Gordon Campbell on bank scandals and air crashes
Gordon Campbell on bank scandals and air crashes
Libor. It stands for the London Interbank Offered rate. Back in 2012, Libor became synonymous with a scandal involving the dodgy manipulation of how interest rates were fixed - during the years before and after the Global Financial Crisis - thus affecting the cost of money for bank customers and corporates all around the world. Here’s an explanation of how Barclays Bank (and other banks) set about rigging the $US 5.3 trillion a day global foreign exchange market.
By 2015, about $US6 billion in fines has been levied in the course of the Libor settlement.
For this country, one of the interesting things about the subsequent wave of banking reforms has been that New Zealand has disengaged itself from the Libor rate setting process:
The Danish, Swedish, Canadian, Australian and New Zealand Libor rates have been successfully terminated, without disruption to the financial markets.
Unfortunately, that may not be the end of the story. Last month, the Australian Securities and Investment Commission (ASIC) filed proceedings against Westpac over activities that have some distinct echoes of the Libor scandal. As with Libor, excerpts from internal bank communications appear to show the individuals concerned knew that their actions could well boomerang on them, and on the banks involved:
Traders at Westpac openly discussed how "f------ with the rate set" could hurt some customers and ultimately and "deservedly" harm the bank's reputation if an inquiry into the bank bill market was ever conducted.
The revelations are presented in new court documents that provide fresh detail on alleged manipulation by the bank of a key benchmark interest rate, the bank bill swap rate (BBSW).
Westpac is contesting the ASIC action. Yet the transcripts seem pretty damning. Again, from the Australian Financial Review coverage of this affair:
“Some end users who you don't know, you know corporates and people who don't know who get stiffed by people," the transcript said, without identifying which of the three men on the call made the comments.
"And then in 2 years time there's some enquiry that you have been f---ing with the rate set that's cost them all 10 basis points and, you know what, leave me alone, its got nothing to do with me, right. That's my biggest fear and that's what I will express to them…," the transcript said.
In similar vein:
In the conversation, "our biggest concern" about the "reputation" of the bank among corporate borrowers and other market participants was expressed, as opposed to the "professional" inter-broker dealers, who "know what they were doing" and probably "spend half their life trying to stitch people up."
"The unprofessional, unknown random you know with $50 million of debt that's getting stitched up by his bank… that at some point wakes up and has a dummy spit and quite deservedly so".
Across the Tasman, the Australian Labor Party is calling for an independent public inquiry into the banking system. The ripple impact upon New Zealand – which is largely a branch office operation of the four Aussie banks – has yet to be seen. Obviously though, getting out of Libor may well have been an ‘out of the frying pan into the fire’ kind of exercise.
While mystery still surrounds the crash of Egypt Air 804, there have been interesting aspects of the media coverage. It is now become routine for the media to mine plane crashes as fodder for the reality television drama involved: from footage of sobbing relatives to speculative scenarios about the possible causes. To that end, terrorism scenarios were being quickly circulated by the media, even though no terrorism organisation has (as yet) claimed responsibility for the disaster. This is in marked contrast to the last major Egypt-related air disaster in October 2015 – when the crash of a Russian Metrojet from an Egyptian airport was quickly claimed by the Islamic State terrorist organization.
Of course, evidence may finally emerge that confirms a terrorism plot. As yet, there isn’t much in the way of evidence to conclusively point in that direction. (The sequence of the sensor triggering is not definitive, although it points to the initial problem being towards the front of the plane.) According to the Stratfor intelligence site, the current lack of terrorism claimants for the disaster may be because the group responsible may have developed a new and secretive technique to which they wish to avoid drawing attention, in order to use it again. The simpler explanation is that a mechanical fault was involved. In which case, the smoke detectors on board may have been triggered by fog generated during the plane’s rapid descent.
The really extraordinary thing is that the media – and the public -is still entirely at the mercy of an airline industry that refuses to install the modern technology capable of immediately detecting the causes of its catastrophes.
That’s an incredible situation. Despite the experience of the Malaysian Airlines disaster in the Indian Ocean, we are once again racing to scour the ocean floor (this time in the Mediterranean) for the pings from black boxes that will cease to send out transmissions in less than a month’s time. There have been calls for the airline industry to update its error detection technology ever since the Air France disaster in the south Atlantic in 2009. It took two years to find those black boxes. This time, the search will not be easy, either.
Given the probable location of the EgyptAir Flight 804 ‘black boxes” ( the Flight Data Recorder’ and Cockpit Voice Recorder) nearly two miles down in the eastern Mediterranean seabed in a jagged seabed, it may be months before retrieval of them or large pieces of the A-320-200 can be brought up to the surface for forensic investigations.
This isn’t good enough. The airline industry has to be made more accountable to the travelling public when it comes to the detective work on its disasters. Technology already exists whereby flight and cockpit data could be being relayed back to a reception point in real time, during the flight. Miles O’Brien, a CNN and PBS aviation expert commented in a PBS NewsHour segment on the Flight 804 disaster:
We go through this time and again. There is technology off the shelf used by the military right now which has ejectable, floatable, deployable flight data recorders. There is technology which makes it possible to stream this data back in real time, not unlike the stream that we have just been talking about.
In the 21st century, the fact that we have to listen for pings two miles beneath the surface of the ocean to find out…the answer to a critical question is a bit scandalous. We should do something about it.
Indeed. If such technology was in place, the media would not be (left) in the position of dealing in speculative theories about whether it was terrorism or mechanical failure that caused this particular crash.
Air Travel, It's A Thing of the Day
Talking of air travel… Two studio musicians called Bobby Swayne and Raymond Appleberry were the Ray & Bob responsible for this oldie. Their song conveys the sense of innocent wonder still possible back in 1962, about the fact that you could simply get on a plane, and go and see the Great Wall of China. Just imagine, you can take a trip around the world! And yes, the vocalist does sound a lot like Sam Cooke…