A few articles of note on the humongous settlements from five banks for manipulating foreign exchange rates. Oh, and a trivial $0.1B settlement from Barclays for manipulating yet another swap rate.
5/20 – Wall Street Journal – Barclays Fined $115 Million by CFTC for Alleged Manipulation of ISDAfix – Barclays tried to manipulate another index which is used to calculate pension payouts. This is an interest rate swap index. Game playing ran from 2007 until 2012.
The DoJ decided not to call this a violation of the 2012 DPA for manipulating Libor.
Eh. Merely $115M. Immaterial in relation to their $2,330M fine on the same day. A rounding error on a day with $5,800M of settlements.
Eh. Just one more index or rate that was manipulated to benefit their trading position. An immaterial index in relation to a few dozen sub-indexes in Libor and Eurobor and multiple exchange rates and the Japan interbank rate.
5/20 – Bloomberg Business – Six Banks Pay $5.8 Billion, Five Guilty of Market Rigging – Superb explanation of the settlement with TBTF banks discussed here. Article has detail of fines by bank.
Article says DOJ says the total fines for forex manipulation are about $9B. My score-at-home tally shows $10.9B which includes $0.6B of private settlements.
About $9B. Or $10.3B. Rounding error.
Deutche Bank and HSBC are still under investigation by DoJ. Expect more settlements. Deutche Bank drew the stiffest fines in the Libor manipulation case but hasn’t settled up with any regulators in the forex manipulation mess.
A source told Bloomberg that all the banks have received waivers from the SEC so the guilty pleas won’t interfere with their ability to raise money in the market. I’ve read elsewhere that the Department of Labor has given waivers.
So the impact of the guilty pleas to a felony criminal charge will be nothing other than a day or two of bad headlines.
5/20 – New York Times DealBook – Guilty Pleas and Heavy Fines Seem to Be Cost of Business for Wall St. – Article points out the high rate of recidivism. I am to the point where I know the names that will appear when a new fiasco arises. There are a few large banks I am aware of that have not been visible in the last several rounds of scandals.
Article also calls attention to multiple uses of criminal guilty pleas in recent years, with the effect mitigated by regulators agreeing there will be no collateral consequences. Author is essentially wondering if the escalation from huge fines to guilty-pleas-without-consequence will change anything.
I’m wondering that as well.