As many now know, Matt Taibbi was right about Wall Street when he noted: “Everything Is Rigged.”
Here are some links to just a very small sampling of what Taibbi meant when he wrote those words:
Mortgage insurance.
Subprime mortgages.
Mortgage fraud.
Property appraisals.
Credit ratings agencies.
Mortgage servicing firms.
Foreclosure auctions.
Commodities prices/exchanges.
High-frequency trading.
Foreign currency exchange rates.
Junk bonds.
Derivatives.
Municipal bonds.
LIBOR.
Insider trading.
And, now, U.S. Treasury Bond price-fixing?
On Monday, the New York Post actually broke the exclusive on this story. That’s right, The NY Post...
Justice Department probes banks for
rigging Treasuries market
By Kevin Dugan
NY Post
June 8, 2015 | 7:00am
The Justice Department is looking into possible fraudulent manipulation of the $12.5 trillion Treasurys market, The Post has learned.
Government lawyers are said to be in the early stages of a probe and have reached out in recent months to at least three of the 22 financial institutions that act as primary government debt dealers to request information, said a person close to one of the banks who was briefed on the matter.
The focus of the probe is on Treasury auctions, a secretive process when interest rates are set for the offerings, the person said…
Last year, the article informs readers, the Treasury Department issued approximately $7 trillion in debt via T-bills. And, while no banks have yet been named, at least three of the 22 Primary Dealers of U.S. Treasury bonds are under investigation.
…Treasurys are a bedrock of the US financial system. Their sale raises money to fund the US government and the rate attached to their sale affects a range of borrowing costs — including home mortgages, auto loans, credit cards and corporate bonds…
…
…Treasurys are considered the most easily traded and trusted debt in the world. They are sold through regular auctions, and include bills, notes and bonds with maturities ranging from a few weeks to 30 years…
While these primary dealers are required (in order to maintain their Primary Dealer status), to purchase millions of dollars in Treasury notes in non-competitive bids, it’s in the competitive bidding where the big money is spent, with as much “as 35 percent of the [government's] issuance” being bought at these weekly auctions.
And, many/most of these competitive bids are submitted via secret ballots.
…A higher price for the debt — and thus, lower interest rate — signals stronger demand and confidence in the US paying back its debt.
By contrast, lower bids and sale prices mean higher interest rates — an expense that’s ultimately borne by taxpayers.
Taxpayers owed $107 billion in debt due to interest for the year through March, according to the most recent report from Treasury….
(Bold type is diarist's emphasis.)
The article concludes with the quintessentially opaque reality that is the hallmark at the outset of virtually all of these ongoing, pathetically unbridled Wall Street efforts to strip-mine both America and the world: “Representatives for the primary dealer banks, the DOJ and Treasury declined to comment.”
I’m sure Attorney General Loretta Lynch, SEC Chair Mary Jo White, and U.S. Attorney Preet Bharara are all over this, and they’re just aching to put more of these Wall Street recidivists behind bars….in some alternate universe.
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Read Wolf Richter’s accompanying post to the above diary, accessible via this link: Is This Why Treasuries Are Diving?
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