Market Overview

Libor Scandal: Deutsche Bank Went 'All In'

“Investment capital will go where it's welcome and stay where it's appreciated.” Maine governor Paul LePage

The more information one holds, the better positioned he is to take increased risk. If that information were to include the ability to influence if not outright manipulate a game/market, then one's risk profile —that is, the size of one's position — is likely to really increase.

Can you imagine if you were playing the tables in Vegas and you had knowledge as to what the dealer held and what he was likely to pull, what would you do? Increase your bet, of course. We see a Wall Street iteration of this very scenario in news emanating from Deutsche Bank that Bank Made Huge Bet, and Profit, on Libor,

Deutsche Bank made at least €500 million ($654 million) in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide, internal bank documents show.

At least $654 million? I would venture that the bank made multiples of that.

The Deutsche Bank documents, handed to investigators by a former employee of the bank and reviewed by The Wall Street Journal, show for the first time the scope and manner in which a bank painstakingly constructed a string of trades in hopes of profiting from small changes in various rates.

A former employee? Sounds like a whistleblower. Think the firm will deny the facts and discredit the information? If past is prologue that is exactly what we will see. Remember what Jack Welch said last year about whistleblowers, though.

 

 

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: General

 

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