The Analysis : The Libor Scandal

1310 Words Aug 21st, 2015 6 Pages
The LIBOR Scandal Analysis
Final Exam Essay - Ryan Sylvia

The LIBOR or London inter-bank offered rate scandal involved the manipulation of one of the most important figures in the finance world LIBOR. LIBOR is the average interest rate derived from rates submitted by the major banks in London and is used in determining the prices that both individuals and business will pay for loans. The rate itself is indicative of the interest rates that a bank will pay to borrow from another bank. The LIBOR scandal surrounded the intentional understatement of these interest rates, which collectively contributed to keeping the LIBOR rate low. Not only did the scandal impact financial lending it also caused British financial institutions to appear to be stronger than they really were. Soon after the manipulation was discovered a large amount of incriminating information surfaced from an investigation into the incidents. Emails and phone records revealed that it wasn’t just a single rogue company involved but rather sixteen of the world’s largest banks, which included JP Morgan, Barclays, RBS, UBS, Bank of America and Citigroup. Lawsuits have since been filed against several of the large banks involved which has lead to billions of dollars in settlements and fines. “Many of the banks are under investigation by regulators around the globe for their role in the scandal that affects an estimated $300 trillion of securities worldwide, even as institutional and retail investors continue to…
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