John Carney on the Delusions Surrounding the LIBOR "Scandal"

CNBC's John Carney has an important piece out on the LIBOR scandal. And by important piece, I don't mean in the Taibbi-Morgenson sense of the term, where nothing is written but a regurgitation of facts and scream "Trillions of dollars in manipulated assets!".

Carney actually looks at the evidence and reaches conclusions about what really went down (or to be more correct what didn't go down.) He is the only MSM writer to do this.

Carney writes:

Were The Barclays Traders Delusional?

One of the oddest things about the Barclays Libor manipulation scandal is that no one has actually demonstrated that the British bank ever successfully manipulated Libor.

We know that during the financial crisis, Barclays [BCS  10.10    -0.15  (-1.46%)   ]executives believed other banks were submitting Libor numbers that intentionally understated the borrowing costs of banks. This, in turn, made the higher numbers Barclays was submitting look like an indication of financial distress. So Barclays decided to start low-balling its own submissions.

But this doesn't look like an attempt to manipulate Libor.

It seems to have been an attempt to manipulate the perception of markets and regulators as to the health of Barclays. If you are rigging your numbers for reputational reasons, you don’t particularly care what the final Libor fixing is.

We also know that derivatives traders at Libor regularly asked the folks at Barclays to submit numbers intended to move Libor up or down based on their positions in trades linked to interest rates. The report from the Britain Financial Services Authority shows the submitters complying with the request.

But it doesn’t provide any indication that the attempted manipulation worked. In fact, it seems as if it didn’t work at all.

Read the rest here.