http://www.economist.com/blogs/schumpeter/2013/02/royal-bank-scotland...

They were said to be among the most talented of their generation, recruited after exhaustive interviews and gruelling internships. They worked at firms prepared to spend small fortunes to attract and retain them lest they take their skills elsewhere. Yet the moral bankruptcy of traders implicated in the rigging of the London Interbank Offered Rate (LIBOR), one of the world’s most important interest rates, is matched only by the incompetence with which they covered their tracks.

Take traders at the Royal Bank of Scotland (RBS), who left a trail of evidence in a trove of e-mails and audio recordings detailing how they set about trying to manipulate LIBOR, even after they knew investigators were looking into the issue. “We’re just not allowed to have those conversations over Bloomberg anymore,” said one trader, laughingly, in a call to another who a little earlier had asked in writing for a rigged rate. “Its [sic] just amazing how libor fixing can make you that much money,” was the verdict of another trader.

These exchanges, and many others, were part of a settlement announced on February 6th in which RBS admitted to rigging rates. It agreed to pay fines of $475m to American regulators and another £87.5m ($137m) to Britain’s Financial Services Authority. By the arcane mathematics determining the severity of regulatory fines, RBS is adjudged not to have been as bad an offender as UBS, which last year agreed to pay penalties of $1.5 billion, but is being dealt with a bit more harshly than Barclays, which paid fines of £290m. Regulators said they found attempts to rig LIBOR hundreds of times in at least four and a half years at RBS, compared with the “thousands” alleged in the case of UBS.

There is now a sense of routine about these settlements: the early leaks, the embarrassing e-mails, the big fines. That can make LIBOR seem like just another problem for banks to manage. RBS’s share price rose on the day of its settlement. Even setting aside the threat from litigation, that is to underplay the import of the scandal....

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http://www.economist.com/blogs/schumpeter/2013/02/royal-bank-scotland-and-libor