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Re: Libor rates - sfo investigation
It seems that the LIBOR fixing 'cartel' mostly held the rate at an artificially lower level, as Crowie has pointed out - presumably by falsely declaring to Reuters that they could borrow from other banks at a lower rate than they actually could in reality, and colluding with each other to do so. Fixing LIBOR at an artificially higher level also seems to have occurred, but on fewer occasions, it appears. So, if us mere peasants are expecting to find that we are entitled to refunds of interest on all our loans, I think we will be disappointed, as the lending rates were - for the most part - artificially low.
It seems to be the savers and investors among us who suffered, because the returns on their investments were held artificially low. In particular, those who have private pension funds will have received lower dividends than they should have.
And then there is the conundrum that many lenders - particularly sub-primes - did NOT reduce their rates in line with LIBOR reductions, and slowly increased them over time. Perhaps we may be able to reclaim the difference between the higher interest paid and the LIBOR-linked rate. But if we are to do this, then we will have to rely on a LIBOR that was fraudulently manipulated, as the basis for our claims. The lenders could argue that their rates were what they would have been if the LIBOR had been set properly and fairly.
At the moment, it seems to my simple mind that - although the other 15 banks will probably all be found guilty of collusion, and the LIBOR scandal will become huge - the losers were investors and traders, and not humble borrowers. Perhaps the annullment of agreements, as mentioned by the OP, Sparkie & BlueBottle, is a possibility for borrowers to pursue - but I suspect that the powers-that-be will stop short of calling it a massive fraud for that very reason. If all LIBOR-linked agreements suddenly became unenforceable, then I assume we would then suffer the most awful financial implosion which will seal our (perhaps already inevitable) fate as a Third World country.
It seems that the LIBOR fixing 'cartel' mostly held the rate at an artificially lower level, as Crowie has pointed out - presumably by falsely declaring to Reuters that they could borrow from other banks at a lower rate than they actually could in reality, and colluding with each other to do so. Fixing LIBOR at an artificially higher level also seems to have occurred, but on fewer occasions, it appears. So, if us mere peasants are expecting to find that we are entitled to refunds of interest on all our loans, I think we will be disappointed, as the lending rates were - for the most part - artificially low.
It seems to be the savers and investors among us who suffered, because the returns on their investments were held artificially low. In particular, those who have private pension funds will have received lower dividends than they should have.
And then there is the conundrum that many lenders - particularly sub-primes - did NOT reduce their rates in line with LIBOR reductions, and slowly increased them over time. Perhaps we may be able to reclaim the difference between the higher interest paid and the LIBOR-linked rate. But if we are to do this, then we will have to rely on a LIBOR that was fraudulently manipulated, as the basis for our claims. The lenders could argue that their rates were what they would have been if the LIBOR had been set properly and fairly.
At the moment, it seems to my simple mind that - although the other 15 banks will probably all be found guilty of collusion, and the LIBOR scandal will become huge - the losers were investors and traders, and not humble borrowers. Perhaps the annullment of agreements, as mentioned by the OP, Sparkie & BlueBottle, is a possibility for borrowers to pursue - but I suspect that the powers-that-be will stop short of calling it a massive fraud for that very reason. If all LIBOR-linked agreements suddenly became unenforceable, then I assume we would then suffer the most awful financial implosion which will seal our (perhaps already inevitable) fate as a Third World country.
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