Libor Scandal: Will Wall Street Run Out The Clock?

Dean Smith was a master practitioner as basketball coach at the University of North Carolina.

While many fans of the game may not have appreciated the style of ball played by Coach Smith, he was focused on one thing. Winning. What was Coach Smith’s signature style offensive strategy toward the end of games? The four corners.

College basketball during a large part of Coach Smith’s tenure operated without a shot clock so the team in possession of the ball often would spread the floor and  run the clock down during the final stages of the game. The North Carolina Tar Heels under Coach Smith ran this “keepaway” style to perfection.

We see a very similar version of this offensive “running the clock out” currently on Wall Street. How so? Let’s navigate and address current developments in what I view as the largest financial scandal in history, that is the Libor scandal.

The Wall Street Journal highlights the strategy being employed by the large financial titans in writing, Regulators Try To Beat Clock in Rate Probe,

U.S. prosecutors are seeking more time to complete their investigation of alleged interest-rate fixing, while banks ensnared in the probe are trying to turn the clock to their advantage as they battle lawsuits claiming damages from rate-rigging.

The Justice Department recently asked several banks to sign “tolling” agreements, in which the companies promise they won’t challenge any enforcement action on the grounds that the alleged wrongdoing occurred beyond the statute of limitations, people close to the investigation said. The Commodity Futures Trading Commission, which is leading the civil arm of the U.S. probe, asked the banks for tolling agreements earlier this year, people familiar with the matter said.

It isn’t clear how many banks have so far signed the Justice Department or CFTC agreements. A spokeswoman for the Justice Department and a CFTC spokesman declined to comment.

Even as prosecutors continue the criminal probe, U.S. officials have grown concerned that the investigation into whether banks manipulated the London interbank offered rate could be stymied by the statute of limitations. This can make it harder to punish firms or individuals for frauds that took place more than five years ago.

A few comments and questions:

1. There is evidence from traders “in the arena” so to speak that the manipulation of Libor went on as far back as the early 1990s.

2. Do you think that the banks are working together to formulate a collective settlement in which they neither admit nor deny culpability? That approach has been the standard modus operandi.

3. Why might regulators focus on individual traders when the enormous scope of this scandal would clearly indicate that senior executives within the banks had to have been aware of this manipulation?

4. This previous question begs a follow up. What degree of confidence do we have in those in the striped shirts, those being our regulators and elected officials, to truly pursue total truth, transparency, and justice in this scandal? Do you think the large monied interests on Wall Street are reminding the ‘zebras’ as to just how the game is played and officiated?

Tick . . . tick . . . tick . . . .

The clock may not only be running down on this scandal BUT make no mistake that with each and every perversion of justice the clock is running out on America as well.

Who amongst our regulators and elected officials are willing to play real defense on behalf of our country?

I repeat what I have written previously and what Chris Whalen addressed in a commentary I highlighted yesterday,

THERE SHOULD BE NO FINES. If senior bank executives are exposed and dealt with appropriately, Wall Street will not only survive but be stronger for it. As will America and the world at large.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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