As much as I would have liked to have seen the Bob Diamond testimony before Parliament yesterday (a previously booked flight ruled that out), I should probably consider myself lucky. Comments by readers and tooth-gnashing reports from the British press indicate that Diamond is an apt student of the well honed CEO practice of shirking responsibility and shameless denials. Those strategies go a long way in stymieing efforts to get insight, at least in the setting of a legislative grilling. Some of it is the time constraints on each interviewer: they can only go so long before they have to turn the mike over to a colleague. I’d love to see a real prosecutor, with the luxury of time and the ability to do serious discovery before deposing executives, go after some of these fearless leaders.
The most theatrical moment of the day appears to have been when MP John Mann went full bore into Diamond. I’m expecting this bit to make YouTube, but this live blog account from Scotsman gives a decent feel (Guardian’s live blog interspersed tweets from other journos, which gave multi-dimensioned coverage, similar to having multiple talking heads at a sporting event):
4.25pm: Labour MP John Mann decides to pile in. He asks Mr Diamond whether he knows the founding principles of the Quakers who first set up Barclays? Mr Diamond looks at him like he’d like to put him in a mincer. “Well I can tell you and tattoo them on your knuckles,” says Mr Mann. “Honesty, integrity and plain dealing,” declares Mr Mann. Mr Diamond hits back and says that honesty, integrity and plain dealing sums up the way he did his business.
4.38pm: John Mann has a good rant at Mr Diamond’s claim that he only found out about the rate fiddling a month ago. “You’re not even asking questions internally. Either you were complicit or you were grossly negligent or you were grossly incompetent.”
Then Mr Mann asks why Mr Diamond doesn’t donate his £20m bonus to Shelter. Mr Diamond replies that he feels he and the management team did a good job in rooting out the wrong-doing at his bank.
The internal inconsistency was there for all to see: I Bob Diamond fully deserve my lofty pay. No, there was no problem here, Barclays has a great culture. That Libor problem? Oh, it was only 14 traders and their “immediate supervisor” (don’t you love that expression? It conjures up an image of a store or factory floor boss, the sort of guy in short sleeves who wanders around to keep everyone on their toes, as opposed to the sort it probably was, a managing director pulling down at a few million quid). Oh yeah, and the compliance guys missed it too.
We have the prima facie evidence of the actual rottenness in Barclay’s culture in the very person of Bob Diamond. Fish rot from the head. Diamond has clearly, deeply internalized the “heads I win, tails you lose” finance view of the world. Barclays not only took advantage of special facilities during the crisis and continued super low rates now, it also enjoys a “too big to fail” funding advantage. Yet Diamond has been one of the most flagrant in showing contempt for the broader public to whom he owes his lofty pay. As we wrote in “Barclays’ Bob Diamond to Non-Bankers: Drop Dead” in January last year:
The reality is that banks can no longer meaningfully be called private enterprises, yet no one in the media will challenge this fiction. And pointing out in a more direct manner that banks should not be considered capitalist ventures would also penetrate the dubious defenses of their need for lavish pay. Why should government-backed businesses run hedge funds or engage in high risk trading, or for that matter, be permitted to offer lucrative products that are valuable because they allow customers to engage in questionable activities, like regulatory arbitrage or tax evasion? The sort of markets that serve a public purpose should be reasonably efficient and transparent, which implies low margins for intermediaries.
But note the clever positioning by Diamond, per the Financial Times
Mr Diamond acknowledged the public anger towards bankers and the emotion surrounding pay, and admitted he wished he could “make the issue of bonuses go away”.
But he argued it was not possible to stop paying bonuses without severe consequences for the business and the broader banking sector and said it was now time for the bonus debate to move on.
Yves here. This is priceless. Diamond wants the “issue”, meaning the controversy, over bonuses to go away. I’d love to see the “severe consequences to the business” of forcing lower pay on incumbents. Yes, a very few might find be able to raise money from investors. But as John Whitehead, a former co-chairman of Goldman said in 2006 when hectoring Lloyd Blankfein over the firm’s “shocking” pay levels, the firms could afford to lose them. But Whitehead missed the dynamic of the post-partnership era. The partners had every reason to keep pay in line; it was their capital at risk, after all, and overcompensating staff reduced their take. Now the top brass is aligned with the interest of the producers in taking as much from any source they can.
Back to the Financial Times:
“We can’t just isolate bonuses and assume it won’t have consequences,” he said.
“The biggest issue is putting the blame game behind us. The time for remorse is over.”
While Mr Diamond said he would “show any restraint possible” on bonuses, he would not commit to waiving his own personal award, as he and rival bank chief executives did last year.
Yves here. If you believe that, I have a bridge I’d like to sell you
Fast forward to Diamond’s Parliament star turn. So his past statements have made clear that he is pretty deficient in any sense of responsibility and he confirmed it again today, with his sadly not unusual view that CEO, like finance people generally, get the benefits of all good things, like bull markets, rising leverage levels, and dumb luck, but never never have to be responsible for failures in oversight, save saying they are sorry (remember, not only has dog-in-the-manger Diamond made it abundantly clear he is not giving up his pay, he’s apparently seen as likely to land a new job pronto. Nothing like failing up, or at worst sideways).
And the MPs managed to dent Diamond’s efforts to defend Barclay’s culture. An exchange with Teresa Pearce, per the Guardian:
Q: You said in February 2011 that the time for bankers to keep apologising was over. Do you still think that?
Diamond jokes that he would like to avoid the question.
Q: You said you were shocked by this behaviour. Yet you have spent your career in banking. Other people were not shocked. Why was this?
Diamond repeats his point about Barclays being an amazing place.
We’ve got that, says Tyrie.
Pearce says it sounds as if Diamond does not really know Barclays.
Andrew Tyrie pointed out that the FSA had raised red flags about Barclay’s culture four months ago, which left Diamond on the back foot, claiming that the FSA approved of the “tone at the top.”
John Gapper of the Financial Times focuses on an issue that this blog and others have raised, that what is really at issue here is that the predatory values of traders now pervade the industry, leading incumbents to defend them as normal and necessary. This leads inevitably to “the devil (the competition) made me do it” defense:
Diamond claimed he’d found out about “the full extent” of the Libor bid rigging only a month ago, and he also said the bank spent £100 million investigating it. Huh? The FT had been writing about this issue since 2007. This says that Barclays refused to do a decent job of internal reviews and that (presumably) Diamond found out how bad things were only via his costly external assessment. a month ago. It points to either a considerable shortfall of internal controls or a deliberate management policy of “we know about this but we’ll pretend we don’t,” meaning key parties were careful not to commit incriminating information to e-mail or other written form. Neither reflects well on Diamond.
Diamond’s disconnectedness, whether genuine or clever posturing, sounds like the view from Versailles, circa 1780. As Andrew Sparrow of the Guardian observed,
I was reminded of that famous quote in Disraeli’s novel, Sybil.
Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets.
Disraeli was talking about the rich and the poor. But he might have been talking about bankers and non-bankers.
There was a brief period, from October 2008 to (roughly) February 2009 when top bankers were frightened and humble. Unfortunately, it will likely take a crisis of the scale just past to engender some humility. And if the public and regulators do not get the will, soon, to curtail their looting, they are likely to engender a meltdown sooner rather than later.
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Hi Yves
A few questions on this:
Wouldn’t the LIBOR rate be a key input for a bank like Barclays when computing its VaR figures every day?
If it is a key figure, wouldn’t the process for bidding for LIBOR have to be documented and signed off under Sarbox?
I’m just wondering why all the focus of questioning is on the fixing of Libor in late 2008, when surely the fixing of Libor prior to that is indefensible? Seems like a successful misdirection by Barclays and its supporters.
I think the banks and the politicians want to keep the focus on libor rigging during the financial crisis in 2008 because it can be sold as ‘yes the rigging was technically wrong, but we did it to save the world from financial armageddon’.
“I’m just wondering why all the focus of questioning is on the fixing of Libor in late 2008, when surely the fixing of Libor prior to that is indefensible? Seems like a successful misdirection by Barclays and its supporters.”
Absolutely. In relation to late 2008, Diamond’s claim that Barclays was not fixing Libor prior to the conversation with Tucker is I think credible. And I also think that Jerry de Missier’s reading of the email from Diamond is plausible, even if Diamond repudiates it – at which point the questions about who was behind the questions from Whitehall referred to by Tucker becomes an imperative one. The suggestion from Diamond appears to be that they were instigated by ministers.
At that point, however, everyone involved was attempting to cope with crisis conditions. The mega-scandal would indeed appear to relate to the apparently routine and casual manipulation of Libor in order to make profits prior to this – and to the apparent complicity of a very large number of major banks. And it will certainly suit not only Barclays but a lot of others in the banking sector to have attention taken off this.
As to the fixing of Libor prior to the crisis, what appears to be suggested is that there was a system of collusion between banks, but that senior figures in the banks did not know about this.
As an ignoramus about banking, however, there is something here which really puzzles me. Given that Libor is assessed on the basis of submissions from a substantial number of banks, it is not clear to me how submitters at a single bank could hope materially to influence the figure, without giving a figure which was very clearly out of line with that from other banks. A commonsense view – which may of course be wrong – would suggest that a very substantial degree of collusion would be necessary to make this kind of fixing work.
But such collusion, one would have thought, would not develop overnight. And it would be bizarre if, over a sustained period, one had collusion without this coming to the attention of senior figures in at least some of the banks. Either figures like Diamond really are fantastically ignorant about what goes on in the institutions they are supposed to run, or they are in some measure complicit.
Diamond’s claim that Barclays was not fixing Libor prior to the conversation with Tucker is not credible, if one accepts statements made earlier in that year to financial media, for example :
`The Libor numbers that banks reported to the BBA were a lie,” said Tim Bond, head of global asset allocation at Barclays Capital in London. “They had been all along. The BBA has been trying to investigate them and that’s why banks have started to report the right numbers.”
quoted from Bloomberg may 2008.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=az3eSerjPuDA&refer=home
One might read the whole article and an easy search will give many more, not only from Bloomberg which has covered this for four years, ( unless they start to get conveniently deleete) yet other media in UK., Europe, and USA.
why have we not heard, in these recent discussions, from the other banks which are also under investigation for alleged manipulation ? Royal Bank of Scotland,JP Morgan,inter-dealer broker ICAP, Citigroup, Lloyds Banking Group,HSBC.
RBS sacked one trader,Tan Chi Min, who is now sueing the bank in singapore and alleges that it was regaulr practice and senoir figures were aware.
UBS came clean long time ago in exchange for immunity from prosecution.
Will it be blamed on the few “rogue traders” again ? and no one senior knew a thing, not even about the inquity, until this years, last month or last week ? ?
If the BBA knew that there was a problem with the Libor back in 2008 then one oannot easily believe that the Bank of Englandn nor relevant senior U.K. political figures would not be made aware too, or other central banks around the world, as the daily Libor figures carry too much weight within the financial world for any known error or misuse to be considered of small matter.
Thanks for the reference to the Bloomberg article.
There is in fact no contradiction. All that Diamond was claiming was that, at the time when Tucker phoned him, Barclays was not underreporting its borrowing costs, while practically everyone else was.
That Barclays traders had been doing so earlier is not in dispute, and this is clearly part of the context to the exchanges between Tucker and Diamond.
The email is a classic example of a document whose meaning would be obvious to those who were familiar with the context, and is not so to those who are not. Ironically, precisely this fact allows those who want to wriggle out of complicity in the late 2008 manipulation — including not only Diamond and the BoE, but also it may very well be Labour politicians — to deny it was an instruction.
If as seems likely discreet action had earlier been taken against Libor fixing, those lower down the chain of command would have wanted to be confident that at some later point they would not be made scapegoats.
So it would have been natural for del Missier to represent a veiled instruction — leaving the BoE an element of deniability — as a hard instruction. The effect has been that del Missier has been left carrying the can, which means that what he does or does not say will be very interesting.
I know from experience that CEOs are capable of drilling with relentless energy into every corner of their large business at least once every two years… when it’s about reducing the wages.
We could call this the Dimon Defense (choose your spelling): “My head is hard, and my ex-employees are slow and sticky.”
The real point is that _no one WANTS to prosecute_. Or regulate. We’re getting a lot of mouthing and handwringing by those high up in public governance because some public sectors are agitated. But it’s all theater. Rushing Diamond/Dimon before the House in question guarantees that: they will lie and dodge both shamelessly and indifferent to outcome because it will al blow over after teh 24 hour cycle expires. An empowered and budgeted investigatory authority able to take the months to chew their way from little toes to big wigs, as is happening to the rottenness which is all things Murdoch, shows a different trajectory since launched to an intent other than smokescreen. ‘Hearings’ are _designed_ to avoid any discovery, that IS their point.
A serious regulatory intervention would start, patiently with discovery. But what would be found is likely exactly what Diamond alleged, he was, as were all the rest for years, tipped on the QT t ‘keep things stable’ for the good of the realm, with the sweetener that he could pump his shop and line his pockets in the process *wink-wink*. Which is why, of course, the response is all theater and fulmination with no teeth or legs behind that.
“The real point is that _no one WANTS to prosecute_. Or regulate.”
Yes, but the situation may change. I cannot comment on the mood in the United States, but there is a build-up of anger in Britain, across the political spectrum – something which few bankers seem to understand. As regards Diamond’s performance, the ‘view from Versailles, circa 1780’, puts it very well.
Compelled by the soaring heat wave to be inside yesterday, I watched what I could stand of the testimony. As you say, the anger in the room was palpable. But it was undercut by Diamond’s unflappable air and his constant use of the MPs first names, by which he managed to impart a clubby tone to the proceedings, as though they were all having a lively discussion at a posh dinner party.
L, but his use of first names sounded more like “AmericanCorporateSpeak” rather than real familiarity. (“John, life insurance is really and investment in your family.”)
It’s also worth remembering that in the UK, Parliament is genuinely sovereign. If the buildup of anger translates into control of Parliament, the banksters have nowhere within the UK to run; Parliament can, if push comes to shove and it turns out that the banksters have somehow managed to wiggle out of prosecution, simply declare them guilty, take their money, and imprison them.
There are some advantages to this system.
“Yet Diamond has been one of the most flagrant in showing contempt for the broader public to whom he owes his lofty pay.”
With respect Diamond owes his lofty pay to Barclays shareholders, as I believe Barclays received no public funds to prop it up. Those shareholders have already clipped his wings once re pay and I doubt they will be impressed with an belief on his part that he is entitled to a golden handshake for this debacle.
Given the potential losses to the bank from the litigation already warming up it makes a kind a sick sense that Diamond would want to abandon ship now, although the Captain demanding room in the first life-boat for his sacks of gold isn’t going to go down at all well.
FK, it was actually revealed that the Libor manipulation was meant to separate Barclays from the pack of “banks” bailed by “government,” wasn’t it? How else was he going to “sell” those Middle Easterners to “invest” with Barclays?
Is Barclays connected with the Qatar-financed “Shard” slicing the sky of London? How was this approved by that champion of “nature and the environment,” Prince Charles?
No, you don’t get it. First, you ignore that Barclays WAS bailed out. All the big banks were, via access to special facilities, super low interest rates, and having some of their peers get equity infusions. The bailout of AIG, for instance, was effectively a rescue of all the big dealer banks. If AIG had gone down, they were all tightly connected to AIG. All would have failed.
Second, even ex the crisis, big banks cannot correctly be considered to be to be private enterprises. The level of subsidies they enjoy is vastly larger than in other industries, even defense. The article referenced here is by no less than Martin Wolf in 2009:
Back to the article:
This observation is of fundamental importance. Here in the US we are still dancing around the dirty word nationalization, with the respectable position being that yes, the US might take banks into the government emergency room for a while, but of course, they will be made private again as soon as possible.
But Wolf is correct. If the authorities do not find a way to change the structure of the banking industry, firms will remain tightly networked, and any one can imperil the health of all, requiring a state rescue. That means they should be very highly regulated, in the classic utility model of regulated return on equity.
http://www.nakedcapitalism.com/2009/03/martin-wolf-is-angry-about-bank.html
Subsequent work by Andrew Haldane of the Bank of England has shown banks to be massively destructive, not value creating:
His calculation of the world wide costs:
Yves here. So a banking industry that creates global crises is negative value added from a societal standpoint. It is purely extractive. Even though we have described its activities as looting (as in paying themselves so much that they bankrupt the business), the wider consequences are vastly worse than in textbook looting.
Another extract from a 2010 post on bank pay:
Now some readers will argue that financial services industry pay is market determined and therefore virtuous. That’s a misconstruction. Compensation in the financial services is a classic example of market failure.
The big banks and broker dealers ALL went into the crisis badly undercapitalized. Why? Because the industry engaged in a variety of practices that allowed them to rely on what amounted to fictive capital. For instance, credit default swaps allowed them to hedge risk with undercapitalized counterparties like AIG and the monolines. When the hedges failed, the banks showed spectacular losses. Similarly, banks shifted assets into structured investment vehicles and other off balance sheet entities, but earned fees both for setting them up and providing services to them. When these entities started showing serious losses, the banks discovered they weren’t so “off balance sheet” and tool losses.
If the banks had accounted for these risks properly, they would have had to carry higher capital levels and would therefore have had to retain more in the way of earnings and pay less to employees. And the idea that escalating pay levels was needed to retain “talent” was dubious. The threat was that the best staffers would leave for hedge funds. But let’s face it, they did regardless, and hedge funds employ comparatively few people in comparison to the banks and broker dealers.
Another reason compensation across the firms was excessive was that earnings are what economists call pro-cyclical. Banks and broker dealers are structurally long. Even Goldman, which endeavored to short subprime, was still long mortgages and credit instruments generally. When interest rates fall and risk spreads narrow, banks and brokers will show profits if they do absolutely nothing. They will show profits on the rise in the value of their assets. This has nothing to do with employee actions, yet they were paid bonuses on profits that would have shown up regardless. And those profits turned quickly to losses when risk spreads widened, but no one was forced to disgorge what amounted to undeserved compensation…
Yet after applying a wrecking ball to the global economy, the banks got big handouts, and like Fannie and Freddie pre crisis, the banks get to borrow at cheaper rates than would otherwise apply because investors understand full well that governments stand behind big financial firms. Haldane again:
http://www.nakedcapitalism.com/2010/06/why-is-no-one-willing-to-say-wall-street-is-overpaid.html
Wolf: “expensive wards of the state” — flat out! If Daddums can’t cut the cord, then the Boyz need to be on a short leash.
In the US, this isn’t considered a contradiction by the Republican leadership, because they think ALL industry should work this way: privatize profits, socialize losses. They think government exists as a tool to transfer money from the 99% to the 0.1%, full stop.
In the UK, that particular insane, oligarchic philsophy is not acceptable even among the Tories, so the UK has better chances of reform without revolution than the US does.
When do we get to nationalize the FED ???????
!!!!!!!!!!!!!!
So Yves, you raise a point I would love to see revisited in a major post: that the ibanks are actively _destructive_ of capital over the long-term (and the mid-term as well). It’s time that this exact point in those precise terms reenters debate. Consider that a request, I suggest.
In aggregate, ibanks _LOSE_ funds which are created in other sectors of the economy.
“Diamond claimed he’d found out about “the full extent” of the Libor bid rigging only a month ago, and he also said the bank spent £100 million investigating it. Huh? The FT had been writing about this issue since 2007. ”
Perhaps Diamond is finished with his process of seeking reinforcement from the British side after threatening to tell more. The extortionists from the CFTC and Justice Dept. have gotten their cut and now it’s time for him to play the buffoon, even ridiculing outsiders’ perspective with the £100 million number.
J. Sterling, do you think it costs £100 million for pay cuts ??
“I know from experience that CEOs are capable of drilling with relentless energy into every corner of their large business at least once every two years… when it’s about reducing the wages. ”
Diamond is telling his reinforcements will be sure to de-nut discovery, their sympathy for his Lehman exploits. London as refuge for the rabid [Joseph Cassano, etc.].
Diamond appears to have found his ‘Zip-It Face’, and it appears to be self-generated.
http://www.scotsman.com/webimage/1.2391894.1341439085!image/3715461055.jpg_gen/derivatives/landscape_595/3715461055.jpg
Reinforcements.
Up, with (Moi?) “wide-eyed” innocence from Cameron, Osborne, and other “public school” types who need better face-training. The “English” and “Scottish” shill tag-team, as brick walls around the City Nexus did their best to stand against Max Keiser’s rational response, passionately delivered on the Al Jazeera program yesterday.
Actually, these complacent grifter twits are so used to getting away with murder, that their bald-faced lying comes as naturally to them as breathing. They don’t give a thought to how ridiculous they look and sound on TV, because up to now they haven’t had to worry about any serious challenge to their “authority.” Well, that’s how it works in a ridiculously anachronistic monarch+courtier system. But, for how long? Is the 99% across the pond truly that brain dead?
The internet’s ‘bwahaha’ is the best response for these untrained ‘facers’, preferably delivered to them in moments of value to them, jokes to all others.
I was sitting there in Virginia this morning having a breakfast egg white taco at a local mexican restaurant, staring out the plate glass windown onto the boulevard, and for some reason started channeling Johnny Cash AND thinking about this Libor fraud at the same time.
For some reason I started to mind-stream Johnny Cash singing in that deep baritone. It was so real in my head I even made up a whole song — or not really made it up, just recorded what the channeling said mostly the word “lie” over and over — but then forgot it all within an hour. Then started channeling spontaneiously again this afternoon and had to make up another one. This one is pretty bad, I admit it, because I quickly forced it and it’s a totally plagiarized butchered version of a real JC song, but it still cracked me up.
fraud is a burning flame
and it makes a fiery ring
but I, I’m not to blame
cause I, I didn’t know a thing
And I earn earn earn
even though I’m a liar
and it burns burns burns
every bonus gettin higher
While we churn churn churn
that ring of fire that ring of fire
I fell into a burnin ring of fire
I went down down down
while the pay kept gettin higher
and we’ll burn burn burn
a ring of fire a ring of fire
I fell into a burnin ring of fire
If Libor’s too low
all our boyz’ll make it higher
and they’ll burn burn burn
that ring of fire that ring of fire
our ring of liars
our ring of liars
our ring of liars
http://www.youtube.com/watch?v=gRlj5vjp3Ko
what is it with this Dimon & Diamond thing. Is somebody up there really high making this stuff up? It’s all so much like an overripe ripe fruit hanging on a tree branch about to fall in the heat of the afternoon.
craazyman, you’ve found your calling!
” Dimon & Diamond ”
Go back over your history notes and you’ll never be the same. Clearly someone somewhere is telling us all that we ought to know by now.
No breakfast egg white taco — just a slice of pizza…
Johnny Cash…
Evil diamonds in the sky, worlds are whirling right on by.
Are you wondering who am I?
Evil diamonds in the sky.
Think you are just a star in God’s crown?
Making million’s life suns go down, down, down?
Evil diamonds in the sky, silent evil shining high.
Are you tears the devils cry?
Evil diamonds in the sky
Evil diamonds in the sky, like the night you sneak on by.
You will be caught and will be tried, evil diamonds in the sky.
You are no star in God’s crown.
The million’s soon will take you down, down, down?
Evil diamonds in the sky, silent evil shining high.
Are you tears the devils cry?
Evil diamonds in the sky.
Deception is the strongest political force on the planet.
John Mann was useless; don’t get even get mad was the name of the game. We’re trying to get these guys locked up and the stupid head says how about a contribution to charity?
Proper cross questioning by an experienced advocate (eg R Jay at the Leveson inquiry) is what’s required.
n, it was “John of Caitness” who asked proper questions.
Sorry, edit: “John of Caithness”
I’d almost forgot.
This whole spectacle is possibly a mock stretching on the rack for the American ‘Anglophile’.
jesse does have a way with these quotes,
“There is no error so monstrous that it fails to find defenders among the ablest men…The danger is not that a particular class is unfit to govern. Every class is unfit to govern…The strong man with the dagger is followed by the weak man with the sponge.”
John Dalberg Lord Acton
Now I’ll leave up to you whether Diamond’s role is that of the strong man .. or the sponge.
http://jessescrossroadscafe.blogspot.com/2012/07/reaction-in-uk-to-this-mornings-bob.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Café+Américain%29&utm_content=Google+Reader
Up, Jesse’s offerings are timely, effective, and just.
Imagine a YouTube quick clip: To the refrain of “Heah come da Judge, Heah come da Judge,” the substitute: “Heah come da Sponge, Heah come da Sponge” to mop up all the blood of the “sacrifices.”
“Jesse’s offerings are timely, effective, and just. ”
That they are. Jesse for president, he’s got my vote.
:)
Up, why not? Jill and Jesse for Veep?
Regarding this from your “Barclays’ Bob Diamond to Non-Bankers: Drop Dead” in January last year:
“The reality is that banks can no longer meaningfully be called private enterprises, yet no one in the media will challenge this fiction. And pointing out in a more direct manner that banks should not be considered capitalist ventures would also penetrate the dubious defenses of their need for lavish pay.”
No one challenges the fiction because the focus is always kept on the intentionally deceptive theatrical CAUSES; the scam ‘complexity’ in the scam ‘rule of law’, the scam investigations, the scam pompous ass media, etc., with very little focus spent on the EFFECTS of this grand criminal collusion. If one were to honestly show the effects and connect the causes with the effects, Diamond and Dimond and their complicit government puppets and media, would be meaningfully called mass murderers.
That is what these aberrant diseased sociopathic over paid Xtrevilist gangsters really are — MASS MURDERERS.
As a direct result of this blatant usurpation of the ‘rule of law’ millions upon millions of honest and hard working people are robbed of the fruits of their labors, denied opportunity, and — as a direct contributing result — are sent to an early grave.
To a lesser degree it goes on every day in America with the same murderous results……scroll to the bottom of the page…
http://www.fountainofbaloney.com/
The dynamic is the same and the results are always the same, they differ only in proportion to the size of the sphere of influence that is corrupted. And the cause is also the same — the sociopathic disease of murdering immoral Xtrevilism knows no boundaries.
That is what these aberrant diseased sociopathic over paid Xtrevilist gangsters really are — MASS MURDERERS — sending millions of people to an early grave!
http://www.google.com/search?num=10&hl=en&site=imghp&tbm=isch&source=hp&q=homeless+graves&oq=homeless+graves&gs_l=img.3…2876.7360.0.8808.15.10.0.5.5.0.337.1734.0j9j0j1.10.0…0.0.jf8ar4QKI7w&biw=1019&bih=662&sei=LIj1T8-2EIHq9AScp8CFBw#hl=en&site=imghp&tbm=isch&sa=1&q=homeless+tents&oq=homeless+tents&gs_l=img.3..0l2j0i24l2j0i5i24.10754.13002.6.13351.5.5.0.0.0.0.1559.1852.0j2j8-1.3.0…0.0.TFU19x_jQQg&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.,cf.osb&fp=88a6611d91a5ff7b&biw=1019&bih=662
We need to focus on the effects of their machinations.
Deception is the strongest political force on the planet.
Warren, your link to homeless -sickening. Here’s a link to Max Keiser saying it on the carefully scripted TV -calling them ‘liars’ -with all appropriate disrespect.
LeeAnne, he should be a lot more disrespectful and call them murderers — that’s what they are. When he was asked directly what he thought should be done he said “Let the market find its own rates.” Wrong answer! He should have called for prosecutions!
Deception is the strongest political force on the planet.
Murderers indeed.
“As a direct result of this blatant usurpation of the ‘rule of law’ millions upon millions of honest and hard working people are robbed of the fruits of their labors, denied opportunity, and — as a direct contributing result — are sent to an early grave.”
This is for the privileged First World. If you’re unfortunate enough to have been born into Third World poverty then you’re looking at quick death through starvation.
A hundred thousand Africans die because Goldman’s commodity traders artificially bid up the price of wheat? All in a day of Lord Blankfe…errr…God’s work.
The amount of money stolen is like trying to comprehend the vastness of space. Eveyone in Yerp (ChimpCo spelling and pronunciation) and USA was affected by and screwed by this fraud.
But according to TeaBag conservatives, Freedom is dead because some toothless rube in a red state has health care now.
Huge problem amongst the left intelligentsia: the casual disrespect towards rural poor people (“toothless rube in a red state”.) This kind of thing is the grain of truth in the right-wing charge that the left is a bunch of elitists who look down on regular people.
As leftists we must fight for the dignity of all oppressed people, whether or not they (currently) agree with us.
And when you consider the fact that many self-described intellectuals on the progressive end of the spectrum are also often woefully ignorant of many things (the nature of capitalism, for example; the conditions of the Third World or even just the world outside of ‘Murica; the essentially reactionary nature of the Democratic Party), what becomes clear is that there’s a need for a lot more humility amongst this crowd.
Making fun of people who are too poor to afford a good dentist is wrong. Making fun of people because they don’t like the corporate shit sandwich that is BarryCare is wrong. Yes, there is backwardness amongst many rural folks, but if you actually do things like, you know, talk to these people, you’ll see that this backwardness also competes with genuine insights into the causes of their oppression. Our job should be to take these genuine insights and to channel them into a higher political synthesis and then take this synthesis back to them.
One thing that will never work: petty bourgeois liberal condescension.
Actually, I think you’re wrong. Petty bourgeois liberal condescension has won *practically every improvement in social justice ever in the history of the world*, from the Reform Act to the Russian Revolution.
…in other words, recheck your history. Movements which succeeded at major social improvements were practically all full of “petty bougeois liberal condescension”. Abolitionists, women’s rights movements, hell, even the union movement.
I’m not saying condescension is a good thing, just that historically it appears that it DOES work.
Can you talk a little more about your method of winning over poor and oppressed people through condescending cracks about their appearance?
As for the liberals, their role in those movements was to coopt them and channel them into avenues more or less acceptable to the state and its ruling classes.
Should we talk about what the liberals did to the CIO?
Care to divulge how the Russian Revolution of October 1917 was carried through by condescending liberals?
Somebody certainly needs to check their history.
Aye. David Graeber has also written a bit about that both in his book Towards an anthropological theory of value and Revolutions in Reverse.. Graeber, pp. 8-9:
The fact is that stories like mine — stories of dramatic class mobility through academic accomplishment — are increasingly unusual. For most of its citizens, America is no longer a land of opportunity. Increasingly, it is starting to look like a caste society. As the higher education system is no longer seen, at least by the white working class, as a plausible means of social mobility, class resentments have become grafted onto educational attainment. What I want to ultimately argue then that it’s the very liberal elites who find Bush so repellent have to bear much of the blame for this. Bush-style populism is the final result of their own stacking of the deck in favor of their own children.
…
The reaction is, predictably, a tendency to see social class as largely a matter of education, and an indignant rejection of the very values from which one is effectively excluded. As Tom Frank has recently reminded us, the hard right in the US is largely a working class movement, full of explicit class resentment. Most working class Bush fans don’t have a lot good to say about corporate executives, but to the frustration of progressives everywhere, corporate executives never seem to become the principal targets of their rage. Instead, their hatred is directed above all at the “liberal elite” (with its various branches: the “Hollywood elite”, the “journalistic elite”, “university elite”, “fancy lawyers”, “the medical establishment”). The sort of people who live in big coastal cities, watch PBS or listen to NPR or even more, who might be involved in appearing in or producing programming on PBS or NPR. It seems to me there are two perceptionsthat lie behind this resentment:
1. the perception that members of this elite see ordinary working people as a bunch of knuckle-dragging cavemen, and
2. the perception that these elites constitute an increasing closed, caste-like group; one which the children of the white working class would actually have more difficultybreakinginto thanthe class of Enron executives It seems to me that both these perceptions are, largely, true. Let me take each in turn:
1. The first thing to be said about this perception is that it is largely true. Members of what passes for an intellectual elite in America do see their fellow citizens as idiots.
It is a peculiar feature of American democracy that we have never had much in the way of an intellectual class. America has never really produced figures like Camus, Tolstoy, Nietzsche, Bertrand Russell or even George Bernard Shaw: that is, genuine thinkers whose works are widely read and argued about by ordinary, literate citizens. The equivalent role tends to be filled, instead, by journalists. Mark Twain and H. L. Mencken are probably the archetypal figures in this respect: men of modest origins who rose through the world of newspapers and popular magazines, and who throughout their lives continued to earn their livelihoods, essentially, in the entertainment industry. Not surprising, then, that both tended to see the public as an irrational herd, or bunch of gullible simpletons. Journalists always tend to think that way. It has certainly been my own experience: it is hard to talk about politics with a professional journalist—even, often, relatively “progressive” journalists—without hearing some cynical tirade about the ignorance or stupidity of the American public.
(Apologies for the partial double posting, pressed submit by accident)
David Graeber has also written a bit about that both in his book Towards an anthropological theory of value and Revolutions in Reverse.. Graeber, pp. 8-9:
Thanks for the link to what looks like an interesting article from Graeber. Will read!
Thanks for sharing your experience, Foppe. Very interesting.
Myself not being privy to the cloistered world of corporate media journos, I was not aware that this kind of casual disrespect was so prevelent in everyday conversation, though I guess I shouldn’t be surprised since it’s certainly present in much of their writing.
Thanks for that Flip Wilson clip, loved loved loved it. . .
Yves, if only you and William K. Black could cross-examine these punks.
I’m puzzled…Aren’t (weren’t) there a total of 16 banks involved with “determining” Libor (“lie-more”)?
If so where are the stories of the other 15…..????
A very good question. One hopes that they will come out in the civil suits now under way — and the further suits likely to follow. At that point, we may perhaps see proper cross-examination.
But what still baffles me is how a system of extensive collusion between multiple banks — such as would seem to be necessary to fix Libor — can be generated simply as the result of spontaneous interactions of low level employees. This does not make sense to me. Does it to other people?
It would seem that there would have been an enormous number of institutions, and individuals, who can plausibly suspect that they lost money as a result of Libor fixing.
So — what is likely to result? It could be a trickle of claims, or it could be a tidal wave — with class actions, and lawyers acting on a no-win no-fee basis, perhaps.
Which is more likely?
DH, “what still baffles me” – See, “baffle them with bull$$t” works!
Not quite my point. What I am sceptical about is the notion that the kind of collusion required to fix Libor can be generated by spontaneous interactions of very low level players. Would it actually require involvement of higher level players from the outset?
As to BS, it seems wildly unlikely that Diamond’s claim to have been so ignorant so late is anything but that. However, care may have taken to avoid any kind of ‘paper trail’. In which case, the best hope of clarification would be, as it were, if the rogues fall out.
I do not imagine that del Missier is 100% happy with being saddled with exclusive responsible for Barclays Libor fixing in late 2008
DH, there must be a digital trail somewhere. But where there is no will, is there a way?
Exactly. And the further details the Justice Dept. is withholding ? Include them with the 15.
1. Investigations of them are continuing
2. Barclays was depicted in announcements of its fines as extremely cooperative. That means it helped finger the others.
I’m assuming the Libor fixing was a cooperative venture, at least in the initial phase. Look at the chummy e-mails from the traders. You’d have to have cooperation for it to have succeeded, and Barclays claims the traders were doing it (in the 200502007 period) to inflate their bonuses. Traders are smart enough to know that submitting a big on their own will do bupkis.
And wouldn’t brazen trader e-mails be a “tell” they had nothing to fear?
Yves Smith,
Thanks for this most illuminating series of posts, and also for harking back to the post on Andrew Haldane’s work.
As you say, cooperation would be needed for this kind of fix to succeed – and a question which is puzzling me is whether, given this fact, Barclays claim that in the 2005-7 period the scam was solely the result of traders seeking to inflate their bonuses is credible.
I am hampered by lack of knowledge of how banks work. But what I want someone to provide a credible account of how this extraordinary scam originated.
In relation to 2005-7 period, the story we are asked to believe would seem to run somewhat as follows. At some point, Tom, on a trading desk, realises that he can make very lucrative leveraged bets if Libor can be manipulated. It would seem that the manipulation would need to be relatively foolproof, if Tom was to be reasonably confident that the risk of bets blowing up in his face could be ignored.
So Tom goes over to Dick, sitting in the office which submits the bank’s Libor figures, and says about what about it.
At that point however, both of them could be expected to be aware that, on his own, Dick could ‘do bupkis’.
Suppose – just for argument’s sake – that Tom and Dick worked for Barclays, Dick would then have to say something like ‘Harry who used to work here now does the submissions at UBS’, and/or ‘I go out drinking with Sam who does them for RBS’ and I’ll give them a call and see what they think. And the process would have to go on from there.
It is a general characteristic of criminal conspiracies that the risks of their being ‘blown’ increase in a more than arithmetic ratio with the number of participants – and also, with knowledge of the conspiracy being supplied to people whose silence cannot be relied upon. All that one requires is, as it were, one honest man – or woman – in Sodom, and the fixing of Libor gets reported to senior management. At that point, one might expect action would be taken to discipline the ‘rogue traders’ – and ‘rogue submitters’.
In addition to this, it is not immediately clear to me what personal financial interest the submitters – as distinct from the traders – would have in the fixing of Libor. Moreover, one would have thought that there would have been people not directly involved who were quite well aware of the discrepancy between the Libor submissions and the actual rates the banks were paying.
We are asked to believe both that this whole process developed by spontaneous action at the grassroots, and that no knowledge of it came to senior management. And this is a story the DoJ, the CTFC, and the FSA seem quite happy to believe.
The inquiries seem to me to have the hallmarks of investigations where those in charge do genuinely want to see corruption brought under control – but are fearful of the destabilising implications of exposing the full extent of the wrongdoing. The continuing fragility of British banks was in fact explicitly adduced by the former FT editor, Richard Lambert, as a reason why a Leveson-style inquiry would cause regulatory uncertainty that the system simply cannot handle, particularly given the potential implications of the Eurozone crisis.
(See http://www.ft.com/cms/s/0/226643ec-c431-11e1-850c-00144feabdc0.html#axzz1zdMug8CO )
The reality is that banks can no longer meaningfully be called private enterprises, … Yves Smith
I wonder if this has EVER been true? Even the acceptance of gold or silver by government as money is a form of government privilege for what should be purely private money forms at most.
And who needs banks anyway? The government can simply spend its fiat into existence and tax some of it out existence. As for the private sector, it can either borrow fiat at honest interest rates or develop and use private money systems that do not require government privileges.
We need to bailout the entire population, including non-debtors, from all debt to the banks and start over. Money, of all things in business, should be ethical.
I suppose there were private banks in the ancient period, but they didn’t resemble what we currently think of as banks, being more “warehouses for storage of valuables”.
And they had their own systems of armed guards, so they were edging into the status of government anyway.
I agree that we should not get angry. We should get coldly determined to kill ALL government privileges for banking, once and for all.
FB, right. What’s the justification for their “privilege” again? Oh yeah, “utilities.”
The justification is that “credit creation” kinda, sorta, almost works to create a form of “prosperity”. Greenspan said that bubbles were “necessary for progress.”
“Mr Diamond acknowledged the public anger towards bankers and the emotion surrounding pay, and admitted he wished he could “make the issue of bonuses go away”.
But he argued it was not possible to stop paying bonuses without severe consequences for the business and the broader banking sector and said it was now time for the bonus debate to move on.”
“Severe consequences”? Like what? Some people not making as much stealing as they otherwise would have, had they not been caught with their pants down?
Diamond… Dimon… same m.o., same guys. Do they actually clone them? The practice has to stop. Time to break the mold once and for all.
Needed: “banker/trader” compensation deflation STAT.
Bob is a sociopathic child of a culture of privilege and deceit, a collegiality of crime.
http://jessescrossroadscafe.blogspot.com/2012/07/central-banks-cutting-key-rates.html
Jesse provides. Also, “carry trade” race to the bottom in Denmark?
“Mr Diamond acknowledged the public anger towards bankers and the emotion surrounding pay, and admitted he wished he could “make the issue of bonuses go away”.”
Hmmm, that sures sounds A LOT like Tony Hayward’s (BP) “I’d like my life back” comment, huh?
How about this?
How about instead of outright allowing you sociopaths to be torn to pieces by a mob, we’ll let you all rot in a supermax prison for the rest of your natural lives as your crimes against humanity and their costs are only exceeded by WWII war criminals?
That’s what I’m hearing when I hear the elite talking about how they wish these mere “problems” that they caused could disappear so their quotidian criminogenic existences can carry on apace.
Judging by the nature and scope of these people’s crimes, they do not and will not understand anything accept through being forcibly punished and incarcerated.
That thought makes many people uncomfortable especially in a supposed “democratic” state, but it’s the truth nonetheless and the sooner people wrap their minds around its veracity the sooner we can began to mend our world.
js, Diamond already pulled a Tony Hayward before, figuratively flipping the bird to the public, telling the little people to get over the last scandal already, he and Barclays needed to move on. See where that got us?
I think, given that these bank executives are clearly psychopaths, that they will not understand even *if* they are imprisoned and punished.
Since it’s hard to keep high-functioning sociopaths locked in prisons or mental institutions for life (they are very clever about escaping), the only option for society is to execute them so that they are no longer our problem.
Bob “Legs” Diamond is simply articulating the usual bankster waffle about “rogue traders”, the “regulators”, etc., obfuscating the main point: colluded rate-fixing.
“Oi, this is our patch, mate, we’ll sort it ourselves. I’ll not have you lot, with your bad haircuts and cheap suits, telling me about mistakes made…piss off!”
Do you think “Legs”, lol, has had the same Senator’s daughter that Jamie ‘Cry for Help’ Dimon did ?
b, speaking of “cheap suits” did you notice what color-coded silk ties the Boyz are wearing today, in keeping with their Bespoke Dog-Whistle Haberdashery?
Unfortunately for a through ‘n through American like Legs Diamond it is the case that you can put a mug in a suit but he’s still a mug in a suit. No matter how many Saville Row threads he dons. Something about breeding and class … not the Diamonds’ and Dimons’ strongest, er, suit! Not saying that crooks who excel in the manners and demeanor of “high class” are any less crooks, mind you. Just an intra-crook aesthetic comparison . . . for the heck of it!
Love that clip….! Those were the days when comedy did not have to be vulgar to be funny. Flip was brilliant. The Krony Kapitalists have used our wealth to destroy all media. Their message promotes fear and dependency and seduces the mind with dizzying distractions.
The only conclusion I can draw from watching the hearing is that this is just the begginning of a long script that has already been written. ‘London’ has decided that they will toss a few bones to the regulators, who may or may not be in on the plan.
Bob didn’t know he was food. He figured it out in time for the hearing.
No other narritive explains the about face of Bob.
YVES, prepare for the SHOCK of the”space alien” Apocalypse. See “award” announced at ZH, esp. re Barclays and “flow” – Nothing should surprise us anymore. These “Snakes in Suits” are anacondas.
(or it may be the “Fukushima effect”)
‘Diamond has clearly, deeply internalized the “heads I win, tails you lose” finance view of the world.’
There was a piece here a while ago about the correlation between clinical psychopathology and elite business leaders. This piece from the Sydney Morning Herald, a sort of ‘Libor for dummies’, mentions a study done at UCLA (Higher Social Class Predicts Increased Unethical Behaviour) on a more prosaic correlation, between social class (ie, wealth) and morality.
The rich it turns out really are different.
http://www.smh.com.au/opinion/politics/to-market-to-market-for-the-ultimate-mates-rates-20120705-21k2o.html
I’ve come to the conclusion that society is only stable when the powerful psychopaths are all executed occasionally, thus removing them from the gene pool. We’re overdue.
http://news.goldseek.com/GoldenJackass/1341518400.php
“Exposure of Banker Corruption” by Jim Willie, in depth, today.
All this hoopla and outrage over rigging the LiBor 5 or 10 basis points is really missing the elephant in the room. The “Prime Rate” is really much more relevant to the U.S. during the past 50 years. Until more recently the Libor is not even in the picture in U.S. consumer credit. Most credit cards and consumer loans are/were more tied to the “prime rate” which was defined as the “the rate the banks charged to the banks’ most credit worthy customers, such as the AAA companies”. Since the late 1980’s the banks have been systematically rigging the prime rate by gradually increasing it over time so that it is now almost 300 basis points (3%) over the real “prime rate”, i.e., what the banks really charged AAA companies such as Exxon and Johnson and Johnson. This is the banks way of picking everyone’s pocket without permission to the extend of billions and billions of dollars every year. It is the biggest fraud in America.
Our government and the Federal Reserve actually are part of this scheme in that they redefined the definition of “Prime Rate” in the official publications rather than stopping the banks from doing this. You can check this out just by looking at the old publications from the Federal Reserve Interest Rate Series vs. the current ones.
Even attempts to correct this thru the legal system has been unsuccessful as the banks seem to have influence over the courts also (see Lum vs. Bank of America, et al). If nothing else, the banks can outspend any legal challenger.