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The latest development in the Libor-manipulation scandal is that the banks weren’t really fixing the price of the key interest rate in total secret — US regulators were aware of the sleazy activities at the time, and seemed to have done nothing. Which should surprise no one. I can’t tell you how much federal officials knew about the activities of Barclay’s, JPMorgan, Citigroup and the other big banks at the center of the maelstrom. In coming weeks, both Federal Reserve chief Ben Bernanke and Treasury Secretary Tim Geithner will inevitably discuss the mess when they appear before Congress. Bernanke testifies...

As the investigation into the LIBOR interest rate-rigging in the United Kingdom becomes a financial scandal of tsunami-like proportions, some analysts are openly wondering whether 16 of the world's largest banks have perpetrated the biggest fraud in history. With the public coming round to the global significance of banks potentially colluding like a cartel to favourably set the LIBOR, those same analysts predict lawsuits worth tens of billions being brought against the Western world's largest financial institutions by average consumers. Early analysis suggests that for a period of several years before and after the 2008 financial crisis, the London interbank...

The Federal Reserve Bank of New York may have known as early as August 2007 that the setting of global benchmark interest rates was flawed. Following an inquiry with British banking group Barclays Plc in the spring of 2008, it shared proposals for reform of the system with British authorities.

The West’s financial industry remains broken, and Western politicians continue to flail about in their halfhearted attempts to pretend that they’re confronting the problem. This week’s titan-turned-villain is Bob Diamond, until Tuesday the head of Britain’s Barclays Bank. The American-born Diamond ran the investment arm of the bank half a decade ago, when it consistently manipulated the London Interbank Offered Rate, better known as Libor—the interest rate that big banks report having to pay to borrow funds from global markets. If Libor is low, things are good; if Libor is high, things are bad. Libor helps determine the rate for...

With the four-year anniversary of the financial crisis approaching, Wall Street thought it had dodged a bullet. Now comes the Libor scandal. The esoteric practice of banks “fixing” the price of the London Interbank Offered Rate (more on Libor in a bit) may have heads rolling — and hard time being served — unlike “sexier” bubble-era improprieties like selling toxic debt to the unsuspecting. Since the 2008 collapse, not a single major US bank CEO has been removed from his job, much less charged with a civil infraction over these activities. (Ken Lewis left Bank of America over other issues.)...

THE unfolding story of how Barclays — and, in all likelihood, other big banks — rigged interest rates is full of telling tidbits about the way Wall Street works. It also represents yet another teachable moment. By now the world knows that Barclays manipulated the most widely used benchmark rate, the London interbank offered rate. But Barclays is just one member of the cozy club that sets the Libor, which is supposed to be based on the average rate at which large banks can borrow money overnight. It’s not based on actual transactions, however — and that leaves room for...

Hundreds of bankers across three continents are embroiled in the interest-rate fixing scandal that has left Barclays chief executive Bob Diamond fighting to save his job. As pressure intensified on Britain’s highest paid banking boss to quit, MPs heard a string of other financial institutions across the world were under investigation. At least 20 banks are believed to be under suspicion, with growing demands for a criminal investigation. Barclays’ shares crashed by 15.5 per cent in a day as the implications sank in, wiping £3.7billion from its value, with other banks also hit. Barclays has been fined £290million after devastating...

The Biggest Financial Scandal In History?Michael SnyderJuly 5, 2012 We always knew that the financial markets were rigged, but this is getting ridiculous. It is now being alleged that 20 major banks have been systematically fixing global interest rates for years. Barclays has already been fined hundreds of millions of dollars for manipulating Libor (the London Inter Bank Offered Rate). But Barclays says that a whole bunch of other banks were doing this too. This is shaping up to be the biggest financial scandal in history, and criminal investigations have been launched on both sides of the Atlantic. What those...

It's Official, The Financial System Is Stressed Out Again Joe Weisenthal Jun. 9, 2010, 1:14 PM In his morning note, David Rosenberg passes on the latest look at the St. Louis Fed's financial stress index, which combines stuff like stock prices, and LIBOR, and other indicators to get a measure of stress on the financial system. A long-term horizon makes it pretty easy to see what's going on. As the Pragmatic Capitalist been pointing out, this is what makes the current market selloff all the more troubling, and clearly different from past dips since the March 2009 rally.[snip]

David Kotok: Widening LIBOR Is Signaling A Solvency Crisis, Not Just Concerned About Liquidity Joe Weisenthal Jun. 2, 2010, 9:42 AM We've been following closely the ongoing widening of the TED Spread, which has been signaling that banks are spending more and more on short-term capital. But what does it all mean? Could it be something minor, that banks need more liquidity? David Kotok of Cumberland Advisors thinks it's something deepr than that. The Fed has responded to the perceived demand for dollar liquidity in Europe by reinstituting the swap lines with foreign central banks. This time the lines are...

Libor slide hits a wall Bad news from bank sector keeps rates, spreads aloft By Laura Mandaro, MarketWatch Last update: 5:25 p.m. EST Feb. 4, 2009 A previous version of this story gave an incorrect range for the Libor-swaps spread before the credit crunch got underway. The story has been corrected. SAN FRANCISCO (MarketWatch) -- The sharp improvement in Libor rates since late last year has stalled as anxiety about banks' health has crept back into this key lending market. The London interbank offered rate, or Libor, rose to 1.235% Wednesday from 1.09% on Jan. 13. Over the same period,...

On the fifth floor of an imposing building in London's Canary Wharf, six people are putting together one of the world's most important numbers. Every weekday morning, as the clock ticks round to 11, the group's members wait patiently for the numbers to arrive. These are the figures that will determine the day's Libor rate, or rather the rate banks charge when they lend each other money.

This toxic crisis needs more than one shot By Wolfgang Münchau Published: October 19 2008 18:34 | Last updated: October 19 2008 18:34 What makes this credit crisis so toxic is that it involves numerous feedback loops with the real economy. This is why simple one-shot solutions such as last week’s rescue plans are not going to be as effective as many people think. Let us look at the present dynamic of this crisis in some detail. First, the housing market. US house prices have fallen by about 20 per cent. To get back to the long-term real price trend,...

Money market stress intensifies By Michael Mackenzie in New York Published: October 8 2008 19:44 | Last updated: October 8 2008 19:44 Stress across money markets intensified on Wednesday despite the unprecedented round of co-ordinated interest rate cuts by central banks aimed at helping banks gain access to funds. In recent days, central banks have pumped vast amounts of liquidity into the short-term lending markets, only for banks to hoard the cash and not lend to other banks. As well as the rate cuts, the US Treasury tried to alleviate lending problems in government bond markets by making more of...

Check credit market to see if bailout works Kathleen Pender Sunday, October 5, 2008 Now that Congress has passed the bailout bill, how and when will we know if it is working? Before we can answer those questions, first we have to answer this: What problem was this bailout trying to solve? Although lawmakers tried to rebrand it an "economic rescue bill," experts say its real purpose is to create a more active and transparent market for mortgage-related securities and thereby help restore confidence in the financial system. It won't restore the balance in your 401(k) plan in short order...

October 1, 2008 As big banks splutter, a new borrowing model must shift into gear Carl Mortishead: World business briefing To a treasurer working in a large industrial company, the big banks look like Hummers: overweight, oversized and overengineered vehicles that no longer can afford the fuel that keeps them on the road. They won't lend to anyone who needs money, so they sit with their engines idling until their tanks run dry, whereupon local kids start ripping off the hubcaps, the wheels and the stereo. Each day there is a government-sponsored rescue, another nationalisation with the shiny bits asset-stripped...

Three-month Libor marks biggest jump in nine years TED spread widens to level not seen since Black Monday 1987 By Lisa Twaronite, MarketWatch Last update: 5:37 p.m. EDT Sept. 17, 2008 SAN FRANCISCO (MarketWatch) -- A closely watched measure of global borrowing costs made its biggest jump in nine years Wednesday and another lending risk gauge rose to a level not seen since Black Monday in October of 1987, as banks grew increasingly wary to lend to each other and sell-shocked investors sought refuge in safe-haven short-term Treasury bills. Three-month Libor in U.S. dollars jumped 19 basis points to 3.0625%...

ECB's liquidity move produces mixed reaction An aggressive move by the European Central Bank to pump liquidity into the banking system produced mixed reactions in financial markets yesterday. The ECB supplied €348.6bn to banks in its two-week operation at 4.21 per cent after it scrapped the normal upper limit on the amount it would lend. Two-week euro Libor was set at 4.40 per cent, down 54 basis points from Monday's fix. The one-month rate fell 33bp and the three-month contract fell nearly 10bp - the biggest drop in six years. Yet Gabriel Stein at Lombard Street Research warned that if...