“In retrospect, could the Fed have intervened to bar use of Libor in the United States? Maybe. Karen Petrou, managing partner of Washington-based Federal Financial Analytics, said it is unclear what more regulators could have immediately done to halt any manipulation, without causing major market disruptions. While some tweaks have been made to how Libor is set, the more dramatic reform suggestions have not been implemented. We know that we’re not posting um, an honest Libor.”įed's Lacker: Libor scandal hurting confidence In a similar conversation dated April 11, 2008, a Barclays employee told another Fed analyst: “(W)e just fit in with the rest of the crowd, if you like. “You know, LIBORs being set too low anyway,” a Barclays employee told a New York Fed analyst on December 17, 2007, according to a transcript of the phone call. The documents released by the New York Fed and other regulators late Thursday and on Friday paint a picture of banks desperate to under-report their borrowing rates in order to appear stronger, and of regulators aware of a broken system but overwhelmed by the financial crisis. and UK lawmakers have demanded to know whether regulators were aware of Libor rigging and what they did about it. It is a major index that helps judge the health of banks and influences rates from mortgages to student loans to credit cards. Libor, or the London interbank offered rate, is calculated daily in London when panels of banks submit estimates of how much it costs them to borrow.
The Federal Reserve Bank of New York was pushed to release the documents amid a furore that was touched off when Barclays late last month agreed to pay $453 million (290.7 million pounds) in fines for attempting to manipulate Libor. A logo of Barclays bank is seen outside a branch in Altrincham, northern England April 26, 2012.
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