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.