web analytics
The Standard

Rate-swapping

Written By: - Date published: 9:55 pm, July 1st, 2012 - 13 comments
Categories: Economy - Tags:

Another scandal in Britain’s banks – interest rate-swapping on small business loans. Banks offered small businesses supposedly low hedging insurance on interest rate movements, knew they could get cheaper rates themselves because they had better market information, and pocketed the difference as guaranteed profit.

The process is explained in this Q+A. It would be interesting to know if the same thing happens here.

13 comments on “Rate-swapping”

  1. bad12 1

    On one level this is right up there with Monty Pythons Flying Circus,one absolute gut-busting laugh right down to ‘The Bankster’s’ having thought the scam through to the point of ‘what would happen when caught fiddling the deals’,

    The Banksters get to choose the referee in the form of an assessor who determines The Banksters level of responsibility and what compensation if any will be paid,

    I havn’t heard of ‘hedging’ occurring between Banks and business in New Zealand over changes in interest rates, the ‘hedging’ scam here began with US based Banksters playing havoc with the value of the NZ Dollar so as to create a climate of uncertainty among NZ Exporters and thus the Banksters were able to plug the export sector into paying ‘hedging insurance’ to protect themselves from sudden erratic movements in the NZ Dollar,

    Once exporters were hooked firmly into ‘the need’ to have ‘hedging’ the US Banks at the center of the scam were able to stop their machinations in moving the NZ Dollar erratically either way and concentrate on the profits to be made from selling ‘hedging’ to NZ exporters,

    Slippery although never directly tarred with the smell of this unethical behaviour was non-the-less working in the industry and for one of the ‘firms’ which specialized in the plundering of our and various other country’s currency’s, and the Prime Minister could sure as hell tell us a few good yarns about by who,and how, these particular scams were dreamed up,

    ‘Too big to fail’ these banks at the center of such unethical behaviour may be, BUT, if their illegal and unethical behaviour is not strictly curtailed the ism of capitalism will be collapsed by the fifth column within,

    There can be only one reasonable outcome of such behaviour of these banks and that is the seizure of all their assets lock, stock, and barrell as being the proceeds of crime, anything else from any country’s Government will simply be seen as weakness by the psychopath’s heading and working in these institutions of finance and an encouragement to carry on with such immoral,unethical,corrupt, and, illegal processes…

  2. Colonial Viper 2

    Time to make basic banking a utility for the public good. Oh yeah, and take away private banks ability to print money into an economy by the creation of debt. Force them to become strict savings and loans operations.

    • RedLogix 2.1

      At some point there will have to be an accounting CV. Because the entire system is built on trust, without which it will grind to a halt.

      I have no idea what event will trigger this, when it might happen or how it might play out. But my gut feeling is that there are two monstrous forces at work here, one being the sheer inertia of the system, the extraordinary power of the embedded interests that are propping it up… the other being the immensity of the human overshoot, the crisis of some many resources peaking all at once, and the absolute inability of any political system to respond intelligently.

      Sooner or later the outrageously inflated fabulousness of the existing system will be punctured by reality on all fronts. I’d have to guess it will be ugly. Yet with all my heart I wish for something different.

      • Colonial Viper 2.1.1

        Sooner or later the outrageously inflated fabulousness of the existing system will be punctured by reality on all fronts. I’d have to guess it will be ugly. Yet with all my heart I wish for something different.

        Reminds me of a mate of mine. People ask him, hey, when peak oil and peak debt hits, what is it going to be like?

        He always replies…just look around.

        and the absolute inability of any political system to respond intelligently.

        This is a major problem. Although central government could do so much, its simply not going to do enough in time. Schemes which increase community based localisation is going to have to be the (imperfect) answer.

  3. Hami Shearlie 3

    I’ve heard there is an investigation going on into the behavior of all the big banks in the UK (I think) going right back into the 1990’s! Wonder what Slippery was getting up to at Merrill Lynch in the UK then?? Be funny if something emerged that embroiled Slippery up to his neck. Oh, one can only dream!!

    • Slippery was up to his neck in the Derivatives trade and the currency wars destabilising the Thai Bath and the other Asian currencies which was an exercise in Naked Short selling (speculating in Currencies on a truly massive scale without actually owning any of them) in order to destabilise their economies and take over with the IMF and buying their assets for cents on the dollar. Exactly what he is doing here now.

      Johnnie Derivatives Key is a very bad boy indeed with a massive conflict of interest to boot.
      What is interesting is that only a couple of weeks ago Johnnie Derivatives Key met with Mervyn King the Governor of the Bank of England and that this “Central/Reserve” bank is now drawn into the LIBOR scandal.

      You’d think that Johnnie Derivatives Key would be disgusted and shocked about this scandal and demand an investigation into how New Zealand which invested $112 Billion off the books in derivatives in recent years which rely heavily on the LIBOR ratings might have been affected.

      But perhaps he doesn’t do that because on breakfast TV a while ago he said that the bankers must have known in their heart of hearts that they would never get the money invested in Derivatives back indicating he knows full well what the hell is going on.

      • ghostwhowalksnz 3.1.1

        The Koreans got very upset over a bit of market manipulation of their currency, which originated out of Hong Kong.

        The plunge occurred during a G10 summit or something in Korea, which meant the hosts lost face. A small group of traders from one of the usual suspects were responsible.

      • Herodotus 3.1.2

        from reading your links you were going to respond to Theo as to his questions regarding netting off the effect of derivatives on the govts B/S. There are valid reasons for this I could think of, in the respect of instruments like SWAP’s. But does the govt have to follow IAS standards in reporting and if so then would they not have to revalue such derivates and report the de/re valuations into the current surplus/deficits of the govts accounts.

  4. DH 4

    One trick banks here used to play was reducing the rate on savings plans, not sure if they still do it (they probably do). My bank would promote to its customers a savings plan with a reasonably high interest rate. People would swap to it. Then the bank would, over time, cut the interest rate to almost zero. They know that most people won’t notice, few people work out a percentage in their head when they get a statement, and even if they did notice it would take a long time for everyone to move to another savings plan. Then they’d start again with a new savings plan…

  5. I think you will find that there are many other World Wide national and international banks involved, not just the UK.
    This is only the tip of the iceberg.
    Banks as far away as Singapore and HongKong are possibly involved.
    Not the Aussie banks – they are too small.
    All will be revealed shortly.

  6. Herodotus 6

    Would not the RSB have an obligation to inform the authorities as criminal actions may have taken place ?
    http://www.independent.co.uk/news/uk/home-news/rbs-sacks-four-of-its-traders-over-liborfixing-scandal-7902731.html

    http://www.dailymail.co.uk/news/article-2166379/RBS-boss-Stephen-Hester-forgoes-bonus-revealed-IT-glitch-originated-Edinburgh-NOT-India.html
    How is it that “The Bank” pays fines when they result from the actions of boards and senior managers ?
    “The bank is thought to have accepted that it will probably have to pay about half as much as the £291 million in fines imposed on Barclays, according to the Times.”
    and if such action is held that criminal activity took place this is where white crime deserves lengthy time as a guest of HMP.
    “A string of mis-selling cases has rocked the financial services industry for over two decades and banks are already likely to pay upwards of £9 billion in compensation for mis-selling loan insurance.” and from people who after being bailed out by the tax payers for them to return to their removed business practices all obscene bonuses!!!
    http://www.independent.co.uk/news/uk/home-news/rbs-sacks-four-of-its-traders-over-liborfixing-scandal-7902731.html

    • mike e 6.1

      The UKTory front bench is going to look very thin very soon this is a much bigger scandal than MP’s troughing.Camorons front is deeply mired in these scandals any attempt to side line them will only make the corruption worse.
      Keys mates could be spending in the old bailey.
      Key is being surrounded by more and more scandal he’s in bedded and indebted to these global pariahs
      The bigger the crime the less the time behind bars
      Goldman Sachs is under investigation for their part in the Greek scandal.
      As well as the sub prime scandals.

  7. Herodotus 7

    from reading your links you were going to respond to Theo as to his questions regarding netting off the effect of derivatives on the govts B/S. There are valid reasons for this I could think of, in the respect of instruments like SWAP’s. But does the govt have to follow IAS standards in reporting and if so then would they not have to revalue such derivates and report the de/re valuations into the current surplus/deficits of the govts accounts.

Recent Comments

Recent Posts

  • Broadband failure sucks up more cash
    The Commerce Committee has blocked an inquiry into the $300 million rural broadband initiative (RBI) despite mounting evidence it’s a massive policy failure and waste of money, says Labour’s ICT spokesperson Clare Curran. “The Government is about to spend an… ...
    10 hours ago
  • TISA – Another secret trade deal you may never have heard of
      This post first appeared on The Daily Blog You’ve probably heard of the Trans-Pacific Partnership Agreement (TPPA) by now and the widespread concerns around it but what about the Trade in Services Agreement (TISA) also being currently negotiated by… ...
    GreensBy Gareth Hughes MP
    16 hours ago
  • Health chickens coming home to roost as Dunedin loses right to train doctor...
    News today that Dunedin Hospital has lost orthopaedic training accreditation is a major blow and proves the Government’s prevarication is having devastating consequences, Labour’s Health spokesperson Annette King says. “Losing orthopaedic advanced training is serious. There is a knock on… ...
    2 days ago
  • $74,000 quarterly rise shows crisis out of control
    New figures out today showing Auckland house prices have spiked by a massive $74,000 in the past quarter is further evidence the city’s housing crisis has spiralled out of control, Labour’s “In spite of constant announcements and photo opportunities from… ...
    2 days ago
  • Democracy for Nauru now
    Murray McCully must send the strongest possible message to the Nauruan Government that New Zealand does not condone its actions given the disturbing developments there, Labour’s Foreign Affairs spokesperson David Shearer says. “Right now we are seeing Nauru stripped of… ...
    2 days ago
  • Recovery needs more than a rebrand
    Today’s announcement of new governance arrangements for Canterbury seems to be nothing more than a fresh coat of paint on the same old approach, says Labour’s Canterbury Earthquake Recovery spokesperson Ruth Dyson. “The Canterbury Recovery has been too slow, with… ...
    2 days ago
  • Copper decision a victory for status quo, not Kiwi households
    New Zealanders hoping for cheaper copper broadband will be disappointed by the Commerce Commission’s latest decision in the long running saga to determine the price of copper, Labour’s ICT spokesperson Clare Curran says. “In an apparent attempt to appease everyone,… ...
    2 days ago
  • It’s time for hard decisions in the Bay
     The Ruataniwha dam project is turning into a huge white elephant as the economics fail to stack up, says Labour’s Water spokesperson Meka Whaitiri.  “Ruataniwha simply doesn’t make economic sense when you look at other major irrigation schemes around the… ...
    2 days ago
  • More testing won’t lift student achievement
    Hekia Parata’s latest plan to subject school students to even more testing and assessment won’t do anything to lift the educational achievement of the kids who are struggling, Labour’s Education spokesperson Chris Hipkins says. “New Zealand school students are already… ...
    2 days ago
  • Bad week for NZ economy gets worse
    The bad news for the New Zealand economy got worse this morning with the 8th successive drop in dairy prices at this morning’s global dairy auction, again exposing the absence of any Plan B from the National Government, Labour’s Finance… ...
    2 days ago
  • System failing to protect women and children from family violence
    Last week we called for mandatory child safety investigations in domestic violence cases. This came after the coronial inquiry into the deaths of Bradley and Ellen Livingstone and the verdict in the trial of the west Auckland boys charged with… ...
    GreensBy Jan Logie MP
    2 days ago
  • Backers banking on social bonds cash?
    The Government is refusing to say what the $29 million it has set aside for its controversial social bonds programme is for, raising suspicions it is an upfront payment to the project backers, Labour’s Health spokesperson Annette King says. A… ...
    2 days ago
  • Plastic Free July
    Today is the start of Plastic Free July. Since its inception in Perth, Western Australia four years ago, more and more people and organisations from around the world have joined the call to refuse single use plastic products. Nearly all… ...
    GreensBy Denise Roche MP
    2 days ago
  • State house sell off Bill gives extraordinary powers
    The Government is about to give Ministers extraordinary powers to take direct personal control of selling state houses, exempting Ministers from normal legal requirements and leaving the sale process wide open for corruption, Labour's Housing spokesperson Phil Twyford says. The… ...
    2 days ago
  • Cash for charter schools, mould for state schools
    At a time when state schools are struggling in old, cold, mouldy buildings and can barely make ends meet, the National Government is shovelling cash at charter schools which aren’t even spending the funding on kids’ education, Labour’s Education spokesperson… ...
    2 days ago
  • New Zealand needs a wise response to climate change
    Today in Parliament I got to hear from a group of New Zealanders who are concerned for the future of our country. Called Wise Response, the group is a broad coalition of academics, engineers, lawyers, artists, sportspeople and others who… ...
    GreensBy Russel Norman MP
    2 days ago
  • No alternative as waste scheme trashed
    Nick Smith must explain how he is going to prevent contamination of New Zealand’s ground and water with liquid and hazardous waste after scrapping the only monitoring scheme and offering no replacement, says Labour’s Environment Spokesperson Megan Woods. “From today,… ...
    3 days ago
  • Flawed system rates death traps as safe
    ACC Minister Nikki Kaye needs to come clean about what really lies behind the reclassification of 18 vehicles in her new motor vehicle registration system introduced today, Labour’s ACC spokesperson Sue Moroney says. "New Zealanders deserve the truth about the… ...
    3 days ago
  • Tiwai Smelter and 800 workers left in limbo
     Workers at Tiwai smelter and the people of Southland have once again been left in limbo over their future in the ongoing debacle over whether the plant stays open, says Labour’s Leader Andrew Little.  “It’s not good enough that after two years of… ...
    3 days ago
  • New twist in state house sell-off saga
    The Government has opened the door to buyers of state houses simply being landlords and not required to provide social services, Labour’s Housing spokesperson Phil Twyford says. The Prime Minister said at his post-Cabinet press conference buyers would not “have… ...
    3 days ago
  • Government fees will hit charities hard
    National’s decision to ignore the concerns of charities will see the voluntary sector face hundreds of thousands of dollars in new costs if the Policing (Cost Recovery) Amendment Bill passes, says Labour's Community and Voluntary Sector spokesperson Poto Williams. “National’s… ...
    3 days ago
  • Four out of ten for Simon’s Bridges
    The Transport Authority’s decision to fund only four of the 10 bridges promised in National’s shameless Northland by-election bribe is a huge embarrassment for Transport Minister Simon Bridges, Labour’s Transport spokesperson Phil Twyford says. “After one by-election poll showed they… ...
    4 days ago
  • Falling consents adding to Auckland housing woes
    Falling numbers of building consents being issued in Auckland will add to the city’s housing shortfall and fuel skyrocketing house prices, Labour’s Housing spokesperson Phil Twyford “The Productivity Commission found there was a shortfall of around 32,000 houses by the… ...
    4 days ago
  • So Mr English, do you have a plan?
    DIpping confidence about jobs, wages and shrinking exports are highlighting the lack of a plan from the government to diversify the economy and build sustainable growth, Grant Robertson  Labour’s Finance Spokesperson said. " Data released over the last week… ...
    4 days ago
  • Serious risks to tenants and assets in sell-off
    Overseas evidence shows there are serious risks around the Government's plan to sell off state houses to social housing providers, Opposition Leader Andrew Little says. “In the Netherlands – where community housing providers supply the majority of social housing –… ...
    4 days ago
  • Land of milk and money
    Kiwi families are paying over the top prices for their milk and someone is creaming off big profits, says Labour’s Consumer Affairs spokesperson David Shearer. “In 2011 the Government told us high New Zealand milk prices were a natural result… ...
    5 days ago
  • MoBIE largesse doesn’t stop with TVs and hair-straighteners
    The number of MoBIE staff earning more than $150,000 has risen 23 per cent in just a year, Labour’s Economic Development Spokesperson David Clark says. Documents obtained from the Ministry of Business, Innovation and Employment show there are now nearly… ...
    5 days ago
  • English wants to flog state houses to Aussies
    Bill English’s admission that he would sell hundreds of New Zealand’s state houses to the Australians is the latest lurch in the Government’s stumbling, half-baked housing policy, Labour’s housing spokesperson Phil Twyford says. “Bill English should face reality and admit his… ...
    7 days ago
  • Exports continue to fall as Government fails to diversify
    The Government quickly needs a plan to diversify our economy after new figures show that exports are continuing to fall due to the collapse in dairy exports, Labour's Finance Spokesperson Grant Robertson says. “Dairy exports fell 28 per cent compared… ...
    1 week ago
  • Government inaction leads to blurring of roles
    The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. “The problems… ...
    1 week ago
  • Courthouse closures hitting regions
    The Government’s decision to shut down up to eight regional courthouses, some supposedly only temporarily for seismic reasons, looks unlikely to be reversed, Labour’s Justice spokesperson Jacinda Ardern says.“The move has hit these regions hard, but appears to be a… ...
    1 week ago
  • A Victory for Te Tiriti o Waitangi
    This week my partner, who has a number of professions, was doing an archaeological assessment for a District Council. He showed me the new rules around archaeologists which require them to demonstrate “sufficient skill and competency in relation to Māori… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Tough bar set for Ruataniwha dam
     Today’s final decision by the Tukituki Catchment Board of Inquiry is good news for the river and the environment, says Labour’s Water spokesperson Meka Whaitiri. “Setting a strict level of dissolved nitrogen in the catchment’s waters will ensure that the… ...
    1 week ago
  • Minister for Women and National missing the mark – part two
    The Minister for Women was in front of the select committee yesterday answering questions about her plans for women. Some useful context is that we used to have a Pay and Employment Equity Unit within the then Department of Labour… ...
    GreensBy Jan Logie MP
    1 week ago
  • Lavish penthouse spend confirms culture of extravagance
    At the same time thousands of New Zealanders are being locked out of the property market, the Government is spending up on a lavish New York penthouse for its diplomats, Labour’s Foreign Affairs spokesperson David Shearer says. News that taxpayers… ...
    1 week ago
  • Māori Television exodus cause for concern
    The shock departure of yet another leading journalist from the Native Affairs team raises further concern the Board and Chief Executive are dissatisfied with the team’s editorial content, says Labour’s Māori Development spokesperson Nanaia Mahuta. “Annabelle Lee is an experienced… ...
    1 week ago
  • Million-plus car owners to pay too much ACC
    More than a million car owners will pay higher ACC motor vehicle registration than necessary from July, Labour’s ACC spokesperson Sue Moroney says. “During a select committee hearing this morning it was revealed that car owners would have been charged… ...
    1 week ago
  • Bill will restore democracy to local councils
    A new Labour Member’s Bill will restore democracy to local authorities and stop amalgamations being forced on councils. Napier MP Stuart Nash’s Local Government Act 2002 (Greater Local Democracy) Bill will be debated by Parliament after being pulled from the… ...
    1 week ago
  • Minister for Women again misses the mark – part one
    Yesterday I asked the Minister for Women about the government’s poor performance on it’s own target of appointing women to 45% of state board positions. I challenged why she’d put out a media release celebrating progress this year when the… ...
    GreensBy Jan Logie MP
    1 week ago
  • Banks enter Dragon’s Den in pitch for Government’s mental health experi...
    Overseas banks and their preferred providers were asked to pitch their ideas for bankrolling the Government’s social bonds scheme to a Dragon’s Den-style panel, Labour’s Health spokesperson Annette King says. Dragon’s Den was a reality television series where prospective ‘entrepreneurs’… ...
    1 week ago
  • Global Mode bullying won’t stop people accessing content
    It’s disappointing that strong-arm tactics from powerful media companies have meant Global Mode will not get its day in court. Today a settlement was reached terminating the Global Mode service, developed in New Zealand by ByPass Network Services and used… ...
    GreensBy Gareth Hughes MP
    1 week ago
  • More questions – why was the Former National Party President involved wit...
    Today in Parliament Murray  McCully said the reason Michelle Boag was involved in 2011 in the Saudi farm scandal was in her capacity as a member of the New Zealand Middle East Business Council. The problem with that answer is… ...
    1 week ago
  • Minister must explain Maori TV interference
    Te Ururoa Flavell must explain why he told Maori TV staff all complaints about the CEO must come to him – months before he became the Minister responsible for the broadcaster, Labour’s Broadcasting Spokesperson Clare Curran says. “Sources have told… ...
    1 week ago
  • KiwiSaver takes a hammering after the end of kick-start
    National seems hell bent on destroying New Zealand’s saving culture given today’s news that there has been a drop in new enrolments for KiwiSaver, says Labour’s Finance spokesperson Grant Robertson.  “New enrolments for the ANZ Investments KiwiSaver scheme have plunged… ...
    1 week ago
  • Straight answers needed on CYF role
    The Government needs to explain the role that Child, Youth and Family plays in cases where there is evidence that family violence was flagged as a concern, Labour’s Children’s spokesperson Jacinda Arden says. “The fact that CYF is refusing to… ...
    1 week ago
  • Prime Minister confuses his political interests with NZ’s interest
    The Prime Minister’s statement in Parliament yesterday that a Minister who paid a facilitation payment to unlock a free trade agreement would retain his confidence is an abhorrent development in the Saudi sheep scandal, Opposition leader Andrew Little says.  ...
    1 week ago
  • #raisethequota
    Last Saturday was World Refugee Day. I was privileged to spend most of my day with the amazing refugee communities in Auckland. Their stories have been inspiring and reflect the ‘can-do’ Kiwi spirit, even though they come from all different… ...
    GreensBy Denise Roche MP
    1 week ago
  • Dairy conversions causing more pollution than ever, report shows
    The Parliamentary Commissioner for the Environment (PCE) released two reports on freshwater quality and management last Friday. The water quality report shows that dairy conversions are hurting water quality and says that despite great efforts with fencing and planting, large… ...
    GreensBy Catherine Delahunty MP
    1 week ago
  • Employers want urgent action on health and safety
    Moves by National to water down health and safety reforms have been slammed by employers – the very group the Government claims is pushing for change, says Labour’s spokesperson for Labour Relations Iain Lees-Galloway. “The Employers and Manufacturers’ Association has… ...
    2 weeks ago
  • Labour calls on all parties to end coat-tailing
    Labour MP Iain Lees-Galloway is encouraging all parties to support his Bill to end the coat-tailing provision when it is debated in Parliament this week.  “New Zealanders have sent MPs a clear message. An opinion poll found more than 70… ...
    2 weeks ago

Public service advertisements by The Standard

Current CO2 level in the atmosphere