World’s biggest banks accused of rigging rates

The Federal Deposit Insurance Corp. has sued the British Bankers Association and 16 of the world’s largest banks for rigging the LIBOR (London Interbank Offered Rate), the rate at which banks supposedly lend each other money.

LIBOR matters because it is the benchmark for setting interest rates on many different kinds of loans around the world.  Bill Black, an expert on financial fraud, wrote that LIBOR is used for setting interest rates for $300 trillion to $500 trillion in outstanding loans at any given time.

The defendants include the three largest U.S. banks, the four largest U.K. banks and the largest banks in Germany and Japan.

http://www.ritholtz.com/blog/2014/03/libor-the-worlds-most-dishonest-number/

How Barclays’ bank CEO earned his big bonus

Bob Diamond resigned as CEO of Barclays’ bank after it was revealed his bank helped rig the London Interbank Offered Rate, a benchmark interest rate which is used in setting credit card rates, variable mortgage interest rates and other variable rates.  False information made the LIBOR rate higher than it otherwise would have been, and this pushed up other interest rates as well.

Click on The Market Has Spoken—And It Is Rigged for background from Simon Johnson, former chief economist for the International Monetary Fund.

Click on Libor rate-rigging scandal sets off legal fights for restitution for background on how rigging LIBOR rates hurt local governments in the USA.

I got the cartoon off Ripped-Off Britons, the official blog of The Guardian cartoon strip.