The Libor rate fixing scandal may seem remote and distant from everyday life, but its effects on us all are difficult to understate. Millions of people have been cheated by what The Economist calls “the rotten heart of finance.” Simply put, the core of the global financial system is corrupt
Libor (London Interbank Offered Rate) is the central interest rate for the worldwide financial market. Countless other interest rates are based on Libor, which is set every day in London according to a consensus number of inter-bank lending rates from several big banks. Three of these banks (UBS, RBS, and Barclays) have already admitted rigging their Libor numbers and several more, including Citigroup and JPMorgan in the US, are under investigation.
The Libor interest rate has been kept fraudulently low. Those with mortgages and commercial loans benefited by paying too little interest. However millions more were cheated of interest income. This includes savings accounts, pension funds, municipalities, and mutual funds”
Read the rest in my latest for IVN, where I detail the various ways that the banks cheated us by fixing the Libor rate. This is the biggest financial scandal ever by orders of magnitude, is occurring in the heart of the global financial system, and many if not all of the biggest banks in the world are involved.