- July 6th, 2012, 9:04 am
#395286
It was in the papers yesterday but this will be far from over.
The current scandal is that Barclays bank has been accused of purposely manipulating LIBOR. From the emails being released it looks like they will have a hard time getting out of this. The scandal could get even bigger as the way LIBOR is calculated would make it extremely hard for one bank to manipulate LIBOR all on its own. So it looks possible that other banks are in on the game. As if a scandal involving the 16 largest banks in the world isn’t enough Robert Diamond (ex-CEO of Barclays) claimed that a Bank of England (Central Bank of England) official asked Barclays to manipulate LIBOR.
For a little background LIBOR is the index used to watch short term interbank lending rates. Basically it is supposed to show the average rate the world’s largest 16 banks pay to borrow money from each other for 3 months.
LIBOR also has direct implications to individuals and small businesses specifically any who have any type of adjustable rate loan or LOC as many of them will be LIBOR + whatever the banks margin for risk is. In fact hundreds of trillions of dollars are directly influenced by LIBOR. So when dealing with such large numbers even a slight shift in interest rates could add up to some serious dollars.
The current scandal is that Barclays bank has been accused of purposely manipulating LIBOR. From the emails being released it looks like they will have a hard time getting out of this. The scandal could get even bigger as the way LIBOR is calculated would make it extremely hard for one bank to manipulate LIBOR all on its own. So it looks possible that other banks are in on the game. As if a scandal involving the 16 largest banks in the world isn’t enough Robert Diamond (ex-CEO of Barclays) claimed that a Bank of England (Central Bank of England) official asked Barclays to manipulate LIBOR.
For a little background LIBOR is the index used to watch short term interbank lending rates. Basically it is supposed to show the average rate the world’s largest 16 banks pay to borrow money from each other for 3 months.
LIBOR also has direct implications to individuals and small businesses specifically any who have any type of adjustable rate loan or LOC as many of them will be LIBOR + whatever the banks margin for risk is. In fact hundreds of trillions of dollars are directly influenced by LIBOR. So when dealing with such large numbers even a slight shift in interest rates could add up to some serious dollars.
- By Tothehoopyall1
- By Sly Fox