GO
Loading...

At Least Three Other Banks in Rate-Fixing Mess

Thomas J Peterson | Getty Images

MIT Professor Simon Johnson points out that it is a mistake to treat the Libor scandal as confined to Barclays.

"Barclays could not have manipulated those rates by themselves — and that is not what the C.F.T.C. [Commodity Futures Trading Commission] found or the basis of the Barclays settlement. Rather, some Barclays employees colluded with people at other banks in a way that, over a period of years, moved Libor rates up and down, depending on what would favor the trading positions of the people and organizations involved," Johnson writes in the Economix blog at the New York Times.

This is quite right. We know that at least three other banks were acting with Barclays .

Here's the relevant bit from the CFTC's order and settlement with Barclays:

During the period from at least mid-2005 through mid-2008, certain Barclays Euro swaps traders, led by the same former Barclays' senior Euro swaps trader, coordinated with traders at certain other panel banks to have their respective Euribor submitters make certain Euribor submissions in order to affect the official EBF Euribor fixing. These requests to and among the traders were made to benefit the traders' respective derivatives trading positions and either maximize their profits or minimize their losses.

The former Barclays senior Euro swaps trader, while still employed by Barclays, spoke daily with traders at certain panel banks concerning their respective derivatives positions in order to determine how to change the official EBF Euribor fixing in a manner that benefitted their derivatives positions. In these conversations, the traders agreed to contact their respective Euribor submitters to request the agreed-upon Euribor submission. The Barclays senior Euro swaps trader also received at times requests for certain Euribor submissions from traders at the other banks, which he then made of the Barclays Euribor submitters as if the requests were his own, at times blind carbon copying the external trader on his emails to Barclays' Euribor submitters. By such conduct, the Barclays Euro Traders were attempting to manipulate Euribor and aiding and abetting the attempts to manipulate Euribor by other banks.

The CFTC order goes on to describe at least six incidents in which Barclays traders conspired with traders at other banks to manipulate Libor, including one four-month long period of coordinated manipulation to generate trading profits. The CFTC doesn't name the banks, but obviously knows exactly who was involved in these actions with the Barclays traders. We know that at least three banks are involved, since the order lists them as Bank A, Bank B and Bank C.

In addition to Barclays, there are several foreign banks and three United States banks involved in Libor panels: JPMorgan Chase, Bank of America and Citigroup. There's no way to tell which were involved in the Libor scandal with Barclays. For now.

Follow John on Twitter. (Market and financial news, adventures in New York City, plus whatever is on his mind.) You can email him at john.carney@nbcuni.com.

We also have two NetNet Twitter feeds. Follow CNBCnetnet for the best of the days posts, including breaking news. Follow NetNetDigest for a feed of every single post each day.

You can also be our friend on Facebook. Or subscribe to John's Facebook page.

We're on Google Plus too! Click here for John's Google+ page.

Questions? Comments? Tips? Email us atNetNet@cnbc.comor send a text message to: 917-740-8477.

Call us at 201-735-4638.

Symbol
Price
 
Change
%Change
BAC
---
BARC
---
C
---
JPM MLP ETN
---

Featured

NetNet TV

Wall Street