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Oonagh McDonald

Chapter 4 Yet more banks are involved In this chapter, I shall set out the ways in which other banks manipulated LIBOR, using the same techniques and for the same reasons. As the FSA final notice to UBS makes clear, the methods used followed in large part from one trader moving from one bank to another, so that networks of contacts were established. As in the last chapter, I have used both the FSA/FCA’s final notices and the US CFTC orders to show that the evidence gathered by more than one regulatory authority led to the same conclusions. Rabobank The FCA

in Holding bankers to account
Costas Simitis

environment was more adverse than expected, euro-area policies were inconsistent, implementation by the Greek authorities was inadequate or insufficient, debt restructuring should have been front loaded, fiscal austerity has been excessive, and finally, not enough weight was given to the structural reform and competitiveness objectives.6 The report stressed that the impact of austerity was difficult to assess. Greece was already in recession when the programme was first implemented. However, ‘it was evidently hazardous to impose a 10 percent GDP shock to a leveraged and

in The European debt crisis
Abstract only
Oonagh McDonald

very struck and surprised, when reading these three reports [from the regulatory authorities], to discover that changing LIBOR by one basis point was the kind of rigging that people were interested in. You would never have noticed that from market activity. We were worried by tens of basis points.20 Did the attempts at manipulation have any effect? Most of the regulatory investigations were focused on whether there had been attempts to manipulate LIBOR, not on whether or not those attempts were successful. Even the regulators were not convinced that the manipulators

in Holding bankers to account
Oonagh McDonald

occurring should have been considered. In reply, the FSA’s chairman, Adair Turner, argued: the FSA’s bank supervisors were primarily focused on ensuring that they understood the prudential implications of severe market dislocation. And the FSA had no formal regulatory responsibility for the LIBOR submission process.11 Adair Turner did have a point with regard to the domination of the financial crisis. It is easy now to forget its severity – the global financial system teetered on the verge of collapse. Turner added: Manipulation abounds57 all of the authorities, both

in Holding bankers to account
Why China survived the financial crisis
Shalendra D. Sharma

strategy of “crossing the river by groping for stepping-stones” have been the 253 The Asian financial crisis catalyst behind China’s phenomenal economic growth. The core of this strategy has been “decentralization.” In the Chinese context, decentralization has meant, on the one hand, devolving the power of decision-making from the central to local governments, and on the other hand, from planning authorities to state-owned enterprises. It is widely recognized that the devolution of government power and authority from the central to sub-national or local governments (the

in The Asian financial crisis
A decade of market manipulation, regulatory failures and regulatory reforms
Author: Oonagh McDonald

This book provides a compelling account of the rigging of benchmarks during and after the financial crisis of 2007–8. Written in clear language accessible to the non-specialist, it provides the historical context necessary for understanding the benchmarks – LIBOR, in the foreign exchange market and the Gold and Silver Fixes – and shows how and why they have to be reformed in the face of rapid technological changes in markets. Though banks have been fined and a few traders have been jailed, justice will not be done until senior bankers are made responsible for their actions. Provocative and rigorously argued, this book makes concrete recommendations for improving the security of the financial services industry and holding bankers to account.

Oonagh McDonald

deposits. GLBA only repealed sections 20 and 32 of the Glass-Steagall Act, which prohibited member banks from affiliating with organizations dealing in securities. 4 It is important in this context to refer to the usual definition of a bank as an institution which takes deposits that can be withdrawn on demand, and makes loans, and which is chartered by the federal government or national or state authorities and insured by the FDIC. The Act comes with a warning attached to it: ‘Before concluding that the GLBA reduced banking regulations and complexity, however, note

in Lehman Brothers

The well-being of Europe’s citizens depends less on individual consumption and more on their social consumption of essential goods and services – from water and retail banking to schools and care homes – in what we call the foundational economy. Individual consumption depends on market income, while foundational consumption depends on social infrastructure and delivery systems of networks and branches, which are neither created nor renewed automatically, even as incomes increase. This historically created foundational economy has been wrecked in the last generation by privatisation, outsourcing, franchising and the widespread penetration of opportunistic and predatory business models. The distinctive, primary role of public policy should therefore be to secure the supply of basic services for all citizens (not a quantum of economic growth and jobs). Reconstructing the foundational has to start with a vision of citizenship that identifies foundational entitlements as the conditions for dignified human development, and likewise has to depend on treating the business enterprises central to the foundational economy as juridical persons with claims to entitlements but also with responsibilities and duties. If the aim is citizen well-being and flourishing for the many not the few, then European politics at regional, national and EU level needs to be refocused on foundational consumption and securing universal minimum access and quality. If/when government is unresponsive, the impetus for change has to come from engaging citizens locally and regionally in actions which break with the top down politics of ‘vote for us and we will do this for you’.

Mike Buckle and John Thompson

highlighted the failings of the supervision system in Europe: the accumulation of excessive risk was not detected; surveillance and supervision were not effective in time; and when transnational financial institutions faced problems, the coordination between national authorities was far from optimal. Consequently a new European system of financial supervision was established. This

in The UK financial system (fifth edition)
Mike Buckle and John Thompson

. The new structure consisted of the European System of Financial Supervisors (ESFS) and the European Systemic Risk Board (ESRB). The ESFS is made up of three European Supervisory Boards (ESBs), namely the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA). They are

in The UK financial system (fifth edition)