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Can Banks Recover From Libor Scandal?

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  • Description

    Mendon Capital president Anton Schutz on how the rate fixing scandal will impact investors.

  • Duration 4:41
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CM.

All Reuters is reporting and that banks are currently being probed and the rate fixing scandal and -- mulling over a -- -- -- -- hopes offending company.

Barkley is backlash and Tom -- the president chief investment officer -- -- capital.

Joins me right now little bit of a switcher and -- but I don't talked about the story because -- -- these and these dozen banks this Reuters report coming out.

Say that they basically nobody wants to be number two.

Behind Barkley is do you think if a global sentiment can be agreed upon.

Either this will put this issue finally -- -- restaurant investors are getting the trust has been broke and with this rate fixing scandal.

Well you know as we've seen from the whole mortgage mess it's continued for a number of years.

Because sure you can come to agreement with -- regulators and authorities.

But then there's the damages that have been gonna happen to anybody use you know locked in a fixed rate via swap mean if they've.

Received Libor paychecks they've got damages and and obviously.

You know doing that discovery.

Achieving class action status obviously having you know states' attorneys general getting involved -- a lot of municipalities to these swaps.

I was gonna carry on for quite some time so certainly wanna get ahead of -- with the regulators and get that out of the way that I think the final settlement will be out a few years and Italy pretty sizeable.

But it's not in your opinion just -- experience you think that regulators would actually be willing to come to the table -- -- -- become already a political football.

With these banks especially Barclays you've got you know congress in this country hopping on a -- regulators' action do you think gonna agree something's.

I think they can come to an agreement I think they can get a settlement because certainly the regulatory bodies can.

Obviously use those funds you know create new enforcement and hire more people on -- revenue further regulatory bodies in some cases -- its own get to keep that money.

And there's no doubt that they're understaffed didn't you know I think clearly gone forward they could spend that money and in enforcement I think what's important here is is how do your confidence in Libor mechanism going forward.

How do you get the banks to do with the supposed to do do you involve the Fed you involve the Bank of England.

How to rates get set -- the one thing that's that's not been said today.

Is that the fact that rates -- artificially law was a means of stimulus around the globe and the central banks that that knew about it.

Certainly had had a them apart and easy mechanism going on by the banks -- most borrowers you know benefited by having their rates to -- What you think that Ben Bernanke is spared so far what -- I mean obviously -- he -- somebody that you look to.

-- he speaks about the economy do you think that he is handled this situation correctly and what do you think we're going to be hearing from Tim Geithner next week.

Well -- diners part of an administration so he he's gonna come under you know probably blistering.

Attack from the from the politicians it is an election year.

You know Bernanke.

Clearly you know and may not have had quite some of the same.

Relationship here but as it as a central banker.

There's there's no doubt that it was a benefit to the economies around the globe that rates were artificially low OK so you know I was -- -- easing by the -- Okay -- -- you know out of -- -- -- guy we have having getting all the numbers as you know from all the major financial institutions in this country I mean are you filling.

In particular -- housing data we've gotten this week which was somewhat mixed but a little more bullish than not do you think that the economy overall is beginning to make -- turn.

Well certainly housing ground has you know appears to put on the bottom destroy a lot of inventory -- out there but it is pretty healthy and if you look at the bank.

Earnings reports the most part -- credit quality continues to improve and -- get better and better.

So I think that's very helpful for the economy but there's no doubt that we need to get some clarity on who our next president is going to be.

And what the policies are going to be closed fiscal cliff hangs over us so.

Who Bernanke's got a chance fault I mean I think he's got to be careful not be politician and influence rates and influence elections.

But you know the economy still quite fragile.

I realize I have to say it does look like there could be a shift in particular to more than regional names again I go back to that fear factor what we tell investors that -- saying -- negative headlines against.

The big banks do you think we might see that let's have a shift by the -- -- -- I I think clearly the retail investor is feel more comfortable in the regional banks.

Consolidations going to be a very big -- regional banks to -- smaller ones.

There's another small deal announced in Pittsburgh this morning -- again very very small but.

A very large premium today announced price so I think we're -- a lot of consolidation forced by regulation.

And a -- -- investor can benefit by owning a basket of small community banks.

And they are -- and have you seen headlines.

OK all right well and kind of does -- talked about -- these issues especially in the financial world.

Anton judge demanding capital Donna president chief investment officer and -- thank you very much doubt on the 101 -- right now everybody 121000 it.

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