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THE DIFFERENCE between Libor and Dibor tells us why Ireland is failing.
London Interbank Offered Rate (Libor) is an interest rate which British banks charge when they lend each other money. Banks recalculate it every day under precise rules; it is important because thousands of major commercial loans have their interest rates set by reference to Libor.
Barclays, it appears, were supplying false information for the Libor calculation, to manipulate it up or down to suit their exposure to the market. Their customers would then be contracted to pay higher (or be paid lower) interest rates than they should have been. The contracts would have been enforced correctly, but based on bad external data.
Probes began after media speculation in 2008 noting that the Libor interest rate did not appear to reflect market conditions. While nobody has yet been arrested, much less charged or convicted, following intense investigations Barclays Bank have admitted misconduct and paid hundreds of millions in euro in penalties to authorities in Britain and the US.
Within days Barclays chief executive Bob Diamond resigned. Bank chairman Marcus Agius resigned from both Barclays the British Bankers Association. Britain’s Serious Fraud Office is considering criminal charges. UK Prime Minister David Cameron announced a parliamentary review of the banking sector, led by the chairman of the powerful Treasury Committee. Investigations are beginning into whether other UK banks have been up to similar practices.
If Barclay’s Libor swindle operation was a sophisticated cat-burglar in the night, Anglo Irish Bank seems to have been a daylight smash-and-grab.
The equivalent Dublin Interbank Offered Rate (Dibor) was used by Irish banks, including Anglo, to set interest rates for many of their business customers.
In 2010, Anglo chief exec Mike Aynsley confirmed that, rather than undertaking sophisticated manoeuvres to manipulate the Dibor to its advantage, Anglo simply lied. Day after day, with client after client, Anglo simply overstated the correct interest rate by a margin of one-quarter to one-half of a percentage point. The false rates may have accounted for 10 per cent of Anglo profits, for up to a decade.
Dibor is publicly-available information, so they were betting that nobody would notice that the rates they were being charged were wrong. For nearly 15 years, it seems, nobody did.
While the UK and US corporate justice systems are far from ideal, they are at least imposing heavy fines; senior people are losing their jobs, and some may yet lose their liberty. In Ireland, despite clear indications fraud, nobody has been arrested, no investigations have been started, nobody has been appointed to find the guilty.
And nobody has been tasked with making sure it never happens again. Which is why it will happen again.
Knowledge of this fraud has been in the public domain for nearly two years, although it was very thinly reported – the word ‘Dibor’ was not mentioned even once in Irish mainstream news sources in relation to this scandal. Nobody is noticing still. Nobody is noticing, nobody is being prosecuted, and nothing is changing. That is why Ireland is failing.
William Campbell is the author of Here’s How, Creative Solutions for Ireland’s Economic and Social Problems.
Thank you for informing me/us!! Time to take the blinders off…
And still nothing will happen. We are a nation of sheep. ( ah shure twill be grand) Makes my blood boil !
Nobody is stopping you, Roddie. Its your own choice to sit there bleating with your boiling blood, doing nothing.
Not for want of trying Conor….if only the sheep would follow
That blows the regulator out of the water again. We really can’ be surprise with information like this, again another cover up. Thanks for the info. Ever think of getting a job as a regulator :)
There is no cover up. The information is known, but not acted upon.
@ Eoin, excellent point and that is what we should be angry about!!!
This is the worst part of the arrogance of the “Ruleing class” they hold us in such contempt that they don’t even try to hide their misdeeds.
Despite this, not one of them will go to jail, not one of them will have their pensions touched, not one of them will be struck off as company directors. This county has an ‘establishment’ that dwarfs the British establishment and what’s sickening is that we know it exists and we’re doing nothing against it. The politicians in this country have shown the contempt in which they hold their fellow countrymen.
Time for a revolution!
Libor = lier and Dibor = deliberate lier, even the names given have sinister ring to them, we need to rebel.
Of Course we need to Rebel, but we need a rebel leader with access to the media to get people up and at it. I think most of us here would go out and support a full march and downing of tools(so to speak). Nobody will take us forward as we are too scared as a nation to fight back for what reason I don’t know. Look at the way the frightened sheep paid the household charge? We need leaders and we will get followers..
Now now don’t be too hard on the powers that be…..they’re too busy jailing ordinary citizens for failing to pay their credit card bills because they lost their jobs due to economic miss management to be running around holding the Anglo clowns responsible for anything
Fitzie .. We’re coming.
See Fitzie disliked this. Or maybe it was his dog!!! ;-)
not a hope martin will seanie or any of the rest of them ever see the inside of a jail cell , ,could you just imagine if this guy started to talk all the political class in this country would be in jail,
And proof if ever needed that this wee isle of ours was and is still run by a group of vile self interested parties. Fitzy rides off into the sunset on the back of a broken nation and still no justice.
Sickening.
Unfortunately from commenting on Internet nothing will happen maybe its time to the streets like Spanish?
libor and its kin is by definition an interbank rate. addition of margin is not unusual, immoral nor illegal to clients.
but where a client has a contract to pay libor with no margin, if margin was charged but the bank purported the fixing to be libor only, there is a clear case for refund of those excess charges.
time to get the chequebook out taxpayers! your banks might owe reckless property developers millions in overcharged interest. or will it now be owed to Nama?
I’m guessing he means to say they charged a higher percentage above the margin advertised.
The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money. – Adam Smith
Arbitrasure, to be clear, Anglo contracts were for “Dibor plus x%”, and Anglo was entitled to charge clients on that basis. Anglo, however, lied to their clients about what Dibor was on any given day, betting (mostly correctly) that their clients would take their word for it, and that gave Anglo vastly higher profits.
Other commentators are correct that this fraud is has been in the public domain for some time – you can bet that The Journal would not allow me to use the word ‘fraud’ if it wasn’t. That is exactly my point. The UK and the US have deeply flawed corporate cultures, but white collar criminals regularly go to jail for long periods there.
Here fraud – a crime – is publicly reported and nobody is responsible for putting the culprits behind bars.
William, White collar criminals may be sent to prison in US & UK, however, bankers and institutional corruption has gone unpunished as here.
There is a symbiotic relationship between elite bankers and the political establishment. Both are protecting the other for reasons of self-preservation. This house of cards will not last long.
We are very much an amateur league country in many respects
@Scarr…that’s the funny thing about it…we’re not. During the 70′s the unions got themselves organised and there were mass rallies about tax rates, fuel shortages etc. When we have an organised effort, this country can do quiet impressive street protests. Of course, with the unions firmly tucked up in bed with the political classes, those days may have long passed.
@ARBITSURE, if proven these banks have lied to the customers who have mortgages surely these are contracts that are null and void because they did not adhere to the conditions of the contract if in any other buisness if it is proven there has been lies the contract is made null and void and not worth the paper it is written on can any body get in touch wit a so called financial expert to throw some light on this ,thank you
Can anybody get in touch with a financial expert? Yes, you could. A first step might be the ask about money forum.
Derek, not necessarily. Courts would seek to isolate the ‘error’ and rectify it rather than tear up the entire contract.
Sorry Scarr, they have that covered too.
Askaboutmoney is controlled by a heavy bank investor and pro-bank commentator, who banned discussion of property speculation on forum. http://www.politics.ie/forum/economy/124556-bailout-expert-group-set-up.html#post2481094.
Money talks. It doesn’t stop talking just because it’s on the internet.
It’s the Nigerian taxi drivers that have the country this way
We’re pathetic and impotent. We deserve everything that’s thrown at us as we never fight back. Glad to be out of it.
Glad to see you’re fighting Simon..from a distance.
Im not sure what’s worse Carl, watching from afar or near. But either way it’s depressing.
@ scarr this country never made that kind of money thats why it is in the mess its in because people like you believe there lies and by the sound of it still do , the same people were telling us we had billions that never existed hence the diabolical situation the country is in now,
What are you blabbering on about? You posted a hyperactive, freeman sounding comment about voiding contracts and other fantasy nonsense and ended with a question asking other people to ask so called experts, as you put it. I pointed you in the direction of so called experts and let you know you could do it yourself Derek. Anyway, it’s a little early to be drinking, isn’t it?
the “ruling class” is very stupid. they don’t seem to realise that if no heads roll metaphorically plenty of heads (theirs) will roll literally when the sheep finally wake up and turn into ravening wolves…
This is a great country. Our revered elite seem to have all the right and privileges going but no responsibilities and no accountability for anything that goes wrong. Oh, sorry I forgot. Nothing ever goes wrong for them and they never “do anythjng wrong”.
Just when we thought we knew all about the depths to which our economic masters have sunk, this column provides some startling information (to most of us) on astonishingly crooked practices that the mainstream media has ignored.
But that is not the reason Ireland is failing. We are failing because we continue to put our faith blindly in market institutions, now mostly foreign and multinational, that have no interest in Ireland other than as a profit centre. The last few years have shown us that those tales about a rising tide lifting all boats, or of prosperity trickling down, are simply bollocks. Does any sane person still believe those myths?
Let’s not be fooled into thinking that just making Irish banksters play by the rules of global capitalism will fix things. It won’t. We need a sea change in how Irish people think about our society. And we need to start voting like we have actually thought it through. That means never, ever again voting for the parties of Big Money, Fine Gael and Fianna Fail, or for their collaborators, the Labour Party.
In a previous article it was commented that Ireland is a haven for people trafficking. It also appears its a haven for crooked bankers. Not only do we have our own homegrown ones, we also imported a couple more from HSBC if reports during the week are to be believed. I fear Mr Elderfield has lost whatever few teeth he had. Regulation – ha ha!!!
We are Irish.We spend more time providing benefits for people who have contributed nothing to our society both Irish nationals and other nationalities than we spend questioning the depth of the coffers that provides these charity payments.We seem to think that being taxed higher to pay off banks that have stolen our standard of living is okay! Whatever the depth of quality of evidence of the facts outlined here,that will never change.A nation of corruption.
I thought Dibor ceased to operate in 1999 and was replaced by Euribor
It did! This is why no other media outlets are covering this. Irish banks use(d) Euribor. All the people who are fuming about this ought to do some googling, see if they can find a listing of Dibor rates anywhere. It would be nice to see a link to that statement from Mike Aynsley too. Even if we assume that the author has confussed Dibor with Euribor, I can’t find any quote from him about that either. I’d well believe Anglo misquoted the Euribor rate, but it’s pretty funny reading all these people getting cross about what amounts to a made-up rate (well, it existed once, but not during much of the “past 15 years” quoted in the article).
Then why thea hell are we reading this grassy knoll story ?
What I don’t understand is WHY the good, decent people of Ire. are still putting their monies in these institutions, the hand writing is on the walls….A major protest would be for all good hard working people to close these banks simply by not partaking.. Sheep no more..
@scar is that you Ffrank?
fantasy is it,and drink your good at making assumptions without knowing other peoples credentials the reason i ask for the financial expert was to try and help people who are a bit in the dark i can look after my own interest and i usually do not commemt to people who cannot be out front and hide behind alias an cannot be up front bit like the faceless men who pull the money strings and makes peoples lives miserable ,off to work now talk later have a nice day @scarr
Faceless men who pull money strings? Yikes. Sounds scary….. Also sounds paranoid and possibly unhinged. I don’t normally respond to assumptive, hysterical types but I’ll make an exception here only because I have no idea what your prattling on about and I’m still curious. When you get you thoughts together, and your full- stop button working, drop me a comment. I’ll be here. Waiting. Faceless. In the dark…. All sinister and paranoid like. Enjoy your day.
A cute theory sir, but that is all this is. Sounds like bitterness from someone who wishes they were one of the bankers, no? One also has to wonder if Christ is in your life?
Troll fail. A good troll will at least attempt to formulate a cohesive, albeit, insincere and controversial counter-argument. You’ve done none of these and just pose a meaningless religious question as some sort of schtick. Whatever brightens your day I guess. You would have been better off going along the lines of “Sean fitz etc have done nothing illegal, sure they operated close to the edge but that’s the nature of the beast. The made the country money and none of us were complaining when we were taking out loans we couldn’t afford. Stupid Irish!” that kind of stuff works much better. You might get a few bites from people not too Internet savvy maybe. Anyhow, troll on.
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