A gentle reminder that LIBOR, the benchmark upon which some $800 Trillion of financial instruments are priced, was completely rigged.

Libor Scandal Gets Older and Uglier for Banks
Societe Generale SA’s deputy CEO has abruptly left the French bank. The cause appears to be the decade-old Libor scandal. With much still unclear, the takeaway for investors is troubling.

Didier Valet has left without severance pay after a “divergence of approaches” at the bank on how to settle the Justice Department’s probe into whether traders manipulated benchmark interest rates, Bloomberg News reported on Thursday.
Shareholders are rattled — and rightly so. The stock fell as much as 4 percent on Wednesday. The bank has lost a veteran executive and one-time CFO who had spent almost two decades climbing up the ranks. This isn’t a lender that can afford to lose top managers: it’s trying to eliminate thousands of jobs to boost profit, and needs to sell assets. The shares trade at one of the steepest discounts to book value in its peer group.

The financial industry has been mired in scandals over the past decade, and firms have signed so many costly legal settlements that the process has almost become routine: provisions are taken, a settlement reached and investors send the stock up in relief. Paying a fine, even a big one, is seen as one fewer unknown to worry about, rather than a signal that big changes are needed.

So the next time some talking head goes on and on about the “free market” – you’ll know better.
Some additional reading:
The Rotten Heart of Finance
Is LIBOR a Lie?
Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
h/t plato_thyself

READ  "Which cable networks can one go on where one doesn't end up talking to architects of GITMO and the War on Terror? ...the security state went from clandestinely controlling news outlets to doing it on their payroll."

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