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Wistful for the Olympics, already? How about the LIBOR Olympics?!

Bob Costas: Welcome to the London Indicted Bank Olympics Report (LIBOR).  I’m joined by Gillian Tett, veteran

Flickr by Mabacam

banking reporter for the Financial Times.  Gillian, set the stage for these banking Olympics.

Tett: As you know Bob, four years ago, the American financial sector stole the show by bringing down the global economy with record-breaking efforts in several prominent events – lying, cheating, fraud, theft, hypocrisy.  Even as athletes competed in Beijing, Bear Stearns drowned in the deep end of debt, Citigroup slipped off its balance sheet, and American International Group found out what it was like to be a bubble in the area where the javelins land.  Of course, Lehman Brothers’ collapse in September ’08 was of Olympian proportions all by itself.

Costas: And now, four years later, we gather in London for another Olympics of banker mischief.

Tett: London really is the key word, Bob. Of course, bank shenanigans continue throughout the year with multiple contests in fraud and so forth, but London has brought out some of the most impressive results. There’s London-based famed London Whale of J.P. Morgan. Banks prefer London, largely because the city is known for offering friendly officials who afford a wide berth to recklessness.

Costas: And these banking Olympics began spectacularly, didn’t they?

Tett: They certainly did. Sandy Weill, the king of the mega-bank and at the advanced age of 79, performed an stunning pirouette. After creating America’s biggest bank 14 years ago, he called for breaking up the mega banks last month That was about as likely as our Queen parachuting from a helicopter.

Costas: Impressive gymnastics indeed. And the Americans bring a strong team once again?

Tett: Absolutely, in theft, some of the most heated competition will come from American firms MF Global and Peregrine Financial Group. They’re credited of stealing customer funds.

Costas: That might be the United States most dominant event outside of women’s beach volleyball.

Tett: Yes, but the U.S. is also a strong favorite in mismanagement. In the spring, JP Morgan set a high standard when it reported a trading loss so large it couldn’t be measured.

Costas: But the British banks are expected to be formidable?

Tett: Absolutely. Barclays and HSBC, two host country competitors, recorded strong performances in each element of the individual medley: lying, cheating, deceiving and apologizing.

Costas: Apologies have become an intriguing competition.

Tett: Yes. HSBC said it was “sorry” for laundering money. Jamie Dimon elevated the bar when he said his JP Morgan traders were “egregious.” But rival Bob Diamond – no relation – may have bested him by claiming that his Barclay’s traders were “reprehensible” when they fixed rates. Any banker hoping to challenge these is going to need a thesaurus.

Costas: Do these Banking Olympics simply boil down to the United States versus Great Britain?

Tett: By no means. Mizuho Financial Group from Japan  brings a strong record of mischief to these games. In July, the SEC alleged the firm cheated on a CDO transaction. [3]

Costas: There’s a move afoot to end these banker games.  Critics would have us believe that while spectacular, these contests are dangerous, not only to the competitors but even more so for the spectators. What are the prospects?

Tett: Well, the United States actually passed a Wall Street reform law after the last Olympics.  Britain has talked about ring fencing some high risk banking.  But in many ways, we can expect these Olympics to save themselves. As you know, corrupting public officials with campaign contributions is one of the most popular events. And as long as the competitors keep breaking records in public corruption, we can these games to be with us for a long time.

Bartlett Naylor is Public Citizen’s financial policy advocate. You can follow him @BartNaylor.