First you had Barclays cutting a deal where they agreed to a penalty along with the termination of executives and the turning over of documents relating to collusion with Deutsche Bank and HBSC in order to avoid further penalties. Next you find Citigroup offering up details on how it manipulated the interest rate. UBS has turned over emails implicating HBSC, RBS Centura and Deutsche Bank. And the rate is accelerating.
The picture being presented as banks turn on each other is painting all of them in the worst possible light. They are revealing that the “Culture of Corruption” is deeply entrenched at all major banks. As a result comes the further push for stricter regulations, or even breaking up of these major institutions. Banks began internal investigations two years ago, assuming that a token motion would suffice to appease regulators.
What has also come to light is that Barclay’s had previously rejected a settlement offer, and was pressing to go to trial. Their turn of heart earlier this year demonstrates in how much trouble the entire banking industry is in. Other banks now are scrambling to expose the most dirt on their competition, trying to save their own corporate hides. The scandal is reaching into new heights as well as well as more indexes, such as the Tokyo interbank exchange rate (TIBOR) are revealed to have been manipulated as well. The uncovering of the manipulation of TIBOR has already resulted in the suspension of banking for major firms such as Citigroup and UBS, demonstrating fast action by Japan’s central bank. This comes in direct contrast to the US Federal Reserve response, or lack thereof, after the manipulation was uncovered four years ago.
Now it is clear that blood is in the water, and the sharks are turning on each other in their attempt to save their own hides.