Libor rates - sfo investigation

[TheRedAdmiral]

Genuine Question this. I work within the legal field but not within this area of law.... (Personal Injury is my field).

Here is the Question.....

If a Bank has been found guilty of fixing the LIBOR Rates, possibly by the SFO, is there then the possibility that each LIBOR Rate mortgage (with that bank) could be construed as Unenforceable - as it was "Tainted By Fraud?"

Opens up a "Can of Worms" but if it were the other way - the banks would be quick to pounce!

[shell]

Re: Libor rates - sfo investigation

Thought this might interest a few.

http://www.wimp.com/financialscandals/

[Nikolai]

Re: Libor rates - sfo investigation

I think you may have something here. If fraud has taken place in the fixing of LIBOR rates (seems pretty certain), this is bound to have consequences for the banks involved. It doesn't take too much imagination to see a court declaring a mortgage unenforceable for illegality.......
Who knows where this will lead?

[Ruby]

Re: Libor rates - sfo investigation

I am watching this space VERY closely! Have second charge 'mortgage' that has very recently been dropped like a hot potato and sold to Arrow Global. I had no idea until recently it was linked to the Libor rate

[Crowie]

Re: Libor rates - sfo investigation

Interesting point, but the 'mortgage' element relates to the charge taken over the property to secure the loan, not the borrowing itself. The interest rate charged has nothing to do with the security which was taken so don't go thinking that they couldn't repossess the property if you stopped paying.

Another especially relevant point in these difficult times is that, say if the property was repossessed, and at auction the lender sold it but it didn't make enough to repay the loan e.g. £100K mortgage, and property sold at auction for £90K. The remaining £10K is still owed by the borrower and wouldn't be simply written off!

One last point is with this Barclays Scandal is that apparently in their case their traders have been accused of trying to reduce LIBOR rates, not increase them. This was to protect Barclays reputation more than anything as (I believe) their inter-bank lending rates were more often than not on the higher side compared to other banks. And of course, the traders made a few quid at the same time.

Don't think I'm defending their actions for one second but it's entirely possible that the actions of these people may actually have helped business, mortgagees etc who had loans etc linked directly to LIBOR/EURIBOR

[enaid]

Re: Libor rates - sfo investigation

I think bottom line with this is some people lost and some gained with their mortgage rates.
The ones who definately gained were again the fat cats who once again deceived us all.
The banks can't even lend us money transparently and honestly, they always seem to rip us off, now they may want us to borrow from our local authority to pay for our care later in life. Oh yes I would love a loan with the honest and uncorruptible local authority to be paid back with interest later on lol (NOT)

[Sparkie1723]

Re: Libor rates - sfo investigation

Interesting point, but the 'mortgage' element relates to the charge taken over the property to secure the loan, not the borrowing itself. The interest rate charged has nothing to do with the security which was taken so don't go thinking that they couldn't repossess the property if you stopped paying.

Another especially relevant point in these difficult times is that, say if the property was repossessed, and at auction the lender sold it but it didn't make enough to repay the loan e.g. £100K mortgage, and property sold at auction for £90K. The remaining £10K is still owed by the borrower and wouldn't be simply written off!

One last point is with this Barclays Scandal is that apparently in their case their traders have been accused of trying to reduce LIBOR rates, not increase them. This was to protect Barclays reputation more than anything as (I believe) their inter-bank lending rates were more often than not on the higher side compared to other banks. And of course, the traders made a few quid at the same time.

Don't think I'm defending their actions for one second but it's entirely possible that the actions of these people may actually have helped business, mortgagees etc who had loans etc linked directly to LIBOR/EURIBOR

Sorry to disagree with you ..but if the LIBOR rate fixing is considered as fraud....this is what happens.

"Fraud avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the Court is a nullity and non est in the eyes of law. Such a judgment/decree by the first Court or by the highest Court has to be treated as a nullity by every Court, whether superior or inferior. It can be challenged in any Court even in collateral proceedings."Lazarus Estates Ltd. v. Beasley, 1956 (1) All ER 341 wherein it 'has been observed :-Master of the Rolls Lord Denning."No judgment of a Court, no order of a Minister, can be allowed to stand if it has been obtained by fraud."“Once fraud has been proved it vitiates, judgements, contracts and all transactions whatsoever,Sparkie

[Shadowcat]

Re: Libor rates - sfo investigation

Many subprime lenders did not reduce their rates throughout the loan, only ever increased it but have openly said and have written that their rate is connected to the LIBOR. If this is so, repayments should have reflected a variable rate. Therefore, subprime seems to have heaped fraud upon fraud. Until we establish where our rates were set how can we understand the loan we entered into? It was at the very least missold as no financial advice was given before entering into something a little more complex than had gone before.

[bluebottle]

Re: Libor rates - sfo investigation

Following on from Sparkie's post, Section 1, Criminal Law Act 1977 states that no agreement shall exist in law between two or more parties to follow a course of action which, if followed through, would amount to an offence at law. This applies whether any of the parties are a willing participant, victim or intended victim.

To the best of my knowledge and belief, Contract Law contains a similar provision that means any contract to do anything unlawful or illegal is unenforceable.

[bluebottle]

Re: Libor rates - sfo investigation

Following on from Sparkie's post, Section 1, Criminal Law Act 1977 states that no agreement shall exist in law between two or more parties to follow a course of action which, if followed through, would amount to an offence at law. This applies whether any of the parties are a willing participant, victim or intended victim.

To the best of my knowledge and belief, Contract Law contains a similar provision that means any contract between two parties to do anything unlawful or illegal is unenforceable.

[enaid]

Re: Libor rates - sfo investigation

Well how will the mortgage lenders be responsible?
It wasn't them that committed the offence was it?

[Shadowcat]

Re: Libor rates - sfo investigation

I think they need to answer the question we've all asked for years - how do they arrive at their interest rate? If it's LIBOR, who are their securitisers/underwriters and are they involved in any LIBOR investigation. If the loans are underwritten by Barclays then the answer is obvious, we have to wait for the other banks to be looked into but the fact that 16 banks were involved in setting the LIBOR means there is a question mark over a lot of them.

[Sparkie1723]

Re: Libor rates - sfo investigation

Well how will the mortgage lenders be responsible?
It wasn't them that committed the offence was it?

The same applies to the Directors and CEO's of the Lenders who used the LIBOR rate as applies to Barclays Directors and CEO...they should have known what was happening with the LIBOR rate as that is from where they made their money........but they were quite happy to go along with the flow......LIBOR went down over the year 2007 to 2008 and has stayed low to what it is now 1.plus %........Not one LIBOR rate lender reduced their interset rate on borrowers agreements ..........lenders using the BOE rate did drop the interest rates to borrowers.

Taking advantage of this to the detriment of borrowers......... they are responsible for that

Just my opinion
Sparkie

[Crowie]

Re: Libor rates - sfo investigation

[QUOTE=Sparkie1723;274549]Sorry to disagree with you ..but if the LIBOR rate fixing is considered as fraud....this is what happens.

"Fraud avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the Court is a nullity and non est in the eyes of law. Such a judgment/decree by the first Court or by the highest Court has to be treated as a nullity by every Court, whether superior or inferior. It can be challenged in any Court even in collateral proceedings."Lazarus Estates Ltd. v. Beasley, 1956 (1) All ER 341 wherein it 'has been observed :-Master of the Rolls Lord Denning."No judgment of a Court, no order of a Minister, can be allowed to stand if it has been obtained by fraud."“Once fraud has been proved it vitiates, judgements, contracts and all transactions whatsoever,Sparkie




[Excellent point - as I said I'm not defending any of them whatsoever. There's a book called 'cityboy' by an author called Geraint Anderson who was emproiled in all these shenannigans a few years ago. Made a fortune, got wise and left it behind. Anyway, the book is written in a quite 'tongue in cheek' style, but if half of what he says is true, then this LIBOR/EURIBOR fixing is only the tip of the iceberg. These traders are only in it for themselves, and many of them would consider honesty and human decency to be a character flaw]

[Shadowcat]

Re: Libor rates - sfo investigation

Which is why the government will not want this considered as fraud and hence no mention of any charges about this. I was watching a programme on BBC3 last night about the riots one year on, it showed how quickly and severely the establishment dealt with these people. I agree with that because rioting has to be nipped in the bud, otherwise the lynch mob mentality rules and it would be chaos, on the other hand it did highlight the contrast of how the banks are dealt with in a direct opposite way. I think they also need to be dealt with properly because what finance is doing to the country and the effect it's having on crime-rate and social dissatisfaction is also a dangerous way to go.