Truth and the great Libor fix
New evidence suggests that bankers were following the government’s direction
The Libor-rigging scandal truly is a gift that keeps on giving. No sooner had courts in London appeared to wrap up the last of the criminal cases related to this pesky interest rate than new evidence emerges to implicate regulators. Libor — the London interbank offered rate — became a focus of recrimination during and after the 2008 global panic. This average of the interest rates that big banks charge one another for short-term funding was, at the time, self-reported to the private British Bankers Association (BBA), and used as a benchmark for other lending contracts, from mortgages to credit cards to complex derivatives. Investigators have long insisted that some banks lowballed the borrowing rates they reported to produce a Libor that would help their own trading books. But in new evidence reported on Monday by the BBC, a banker at Barclays is heard on tape in October 2008 telling a colleague that the bank was under pressure from the UK’s central bank and the Labour government to...
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