Did Panel Banks in LIBOR Scandal Actually Help Borrowers?

Chicago, New York, Los Angeles, Miami, December 4, 2014 (Newswire.com) - Did Panel Banks In LIBOR scandal actually help everyone

A foremost real estate expert and industry veteran by the name of Mr. Val Sklarov was interviewed for this article and here is what Mr. Val Sklarov had to say.

As the LIBOR scandal enters its 6th year many questions have been answered but many questions still remain unanswered. About half of the Panel Banks involved have confessed to guilt and have paid over $7 billion in fines mostly to UK and US authorities. There have been over 2 dozen criminal indictments on both sides of the pond and at least 2 criminal convictions so far. Numerous municipalities, public pension plans as well as federal entities such as FDIC, Fane Mae and Freddie Mack have filed suit. The private sector has been a little slow in filing suit against the Panel Banks, probably because the private sector is confused, does not understand the dynamics of litigation or cant afford the litigation and sitting on sidelines watching developments.

Why is the private sector confused and has not initiated a flood of suits? Because the Panel Banks have been very clever in further deceiving the public with a publicity campaign that LIBOR for the past some 20 years has been manipulated by them to the downside and the Panel Banks call it “rate suppression”. So if the interest rates were actually suppressed then the Panel Banks actually helped the mortgage borrowers and all the borrowers should actually thank them?

This nonsense has the general public fooled and here's why. If the LIBOR interest rate was only suppressed over the past 20 plus years, then LIBOR would be in the negative territory, maybe like minus 8 zillion percent below zero and last time everyone studied math in school,  the match teachers taught and schoolbooks stated that there is no such thing as negative percentage to index a mortgage balance to.

If the interest rate was suppressed, how was it done then since interest rates can and did go up and down daily. Did the Panel Banks conspire to raise the rates on Mondays and Wednesday's but to lower them on the other days of the week and just conveniently have a memory lapse of the events on Mondays and Wednesdays? Or were the employees of the Panel Banks were just too kind to us all and as soon as market forces independent of the Panel Banks raised the LIBOR rate, the Panel Banks conspired and rushed to our rescue by forcing the LIBOR index back down? Maybe it is the later and we should be forever thoughtful and grateful to the Panel Banks for continuously over the past 20 some years stepping in and driving the LIBOR rate down every time market forces drove them up.

The fallacy that the Panel Banks have created in making the general public believe that rates were suppressed is comical at best. For the Panel Banks to attempt to make fools out of all the people is criminal in itself and laughable at best. Numerous employees of the Panel Banks have not only confessed that LIBOR was manipulated up and down but that that is how they made money for the banks and themselves and money they made. Panel Banks made tens of billions of dollars in trading the LIBOR index. They made money on the swing of the LIBOR rate, plain and simple. By predicting which way LIBOR was going to go the next day, they placed their bets using billions of dollars and made massive profit on the daily swings. That's all that the Panel Bank traders were after. The traders knew which way LIBOR was going to go day in day out, day after day. By placing bets using billions of dollars, an incremental swing of 1/8 of 1% produced massive profits. I believe every financial textbook calls this insider trading and securities manipulation. Can someone say "insider trading" and where is the SEC with their guardogs?

The traders of the Panel Banks made enormous profit for their employers and reaped massive bonuses for themselves. These traders saw the LIBOR index as an index that they could and should control and drive the direction of on daily basis. The historical charts show that there is absolutely no correlation between LIBOR and other interests rate index’s such as prime, the treasuries or fixed rates. The historical charts actually show us something very strange. Some years the prime rate and LIBOR moved in opposite directions and that doesn't make sense at all. If prime rate went down, obviously it means the cost of funds has decreased so then why does LIBOR go up because it also is a cost of funds and has a correlation to the financial markets. The truth also holds when the prime went up,  the LIBOR index went down. All these years the borrowers were taught that cost of funds worldwide is fairly consistent. Either cost of funds worldwide for all index’s goes up or goes down. To have cost of funds index’s move in opposite directions is strange indeed.

Mr. Sklarov states "I remember when I had some $50 million in loans tied to LIBOR and on several occasions for no reason my mortgage payments went up. Mr. Sklarov states that his loan officer couldn't explain it other then “we have no explanation why LIBOR went up drastically while prime rate didn't”. A 1% increase in the LIBOR rate would cost a real estate borrower $500k over 1 year. A 2% increase would cost $1 million over one year and Mr. Sklarov states "I remember 2004 when LIBOR went up and nobody could provide me with an explanation as to the increase".

So if a borrower held a mortgage tied to the LIBOR index and someone told this borrower that the LIBOR manipulation actually helped the borrower because the Panel Banks alegedly lowered interest the rate, beware and remember this article.

These days Mr. Val Sklarov is president of BoutiqueBankLaw.com, an attorney referral agency that seeks out clients that have or had LIBOR based mortgages or were wrongfully defauled by a bank and are in need of a contingency fee attorney. He can be reached at Val@BoutiqueBankLaw.com

Written by

Val Sklarov