Libor Fines: When Is Enough, Enough?

Another day, another Libor manipulation fine—this time, Barclays is paying $100 million to a handful of U.S. states. New York Attorney General Eric Schneiderman made the announcement, adding yet another penalty to the bank’s growing list. While I support the enforcement of financial regulations, it’s hard not to notice how many different entities are lining up to collect their piece. Barclays has now been fined 47 times for essentially the same offense.

Originally, Barclays cooperated with the European Commission’s investigation and received full immunity from further European penalties. However, the Commission has no jurisdiction in the U.S., allowing states and agencies here to pursue their own claims. The irony is that the same set of incriminating emails has been recycled in nearly every case. Perhaps that’s why institutions like the Federal Reserve Bank of New York and the European Central Bank—who were also recipients of some of those emails—have remained silent. Maybe it’s too awkward for them to press charges when they were partly in the loop all along.

Fannie, Freddie, and the Politics of Profit

The Federal Housing Finance Agency (FHFA) recently released results from its latest stress test on Fannie Mae and Freddie Mac. The conclusion? Even if another bailout were required, the government would still come out ahead. Since their initial $187.5 billion bailout, the government has received $246.7 billion in return—netting a profit of $59.2 billion.

Despite this, there’s a growing debate about whether Fannie and Freddie should return to being for-profit companies. The argument hinges on capital retention: right now, any profits are funneled straight to the U.S. Treasury. Critics argue that if the agencies lose money again, the government will be on the hook. However, the latest stress test indicates that even in the event of a future bailout costing $49.2 billion, the government would still walk away with a $10 billion profit.

Much of the noise is coming from shareholders whose stock remains frozen under the current conservatorship. Releasing Fannie and Freddie could potentially unlock those shares—but this ignores the larger benefits the government enjoys: policy control, a consistent revenue stream, and off-book debt. In essence, it’s a sweet deal for the U.S.—and the grumbling feels more like sour grapes from sidelined investors.

Bitcoin: Reinventing the Same Problems

Bitcoin continues to promise a financial revolution, but the recurring issues with security and structure make it feel more like a reboot of existing systems—only with less regulation and more drama. Most recently, Bitfinex, one of the major exchanges, was hacked, losing $71 million or 36% of its bitcoin inventory. Rather than isolate losses, the exchange decided to socialize them, spreading the damage across all users and issuing an “Omni token” IOU to represent each person’s lost value.

This situation reveals an ongoing irony: Bitcoin’s ecosystem is gradually evolving toward the same systems it originally aimed to replace—centralized authority, shared loss distribution, and even convertible debt instruments. The Omni token acts like a proxy for a proxy: a claim on a company’s claim on a currency. Sound familiar? It’s remarkably similar to how corporate bonds and bankruptcy proceeding’s function.

Bitcoin isn’t inherently doomed, but its progress would likely be faster—and more secure—if its developers leaned on the hard-earned lessons of the traditional financial system instead of dismissing them outright.

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