Monday, July 9, 2012

LIBOR scandel indicative of corrupt business practices

Matt Taibbi appeared on Eliot Spitzer's Current TV program Viewpoint recently. (If you're not familiar with LIBOR corruption, see Taibbi's initial reporting here, with follow-ups here, here, and here.) According to Taibbi on Viewpoint, "it goes far beyond any corruption scandal we've had." He explains that LIBOR is the rate banks charge to lend to each other. The 16 banks involved have been lying about this rate, "essentially faking their credit scores." And this affects every interest rate in the world. Spitzer then asked Dennis Kelleher about this and he said: "This is their business model.... The entire business model is corrupt and rotten to its core." Deregulation, in large part written by bank lobbyists buying politicians, gave them "the green light that there were basically no rules that applied to them and they could do whatever they want." And indeed they did, causing the biggest financial meltdown since the Depression. The same people that did that are still running these banks, and the LIBOR scandal shows they are still up to the same corrupt practices.

Kelleher goes on: "The corruption behind their business model has pervaded the political arena as well." He notes that in the UK there is political and opposition to this scandal and they are taking political action. Their press is getting quite involved as well. Whereas in the US both political parties are pretty much bought and paid for and the press, aside from the likes of Taibbi, doesn't even report it. Another exception is Gretchen Morgenson's recent story in the New York Times. She issues a challenge to US regulators to do what the Brits are doing. She criticizes US regulators for actually using the pitiful excuse that "everybody was doing it" so why bother?

I can say from personal experience working in the medical malpractice market that indeed this sort of behavior "is their business model" and it too "is corrupt and rotten to its core." It seems in fact to be the prevailing business model for any and all large corporations these days to the point that any sense of ethics or fair dealing is long past. And all due in large part to the kind of greed that began by deregulating the banks and insurance companies with virtual criminal immunity, in effect promoting the kind of privileged attitudes to do whatever in necessary to earn more and more profits with little to no regard to how it effects the economy as a whole. To this day not one US banker has been criminally prosecuted for their role in the financial disaster. Sure, their corporations have faced civil prosecution, paying what seem like huge fines for their conduct. But such fines are miniscule compared to the ill-gotten gains obtained from their crimes. All in all lending ample support that indeed this same corruption "has pervaded the political arena as well." Thanks to the SCOTUS and Citizens United for sealing the deal.

Update: Also see Robert Reich's article on this.

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