Wednesday, 6 February 2013

Banks and Fines



So have I got this right?

We have banks, government, customers and a LIBOR rate.

The bank rigs the LIBOR rate. 

The bank then makes x million quid by increasing the mortgage costs and charges imposed on their customers because of the rigged rate.

The government then finds out and demands a handout (fine) of x million quid from the bank. 

The bank quietly sets customer charges to cover their loss of x million quid.

Or, from the other angle:

The customers pay x million quid to the bank because of their rigging. 

Then the government take x million quid from the bank. 

Then the customers pay x million quid to the bank to make up the bank’s fine costs.

Does anyone else detect two winners and one loser in this cozy little arrangement?

N.B. The same system applies to fines applied to utility companies.

Me cynical?

4 comments:

  1. Not quite. LIBOR is inter bank lending. It doesn't involve customers. And in the long run because everyone involved knew about the rigging (even if they didn't actually rig it), no one lost anything.

    It might have made a difference if only one bank did it and no one else knew. But with all banks in it, over years the rigging of the rates didn't make the slightest bit of difference.

    ICBW though.

    ReplyDelete
  2. SBML. I think it does involve customers, otherwise mortgages and loans would be based around the 'official' bank rate of 0.5%. In addition we need to remember that any undue profit made by the banks came from someone's pocket - whose pockets were they if not the customers, whether directly or indirectly?
    There are certainly a load of customers here
    http://www.forbes.com/sites/halahtouryalai/2012/10/15/banks-rigged-libor-to-inflate-adjustable-rate-mortgages-lawsuit/
    who think they were deliberately targetted and affected.

    ReplyDelete
  3. I have 5 shillings in the RBS

    WAR DECLARED
    on Scottish Government !!!

    Not many deed !!!

    http://www.daveallison.org/

    ReplyDelete
  4. Yep, think you've just about got it there.

    ReplyDelete