** Some of those adjustable rate mortgages sold to homeowners in what are now Foreclosure Frontrunners (like Las Vegas, NV) were based on the nefarious mix of indexes and margins. Bankrate.com explains: “When you get an ARM, two main factors determine the rate you pay: the index and the margin. The index is a rate set by market forces and published by a neutral third party. The margin is an agreed-upon number of percentage points that is added to the index to determine your rate.” One of the most popular spot rate indexes? LIBOR. (London Interbank Offered Rate) Just when we might have thought we’d plumbed the depths of the mortgage meltdown muck… Behold! The Department of Justice began investigating LIBOR as part of a “criminal probe into whether the world’s biggest banks manipulated a global benchmark rate that is at the heart of a wide range of loans and derivatives, from trillions of dollars of mortgages and bonds to interest rate swaps …” [HuffPo] But wait! There’s more.
There were flaws in banks’ internal controls that allowed traders to manipulate interest rates around the world [Bloomberg] and now after 26 years of association with LIBOR the British Bankers Assn. is trying to put some distance between itself and its creation:
“The British Bankers’ Association, the century-old lobby group that oversees the rate, last week deleted references from its website referring to its role in setting Libor. This week, it met regulators and bank executives to review the future of the benchmark. Under one option, the Bank of England’s proposed Prudential Regulation Authority would take responsibility for policing the rate, said a person with knowledge of the talks who asked to remain anonymous because discussions are private. The BBA says it isn’t seeking to cede oversight to the regulator.” [BusinessWeek]
What’s all the fuss about? It’s a minor little technical flap? No, because the LIBOR rate underpins about $360 TRILLION — yes, that’s Trillion with a T — in securities globally. If you want to see what $1 trillion looks like click here, now imagine $360 Trillion. Continuing the day’s rant — could someone please stop the Financialists from decimating Capitalism, pretty please?
** Must read for the morning: J.P. Coolican’s article in the Las Vegas Sun about the inadequacies of Nevada’s mental health care services. “In Clark County, we have 733 beds, but 127 are set aside for the elderly and 58 for children. We have 298 beds at Rawson-Neal Psychiatric Hospital, but the Legislature only budgeted staff to support 190.” Any questions?
** The Miami Herald reports that there are brochures being distributed in the Florida Senate demanding that the state legislature ban Sharia law. Just asking, but didn’t we just get a barrage of poutrage about a requirement that health insurance corporations provide coverage for contraceptive prescriptions which was characterized as “an assault on religious freedom?” If the assault on Islamic religious law is not an assault on religious freedom, it’s hard to calculate what it would be. Has anyone amongst the fundie crowd not yet picked up on the fact that if Sharia is vulnerable, then so is the Jewish Halachah? [JTA] The freedom of religion is not a license to force everyone else to follow one religion’s precepts.
** Speaking of the Catholic vote, it’s not going to über-Catholic Rick Santorum. ” Santorum’s voting base is white evangelical Protestants, a category that happens to overlap significantly with three other demographics where he does well: “very conservative” voters, Tea Party supporters, and voters from rural and exurban areas.” [WashMonthly]
** Those vote suppression identification laws like the ones passed by Tennessee and Ohio appear to be working, if by “working” it means they are preventing people from voting — like the former Tennessee Congressman who was mysteriously removed from voting rolls and was not offered a provisional ballot, and an 86 year old Ohio World War II veteran who couldn’t cast his ballot because a poll worker rejected his VA identification card. [TP]
** Good headline from The Grio, “Limbaugh’s Downfall is no Fluke.” Another headline looming as Limbaugh continues to bash the Chevy Volt, America’s answer to the Prius? Really, Mr. Limbaugh, do you WANT American manufacturers to fail? [TPM] Best Presidential smack down of a ridiculous question from a Faux news flack, click here. (Video, but with partial transcript thoughtfully provided for those whose hearing isn’t so hot.)
** “Too small to be a republic and too large to be an insane asylum” (James L. Petigru): South Carolina’s Laurens County Republican Party has a pledge for office seekers to sign — “Your spouse cannot be a person of the same gender, and you are not allowed to favor any government action that would allow for civil unions of people of the same sex.” [HRC] There’s more: “You must favor, and live up to, abstinence before marriage. You must be faithful to your spouse. Your spouse cannot be a person of the same gender, and you are not allowed to favor any government action that would allow for civil unions of people of the same sex. You cannot now, from the moment you sign this pledge, look at pornography.” [CChron]