LIBOR: How London Banks Scam the World
(Image courtesy: http://www.veteransnewsnow.com/2012/07/17/the-libor-scandal-explained/ )
It is turning out to be one of the biggest financial scam ever, and the total amount, potentially in trillions of dollars, may never be known.
In International Finance most lending interest rates are linked or ‘pegged’ to the London Interbank Offered Rate (LIBOR), which is the average interest rate at which major London ‘City’ banks say they would lend to each other.
It is set through regular submissions to the British Bankers’ Association. So if one or more of the banks change their submissions, the average moves, and the market interest rate changes.
Financial Traders have been putting pressure on the LIBOR “submitters” to change the LIBOR rate to cover their losses and help improve their own financial positions.
Till now Barclays Bank has been the focus of enquiry, but it is known that banks across the ‘City’ and Wall Street, from Lloyds Banking Group to JP Morgan, are likely to be involved in the scandal.
This fraud has potentially scammed most International Borrowers by trillions of dollars. Read one story here. (It will open a new window)