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Weekend Reading: July 27, 2012

News and analyses worth a read this weekend …

Barney vs. Bartiromo — Love him or hate him, Rep. Barney Frank is a great for TV. Check out the verbal jousting match that broke out yesterday between the distinguished gentleman from Massachusetts and CNBC’s Maria Bartiromo. Be sure to watch all the way to the very, very end because Frank’s “Sometimes more than others” jab is priceless.

Just how old is LIBOR-rigging? — Mathematical scientist and former Morgan Stanley trader Douglas Keenan, writing in the Financial Times, says he discovered the rigging of Libor in 1991. But when Keenan tried to report it, he discovered the practice was common knowledge among traders. “My naivety seemed to be humorous to my colleagues,” he writes.

IFLR strategizes on how banks can beat the class-action LIBOR rap: The legal doctrine of standing might allow banks to have these cases thrown out, since the plaintiffs were not direct purchasers of assets from all of the defendants. Many of the bank defendants are being sued for manipulation, but didn’t have a contractual relationship with plaintiffs. … If banks fail in having cases dismissed, they might still find some protection resulting from the calculation of damages. “I think calculating damages in a case like this would be difficult,” one litigator said. “You’re trying to unscramble an egg.”

Simon Johnson details in the New York Times a recent speech by Sarah Bloom Raskin, a governor of the Federal Reserve System, where she said she would withhold her support of some new bank regulations – like the Volcker rule — because she feels they are too weak. “From the tone and timing of Ms. Raskin’s speech, we can reasonably infer that the loopholes remain a big issue. Ms. Raskin uses the metaphor of guard rails on roads: “I was concerned that the guard rails as crafted could be subject to significant abuse – abuse that would be very hard for even the best supervisors to catch.” Financial institutions know when they are engaged in proprietary trading, but they can hide it well.