this type of shit to stop is to impose (at minimum) triple damages. Ergo, it it can be reasonably proven Barclay’s made an extra billion off this manipulation, the minimum fine should be three billion.

  7. golddog says:

    I’ve had big loans based on LIBOR over the past 15 years. In reading the article I don’t see where the consumer gets anything from the settlement. Should I call DoJ or Barclay’s for my check??

  8. DAS37 says:

    Just the tip of the iceberg. Virtually every major financial institution in the world is implicated in this as well as the manipulation of the municipal bond market. Matt Taibbi at Rolling Stone has some good reporting on all this.

  9. Telekinesis123 says:

    “Here’s how the money will be split up under the settlement, which will allow Barclays to avoid prosecution”

    What is this shit? Pay to avoid prosecution, they probably made billions upon billions doing it and no one who was actually harmed gets any recompense. Over and over again this happens.

  10. Bsamm09 says:

    Here’s a more detailed article from a great blog. There should be some people in jail for this. Senior Management was directing a lot of this it seems.

    http://www.zerohedge.com/news/barclays-found-engage-massive-libor-manipulation-gets-wrist-slapped-coopted-regulators

  11. frodolives35 says:

    What we need is less banking regulation. They would not be criminals if we did not make it against the law. Its our fault. /s