Curious Capitalist

Meet the Man Cracking Down on the LIBOR Scandal

Gary Gensler, the chairman of the U.S. Commodity Futures Trading Commission, is now one of Wall Street's toughest regulators.

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It’s been a bad week for banking – and the next few weeks and months will likely get worse. With new arrests in London, the investigations over manipulation of LIBOR – the London interbank lending rate that is central to the global financial system – are heating up again. And the driving force behind the crackdown is Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission (CFTC), who years ago helped loosen the rules for Wall Street but has since become its toughest cop.

When he’s not busy putting the heat on traders and brokers accused of rigging rates to benefit themselves and their firms, Gensler is a pretty genial guy. The 55-year-old single father laughs easily, jokes frequently, and — in between sober reflections on his role in making our financial system safer — tells self-deprecating stories about the perils and joys of raising three daughters (Anna, 22; Lee, 21; and Isabel, 16) on his own following the death of wife Francesca in 2006. Gensler opened up to TIME about all that and much more, in an exclusive interview at his home in Baltimore (to read TIME’s profile of him, pick up this week’s issue, available to subscribers here). The interview sheds new light on what still needs to be cleaned up in global markets, and on the man who’s leading the charge.

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Since last summer, Gensler has been a central figure in exposing the biggest banking scandal since the financial crisis—the LIBOR interest-rate manipulation investigations. LIBOR is an arcane term for a simple concept: the interest rate that a bank might charge another bank. You may not pay much attention to it, but LIBOR plays a huge role in lots of everyday loans, since banks use it as a benchmark to set other rates. Adjustable-rate mortgages, many student loans, and car payments are pegged to LIBOR. So are countless complex financial instruments, including 70% of the U.S. futures market. In all, LIBOR underlies some $350 trillion worth of derivatives contracts and $10 trillion in loans.

So the notion that someone has played games with LIBOR doesn’t sit well with Gensler, to say the least. From pro investors making giant bets to homeowners considering a refinancing, practically everyone in the market relies on the assumption that the LIBOR benchmark reflects reality. “These rates are at the absolute core of our global financial system,” he says. If they are falsely reported, “that goes to the integrity of markets and how much trust the public has in them.”

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It turns out that public trust was indeed misplaced. On June 27, after four years of investigation by the CFTC, Barclays became the first major bank to publicly admit that it had been rigging the rates it submitted for LIBOR for years, paying $450 million in fines as a result. More than a dozen other global banks are under investigation by the CFTC and other U.S. and European regulators for falsely reporting or manipulating LIBOR. A number of those banks have been setting aside massive reserves to deal with potential fines. UBS, which may end up paying even bigger penalties than Barclays, has socked away some $610 million to deal with possible regulatory issues.

To read more about what else may be coming down the financial pike, and how the LIBOR scandal developed, pick up this week’s issue of TIME magazine.

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RickFitzpatrick
RickFitzpatrick

Meanwhile...HSBC and ATF Fast and Furious criminals get off scott free care of AAG Lanny Breuer while the US Two Tiered Justice system prosecutes average Joe's with impunity.   The unmitigated gall, if not criminality of the DOJ never friggin ceases to amaze me.

Meanwhile.., AG Eric Holder is still in Contempt of Congress charges for failure to provide documents in the F&F debacle, while Oblabla cover's his butt with Executive Privilege all the while vaporizing innocent human beings around the world with Hellfire missiles, and now, thanks to that despicable schmuck Holder's "secret memo" which somehow magically redefines  murder into "due process" so Obambardier can blow American citizens to smithereens via death  from above drones....sheeeeezushchrist..  all I can say is ..CONGRATULATIONS 'merica ...your Great Moment in Monumental Stupidity on election day is really workin out great.......for the Oligarchy that is.

 However, frankly speaking, I'd submit these depraved psychopaths have a pretty good plan for ya'll too!. Yesssereeebob...courtesy of those smart fellas in Congress who wrote the NDAA.. they gonna take care of you real good with it...like..PERMENENT DETAINMENT with NO access to that pesky ole Constitutional guarantee of..ahem...due process. Nosereeebob. None of that for us!!  We get a FREE, all expenses paid straight shot to Gitmo...no TSA...no long lines...hell, they'll even provide a couple of Men in Black escorts for ya'll...you know..those guys from the CIA who torture..er.  ummm...ah..oh, that's right....."train"   ..yeah that's it...train yo body to pay attention and prep it for eternal hell. Heck, they might even render...opps..I mean..hehehe...reroute ya'll through a couple of great blacksites...er..dang..there I go again.  I mean NIGHTSPOTS..you know.. one of those cool, dark, dank dungeons where ya'll gets the full treatment. Like slicing ...er...I mean .hehehehe  "massaging" yo balls..or good ole 240v electrical shock treatments..you know..for ya'lls nervous system. Makes it real alert.  Heck, they might even throw in a hundred or more  waterboarding sessions..absolutely FREE! Ya'll can't beat that for yer taxdollars can ya?

Well folks. Sounds like we have a pretty nifty four years ahead of us..no? Hey, while I'm at it..ya'll might wanna start lookin up. After all, with 40k drones headin to grace ya'lls backyard BBQ's in the next few years..ya might wanna make sure you have an escape route..you know.. a place to run should one of those  Hellfire missiles get "misdirected" by mistake...like the one in Indiana last month. Heck, that one only killed TWO people. Crap, their so called precision is kinda misleading though, wouldn't ya'll say? After all, they were supposed to blowup a couple of USG DOD buildings a few blocks away...oops..hehehehe...that wasn't supposed to get leaked. Oh well, what's a few leaks here and there, right? I mean..after all, the only ones who get prosecuted for leaking crap are those pesky whistleblowers who've done nothin, while the real criminals...oops..hehehe...I mean .."dogooders"..you know..like that scumbag Jose Rodriquez gets a free pass for destroyin those pesky torture video tapes...DANG. There I go again.  

Oh, btw, yo pal Bill post "NSA" whistleblower Binning left a message for ya'll.  Seems those good folks in the NSA are gatherin up ya'lls emails, phone calls, and whatever else they can for....well...FOREVER. You know...just in case.  I mean, at some point they might wanna run one of those new dystopian algorithms that spot a pattern...you know..a "precrime" pattern. After all, we can't have ya'll thinkin stuff that might be a little ..well..let's just call it a little ..dissenting. Once they spot it though..look out!  Obombardier just might put ya'll on his so called "kill list"...and BOOM!!! Ya'll just become so much BUGSPLAT!! Of course though, that does keep those poor  schmucks sittin at their video kill game console from gettin too bored..right? Can't have our taxdollars goin to waste, now can we?

Well, at least we done levied a great big ole fine on HSBC.  You know..gotta keep those Cartel folks in the USG happy. They ain't too happy when they think they're not gettin their share of the goodies. Heck..even the Mexican cartels know that! How dumb of HSBC. Even the ATF was supplyin tons of weapons to those drug doods down below the border...you know..to keep those poor schmucks that head the Mexican government from interferin with the cash cow and drug flow to their 'Merican customers. Heck, even the good ole folks at FBI, DHS, ICE, IRS and god knows what other Departments of Crime were in on the game. After all...gotta protect those "murican INTERESTS"...right? Right.   Well, the rest of ya'll in the Financial Cartel outta get a heads up. I mean, they don mind if ya'll conspire to wreak financial havoc on the world and make a ton of money doin it...but man..ya'll gotta pay Caeser his due. I mean, ya still gets to keep ya'lls bonus's in those offshore accounts, and fly off to one of yer billion dollar castles...but DOOD! YA GOTTA PAY CAESER his due! Well, so much for clues. Have a good day.