LIBOR manipulated – that’s a really big deal!

Banks are different from other business. Money is their stock in trade. A big part of the huge profits that they make is the difference between the interest that they charge (their income) and the interest that they pay (their cost).

The banks dishonestly adjusted the interest that they pay by manipulating LIBOR. The system of setting LIBOR, simply canvassing the banks by asking them what rates they were paying, with no checks and balances, opened it up for manipulation.

The traders who are responsible for working in the derivatives market worth $554 trillion in 2011 (37 times U.S. GDP) are not supposed to communicate with the people being canvassed for the LIBOR rate. They did. The traders asked their colleagues to manipulate the figures submitted for LIBOR, and the response was a positive “done for you big boy“.

Barclays has just been fined $93 million by the UK’s FSA and $450 million by the U.S. DoJ after owning up. Now they face law-suits from the people they ripped-off, which will certainly amount to a lot more. The time frame of the “crime” – 2005 to 2009. The FSA and DoJ may have settled for too little.

Barclays are not the only ones. Other banks are being investigated.

Watch this spot.

More at:
Q&A: Barclays and bank rates
Barclays Bank PLC Admits Misconduct Related to Submissions for the London Interbank Offered Rate and the Euro Interbank Offered Rate and Agrees to Pay $160 Million Penalty
Barclays fined for attempts to manipulate Libor rates
Barclays ‘attempted to manipulate interest rates’
More banks face interest rate rigging investigation
‘Systematic dishonesty’ at Barclays, says former boss
Q&A: Barclays and bank rates
Inter-bank interest rates Cleaning up LIBOR
The LIBOR probes An expensive smoking gun
Inter-bank interest rates Fixing LIBOR


4.49 avg. rating (89% score) - 4387 votes

Leave a Reply