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Matt Taibbi Dishes on the "Biggest Insider Trading You Could Ever Imagine"

Sixteen international banks are accused of rigging a key global interest rate used in contracts worth trillions of dollars.

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MATT TAIBBI: Well, first of all, there hasn’t been enough coverage in the United States, and that’s probably because the scandal has not yet spread to our shores. And it will, because this starts—it probably starts with Barclays and  UBS and the Royal Bank of Scotland. These are the three banks that we know of already that have admitted to this conduct. But it’s eventually going to involve big American banks, as well. And we know who they are; we don’t have to mention them. But they’re the other—the American banks in the survey are also going to be involved in this.

But I think the American media generally has been slow to realize the gravity of the scandal. I think there’s a lot of fatigue out there among people with all of the financial corruption. I think news editors generally are reluctant to go there, especially with something as complicated as Libor. But what we’re going to see is a lot of coverage like what you just heard from the  Wall Street Journal, where there’s going to be a suggestion that this was done in sort of a patriotic manner, in order to create an appearance of soundness in the markets during a period of crisis, that this was done at the behest of governments. And I would suspect that that’s going to be the first line of defense for these banks.

JUAN GONZÁLEZ: I wanted to ask you about something else not directly related to Libor but certainly to banks and to the—your connection to them to the Mafia: the recent revelations that  HSBC, one of—the biggest bank in Europe, admitted that it was laundering tens of millions of dollars in drug money from the Mexican drug cartels, forcing one of its chief officers to resign publicly in a hearing?

MATT TAIBBI: Right, yeah, that’s obviously a big scandal, too. It probably has been overshadowed by the Libor revelations recently. We’ve obviously heard things like this before, banks not asking enough questions about where the money is coming from: the Bank of New York scandal back in the late '90s with the Russian mob money that was flowing there by the billion; you know, to a lesser degree, the scandal involving Jon Corzine and his company, and what questions did Chase ask or not ask when they were dealing with them. There's clearly a laxity among all the banks in asking enough questions about where money is coming from. I suspect that the  HSBC scandal will help spread awareness in that regard, as well.

AMY GOODMAN: What is the solution, Matt Taibbi?

MATT TAIBBI: To the Libor situation or—

AMY GOODMAN: Yes, and overall, whether we’re talking about  HSBC to—

JUAN GONZÁLEZ: To crooked banks.

AMY GOODMAN: —the power and to the administration, not to mention in this election year, the opponents, shoring up and supporting and protecting?

MATT TAIBBI: Well, the Libor scandal presents really the mother of all regulatory dilemmas, because this scandal could not have happened if it was just one or two or even three banks acting as rogue participants. The way Libor works is, they take a survey of 16 banks every day. They take the four highest numbers and the four lowest numbers, and they throw them out. They average out the remaining numbers. And what that means is that pretty much all the banks have to be in on it in order to move the needle in any one direction. So you’re talking about 16 of the world’s biggest, most powerful financial institutions. And if they’re all cooperating in what essentially is a gigantic international price-fixing operation, what do regulators do? You know, fines are clearly not going to be sufficient. Even if they pursue criminal investigations and jail a few of the traders, that’s really not going to be sufficient either. So, it really poses a tremendous question. What are they—they’re going to have to revoke some kind of privileges to all of these banks, and that will really result in a massive shake-up of the entire financial system.

 
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