Courtesy of Pam Martens.
Oakland, California Formed an Activist Group to Fight Goldman Sachs Over a Libor-Linked Interest Rate Swap Contract
Gary Gensler, the outgoing Chairman of the Commodity Futures Trading Commission, previously testified to Congress that he began investigating allegations that a global banking cartel was rigging the international interest rate benchmark known as Libor in the spring of 2008. One can prudently assume that around the same time, he made the issue known to the U.S. Department of Justice. It’s now almost six years later and yet two of the U.S. banks involved in the cartel, JPMorgan Chase and Citigroup, have yet to be charged by U.S. authorities.
Today, JPMorgan and Citigroup have admitted participating in the Yen Libor financial derivatives cartel to the European Commission and accepted fines of €79.8m ($108.3 million) and €70m ($95 million), respectively. Citigroup avoided paying an additional €55m ($74.6 million) by being granted full immunity for one of its three charged infringements, ostensibly for its cooperation in the matter.
The European Commission began its investigation just two years ago, on October 18, 2011. The settlement announced today encompasses the rigging of two benchmarks, Yen Libor and its European equivalent, Euribor, in an effort by the financial institutions to make profits in the financial derivatives linked to those benchmarks.
Deutsche Bank and RBS admitted to taking part in both Libor and Euribor cartels and agreed to fines of €725m and €391m, respectively. Societe Generale will pay €446m related to Euribor. RP Martin, a broker, will pay €247,000. The total of the fines for all financial institutions was €1.71 billion ($2.32 billion), setting a European Commission record for fines in a cartel case.
Barclays and UBS did not receive fines on the basis that they were the first to alert authorities. Both have previously received hefty fines in the matter by regulators. The European Commission is involved in just the cartel aspect of the crime.
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