Banking sector needs to adopt ultra transparency after Libor-rigging

Perhaps the best line to emerge as RBS settles and pays the equivalent of a parking ticket for its role in manipulating Libor was (from a Telegraph article):

Senior Yen Trader: its just amazing how libor fixing can make you that much money

Senior Yen Trader: its a cartel now in london[.]

Please re-read the highlighted text as it provides an insight into the culture of all of the global banks.  I say culture because it isn't 21 individuals at RBS or 100+ individuals at UBS.

The culture that permitted manipulating Libor at all these banks also permitted money laundering at Standard Chartered and HSBC, mis-selling payment protection insurance by all the UK banks and mis-selling interest rate hedging products by all the banks.  And this list of scandals doesn't even include the banks' involvement with toxic structured finance securities or lying about the value of their derivative exposures (see Monte Paschi).

To date, the regulatory response to changing this global culture in banking has been inadequate.

Like Barclays and UBS before it, RBS paid a fine that was equivalent to a parking ticket.  It was simply a cost of doing business.

The lesson from these fines is not that manipulating a benchmark interest rate is bad, but rather, next time don't say it in an email so you don't get caught.

If the policymakers and financial regulators are ever going to get serious about reforming the banks and their cultures, it will start with requiring the banks to provide ultra transparency and disclose on an ongoing basis their current global asset, liability and off-balance sheet exposure details.

It is only with this level of disclosure that sunlight can begin to act as the best disinfectant.

In the absence of ultra transparency, the bank executives can spew forth all the rhetoric they want about how bankers have to behave better, but everyone knows that the rhetoric will not change the culture of the banks.