The Emerging LIBOR (Bank Interest Rate) Scandal: Will Britain’s Reaction Put the US to Shame?
The Emerging LIBOR Scandal: Will Britain’s Reaction Put the US to Shame?
By: David Dayen Monday July 2, 2012 1:30 pm
...LIBOR (which stands for London Inter Bank Offered Rate) is used as a benchmark lending rate all over the world. Adjustable-rate mortgages were calculated using the LIBOR. The exposure on this could be enormous.
Already, the chairman of Barclays Bank, Marcus Agius, has resigned, in an attempt to take shrapnel for Bob Diamond, the CEO of the company. But that has not stopped the furor in Britain. Prime Minister David Cameron announced a parliamentary inquiry today, not just of Barclays, but the entire British banking sector.
Prime Minister David Cameron has announced a wide-ranging parliamentary review of the banking sector following the Barclays rate-rigging furore.
He told the House of Commons that the manipulation of the Libor interest rates had been a “scandal”.
The review will run alongside an inquiry specifically into the Libor market, also announced on Monday.
The comments follow news that the Serious Fraud Office is considering whether to bring criminal charges.
You just don’t see the words “criminal charges” thrown around in banking inquiries these days. But the UK is leading the way on this one, in sharp contrast to how these sorts of things get handled in the US. Cameron was forced into this investigation, and the Labour Party continues to claim it doesn’t go far enough, seeking an additional independent investigation on executive pay and culture in the financial industry. There’s enough of a separation between the parties on these issues that creates the space for accountability. That’s especially true as the British press has exploded over the scandal, feeding the outrage and bolstering the Labour Party’s resolve. Labour sees the opportunity because the Conservatives may be up to their necks in the scandal themselves.
This dynamic doesn’t exist in the United States. The parties tamp down rather than raise up anger over banking scandals. Years after the foreclosure crisis and documented fraud, we see a new term rise: “foreclosure fatigue.” It’s just all so boring. Who wants to hear about mass fraud in the banking system anymore? Keep in mind that the British financial system is arguably bigger per capita than the US. It’s as much about culture as it is money.
Hopefully Britain will lead the way to shaming the powers that be in this country to act. Because you just know that US banks weren’t standing idly by as foreign counterparts sought to game the LIBOR for their benefit.
http://news.firedoglake.com/2012/07/02/the-emerging-libor-scandal-will-britains-reaction-put-the-us-to-shame/
