Casual e-mails tell chilling story of market fixes

LONDON (AP) - The e-mails sound casual: Dude reaching out to dude, begging for favors and offering rewards ranging from coffee to fine champagne.

But what the bankers were allegedly doing was as serious as it gets: fixing an interest rate that affects the cost of half a quadrillion dollars - that's $554 trillion - in financial contracts around the world, from mortgages to loans.

U.S. and British investigators say the employees of Barclays Bank - and possibly those of other major international banks - clearly knew it was wrong to manipulate the London interbank office rate, known as the LIBOR, which determines the rate at which banks lend to each other and, by extension, the rate at which they lend to consumers and businesses.

The rate is calculated daily by the British Bankers' Association, based on lending rate figures submitted by global banks. Some of Barclays' staff, however, allegedly succumbed to the temptation to adjust the figures in a bid to boost profits or disguise financial weaknesses.

One trader messaged a colleague about helping to influence the three-month LIBOR.

"As always, any help wd be greatly appreciated," the trader wrote.

"I am going 90 altho 91 is what I should be posting," came the reply.

The trader responded: "When I retire and write a book about this business your name will be written in golden letters."

"I would prefer this not be in any book!" came the answer.

And yet it did appear - not in a book, but in court papers that led to fines totaling $453 million against the bank. U.S. and British officials are considering criminal charges against individuals and British investigators are probing other major banks including Citigroup in the United States, Switzerland's UBS, Britain's HSBC and Royal Bank of Scotland.

The scandal has added fuel to public anger at the banking industry, whose executives face mounting accusations of being overpaid and unethical. Shares in Barclays plummeted 15.5 percent on Thursday as investors worried about the impact of fines any tighter regulation. The British Bankers Association confessed to being "shocked" at the accusations.

"One of the reasons London is a major international financial center is because of the perceived emphasis on trust and integrity in the London market," said Simon Culhane, chief executive of the Chartered Institute for Securities & Investment. "This scandal can only serve to damage London's reputation."

Treasury chief George Osborne said the messages cited by the Financial Services Authority read like "an epitaph to an age of irresponsibility."

"These contracts may sound exotic, but they are the bread and butter of our financial system and are used by businesses and public authorities every day, and they affect the mortgage payments and loan rates of millions of families and hundreds of thousands of firms, large and small," Osborne said.

To the traders, those rates affect whether they win or lose.

"Duuuude. whats up with ur guys 34.5 3m fix . tell him to get it up!" another trader implored a contact at another bank.

"If it comes in unchanged I'm a dead man," another trader messaged to a colleague, who promised to "have a chat." Barclays' rate duly came in lower, and the trader sent a thank-you note: "Dude. I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger."

Upcoming Events