Curious developments continue.
The private agency which currently sets Libor rates is asking the government to take responsibility for determining them in the future.
Newsnight 's Paul mason commented that Barclays fine is low, probably because it agreed to cooperate. This means they will have provided evidence against other banks doing the same thing. That this crisis may become as big as the initial bank crash by the time the lawsuits stop.
Bob Diamond apparently said that the action to fix the LIBOR rate during the bank crash was discussed with government at a high level. (That is, as distinct from when employees of the bank were fixing the rate simply to boost their own profits). This makes it hard to understand Barclays top management claims that they were unaware of any of this rate fixing going on.
Mason reckoned the government was reacting to this oddly. Normally they say the banks have been naughty boys, but things are fine now. But this time political calls for further punishment are getting louder. Things are so bad that banks are going to have to be disciplined.
An MP today was interviewed describing the proposal he had made that all bonuses should be treated as company capital for a certain period. So, if a company goes bust the employee is liable to refund the companies money which he was just holding for that period. Thus making it much easier to get back performance bonuses which turned out to be unwarranted. He also thought that senior management should be required to put up a bond, so that in the event of a company failing they would be liable for this amount. The government did not think either of these was a good plan, others might disagree. The MP said he would be proposing them again in the house of commons.
Apparently RBS is facing a £150mn fine, according to tomorrows newspapers. There is a sting in the tail of all these fines. They go towards funding the regulating agency, which otherwise is paid for by contributions from the banks it regulates. So....if every bank gets fined £100mn, then the regulator will get a big surplus in its funding and the banks will be able to stop making funding payments until the fines they just paid are used up. So they will end up paying nothing!
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Which banker thought that one up?