from Washington’s Blog:
The big banks have been manipulating the world’s central economic indicator – Libor – for decades, harming homeowners, students, credit card holders, small businesses, cities and many others.
The sums involved were huge. As the Economist notes:
The sums involved might have been huge. Barclays was a leading trader of these sorts of derivatives, and even relatively small moves in the final value of LIBOR could have resulted in daily profits or losses worth millions of dollars. In 2007, for instance, the loss (or gain) that Barclays stood to make from normal moves in interest rates over any given day was £20m ($40m at the time). In settlements with the Financial Services Authority (FSA) in Britain and America’s Department of Justice, Barclays accepted that its traders had manipulated rates on hundreds of occasions.
The Independent notes that potential liability from the Libor suits could wipe out Barclays, RBS and other banks … and that the big banks have taken inadequate reserves against litigation risks.