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There Go Those Cheating Banks Again

The deck may be stacked against savers.You’re honest. Hardworking. Just trying to create some financial security for yourself and your family.

But you’ve long suspected the deck is stacked against you.

There’s been some clear evidence recently that, at least when it comes to money, you can no longer be accused of paranoia.

The biggest recent scam involves the manipulation of the London Interbank Offered Rate, or LIBOR. If you’ve never heard of this, you’re certainly not alone. But LIBOR may impact what you pay on loans.

LIBOR is one of the benchmarks used to determine the adjustable interest rates on such things as mortgages and student loans.

Barclays, the big British bank that recently began offering U.S. savers competitive CDs and savings accounts, has been talking lately about how some of its employees worked to rig LIBOR to boost profits.

Barclays is probably not alone in stacking the deck.

As the New York Times reported this week, such rigging may — or may not — have cost consumers.

But it’s cheating. And somebody, somewhere lost because of it. Not to mention that trust is eroded that much more.

Dishonesty is big business. And it’s almost always the little guy who gets screwed.

That’s you and me.

Those of us who are financially responsible are paying for the banks’ sins today with low deposit rates and extreme difficulty in getting the cheap loans promised by the Fed’s manipulation of the lending market.

This missing sense of integrity is no accident.

Reuters reported this week on a new survey of Wall Street executives. Fully one-quarter said cheating is necessary to achieve success, according to the survey from Labaton Sucharow, a law firm.

From the story:

“In a survey of 500 senior executives in the United States and the UK, 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful.”

Some 16% said they would break the law via insider trading if they could get away with it.

“When misconduct is common and accepted by financial services professionals, the integrity of our entire financial system is at risk,” Jordan Thomas, partner and chair of the whistleblower representation practice at Labaton Sucharow, said in a statement.

These executives might be playing each other when they cheat, but it’s not hard to imagine that when unethical behavior infects an industry, everyone who touches that industry gets hurt.

Indeed, it’s difficult not to hate when many of the people we are forced to deal with for our retirement savings, bank accounts or buying a home hold us in such contempt.

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