So, it seems that
Barclays Bank, and possibly others, have been implicated in fixing one of the most important financial indicators in the world:
LIBOR, which is one of the benchmark interest rates used to set prices for all sorts of financial assets and transactions.
Like most financial fraud cases, the abstract concepts and terminology obscure the simple fact that the bankers were taking advantage of their market dominance (in this case, a small number of players who all mostly knew each other) to set prices favorably (for themselves, of course).
The Washington Post has a
pretty good backgrounder on the scandal, as does
the Economist magazine. The BBC also has a
timeline of how the scandal unfolded.
Barclays has already been fined by
Financial Services Authority (UK) and the
Commodity Futures Trading Commission (USA), and CEO Bob Diamond has resigned. But it's not over yet, not by a long shot. The UK's Serious Fraud Office and the U.S. Dept. of Justice
are conducting a criminal investigation.
Why should you care about this? Because this kind of behavior
affects every corner of the financial sector, which in turn affects every industry. LIBOR is used to set prices for all sorts of financial products, and if people lose what little remaining confidence they have in the global financial system, be prepared for a repeat of 2008, only bigger and angrier.
Note also that much of the mainstream media has mostly buried this story...they are every bit as scared as the banks are.
