I know this is not getting much attention in the US media (some but so far, as some pundits have noted, headline news seems more concerned about Tom and Katie getting divorced).
However, this distinctly qualifies as a Big Deal[sup]tm[/sup].
Here is one take on it by Matt Taibbi at Rolling Stone:
For those unaware LIBOR is the London Interbank Offered Rate and, according to the Wall Street Journal, $800 trillion (yes you read that right…trillions) in securities and loans are linked to the LIBOR rate.
Sixteen banks are involved with setting this rate each day and it is being claimed that Barclays bank was involved in manipulating this rate for their own profit. Their CEO, Bob Diamond, has just resigned over it as has its chairman Marcus Agius.
Now, it may seem that this is just a Barclays thing but it can’t be. The way the LIBOR is set is the top four and lowest four reported rates are tossed out each day and the rate is set by the middle eight banks. In order to manipulate the rate you need the cooperation of most of the banks to make it happen.
Citibank, JP Morgan Chase and Bank of America participate in this (so basically the three biggest banks in the US).
This is yet one more example among many that the banks are making up their own rules and everyone else be damned. Will this one be big enough for us to finally force some change or will they piously claim it was just some rogue traders and they will be sure to clean up their own mess…again?