The Great UK #interestrateswaps Scam and What About the USA?

The interest rate swaps scam relates to this chart that I pulled from FRED:

Interest rate swaps at issue, were written between 2002 and 2010, and the banks took the low interest side of the swap, knowing that Bernanke and the swap market needing collateral would both force interest rates down. This, of course has killed corporations and governments that were forced, or sometimes volunteered to take the higher, fixed rate of the swap. As rates went down, the fixed rate that was supposed to protect against higher rates killed the counterparties.

Governments are paying this tribute to the TBTF banks, and so are corporations. One of the reasons the large corporations are hoarding cash is to avoid these swaps!

Now that interest rates are rock bottom, there is less risk to the counterparties, but it is still tribute, as companies must succumb to this swap if they want the loan. The swaps actually create a demand for pristine collateral, as I wrote on Seeking Alpha under my author name, Gary A, and that is the goal of the Fed and the banks, to create demand for US treasuries.

That demand for collateral has the effect of keeping interest rates low. That demand protects the banks who take the low, floating side of the bet.

Well, as the hashtag says, #interestrateswaps, it turns out that the tweets that are connected to this hashtag reveal that in the UK, companies are trying to get some relief from this swap scam that has seen their hedge blow up in their faces. The UK has ruled that companies have the ability to seek justice, but no such finding has been determined for Wall Street as of the writing of this article.

The LIBOR scandal has brought this interest rate swaps scam to the public view, but the scam, in my opinion, is the swaps themselves, sold as inflation and interest rise protection when the central banks determined the direction of rates, oh, and the swaps themselves increased demand for the treasuries, further insuring low interest rates. It is like a circular game the banks are destined to win!

Of course, like the MBS settlement in the US, it is unlikely that the UK barristers will succeed in getting full justice. This may trim bank profits a little bit.

But a little justice is better than no justice. Here are a list of websites that I gleaned from the hashtags #interestrateswaps and #swaps that are involved in trying to get justice for these swaps:

Demystifying Interest Rate Swaps 

Interest Rate Swaps Being Mis-sold to SME's

GP Practices Among Hardest Hit by Interest Rate Swaps Scandal

Berg Linkedin Interest Rate Swaps Discussion Group

Berg: Do You Have a Dispute Over Mis-Sold Interest Rate Swaps?

Interest Rate Hedging Product Mis-Selling

LexLaw Interest Rate Mis-Selling

Clearly, the help for companies in the USA has been put on hold. Wall Street is even more intransigent than the Square Mile in the UK! Maybe we are poorer here. We do know that JP Morgan is the leader in this Swaps Market that makes the MBS market look like child's play. Our companies should get some sort of relief if the UK, the center of financial skulduggery can see that a huge injustice was done.

But we know that the robosigning scandal gave 80 percent of the victims less than $1000 in the banking settlement. So if we are looking for justice in the USA as regarding banks, don't hold your collective breaths.


  1. You seem to be working overtime to attract attention to yourself. Not that you haven't learned enough to make legit points now and then but none of it is the kind of original thinking you want us to believe you're doing.
    BI seems to get you more troll results.

    1. And one more thing. The chart is mine. I gleened it from Fred. I don't claim to be a chart guy, but it is original.

      As far as originality is concerned, there are few that make the argument that interest rates will stay low and bonds will stay in demand. And many who do don't really understand why. Since I am not a banker I have to rely on my ability to see the important issues. If that is not original, that is ok. You know why? The issues need to be brought to the attention of people. The banksters were at fault for the original housing bubble. Is the idea original from me? NO. But I had a hunch that the bankers were at fault, not the GSEs, and I researched it out and came to the decision that they were at fault.

      I have sold over 1000 ebooks Will Rogers, From Great Depression to Great Recession. I believe the idea to focus on Rogers when we had virtually the same thing was original.

  2. I have over 60 articles published on BI. However, the banksters don't like me and you probably don't either. I really don't give a damn. Read the rest of my articles (I no longer can blog at BI due to the advertisers), and learn something:

  3. In Europe (not just the UK) banks are being taken to task for the mis-selling of OTC derivatives such as interest rate swaps to small businesses.

    The UK regulator has agreed with the major banks that they ought to review past sales since 2001 to see if there was compliance with the regulation (which derives from an EU directive MiFID)and to give regulatory redress where appropriate. See

    Also many businesses are entering into litigation in order to seek full legal redress as some businesses do not qualify for the review and others consider legal redress will give greater levels of compensation.


  4. I appreciate Lexlaw Solicitors commenting on the subject. This is an attempt at some justice for businesses who have been gouged by swaps.


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