Who knows what the future might hold for the individuals who wrote the following. Will they be indicted for market manipulation? They should certainly be indicted for stupidity. Under the heading of "you cannot make this stuff up," Bloomberg reveals,
Here's an e-mail about the three- month rate from a senior Barclays trader in New York to the London banker who submitted the rates: "Hi Guys, We got a big position in 3m libor for the next 3 days. Can we please keep the lib or fixing at 5.39 for the next few days. It would really help. We do not want it to fix any higher than that. Tks a lot."
Bankers submitting rates responded to such requests as if they were routine: "For you, anything," and "done … for you big boy," according to the e-mails. Not that the efforts went unappreciated: "Dude. I owe you big time!" one trader wrote to a Libor submitter. "Come over one day after work and I'm opening a bottle of Bollinger."
Barclays traders also coordinated with counterparts from other banks. In an instant message, one Barclays trader wrote to a trader at another bank: "If you know how to keep a secret I'll bring you in on it, we're going to push the cash downwards. … I know my treasury's firepower … please keep it to yourself otherwise it won't work."
If the best defense is a good offense, other banks likely to be dragged into this scandal are already hard at work. How so? Late yesterday afternoon, the WSJ reported Banks Seek Dismissal of Libor Suit. Not so fast, gentlemen. Let's see the e-mail exchanges first.
I have long maintained, that the banking industry shouldn't be trusted to regulate itself. Will this scandal bring about the necessary change on that front?
Larry is a Wall Street veteran, having worked at such banks as First Boston, Bear Stearns and Union Bank. He blogs at www.senseoncents.com