Libor scandal: A case of the fox guarding the hen house
The Gentlemen's Club That Sets Libor Is Called Into Question
By LANDON THOMAS Jr., NYT
LONDON — It was big news when the Barclays chairman, Marcus Agius, resigned Monday over his bank’s role in the Libor rate-fixing scandal. Less remarked upon was his second resignation that same day.
Mr. Agius also quit as chairman of the British Bankers’ Association, or B.B.A. — the powerful trade group that, among other things, oversees Libor.
Libor, short for the London interbank offered rate, is the interest rate that affects trillions of dollars’ worth of corporate and consumer loans each year. It is supposed to be a neutral figure that reflects how much it costs a bank to borrow money. But as Barclays has admitted, and other big banks may soon be forced to acknowledge, Libor has occasionally been manipulated — either to create a false impression of a bank’s health or to help a bank’s traders game the financial markets.
However shocking the behavior by Barclays and possibly other banks might have been, the interest rate paying public is likely to be just as startled to learn that a vital financial benchmark is vouchsafed not by government officials but by the bankers’ own trade association.
(More here.)
By LANDON THOMAS Jr., NYT
LONDON — It was big news when the Barclays chairman, Marcus Agius, resigned Monday over his bank’s role in the Libor rate-fixing scandal. Less remarked upon was his second resignation that same day.
Mr. Agius also quit as chairman of the British Bankers’ Association, or B.B.A. — the powerful trade group that, among other things, oversees Libor.
Libor, short for the London interbank offered rate, is the interest rate that affects trillions of dollars’ worth of corporate and consumer loans each year. It is supposed to be a neutral figure that reflects how much it costs a bank to borrow money. But as Barclays has admitted, and other big banks may soon be forced to acknowledge, Libor has occasionally been manipulated — either to create a false impression of a bank’s health or to help a bank’s traders game the financial markets.
However shocking the behavior by Barclays and possibly other banks might have been, the interest rate paying public is likely to be just as startled to learn that a vital financial benchmark is vouchsafed not by government officials but by the bankers’ own trade association.
(More here.)
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