|The Economist (source: Google+)|
I've covered LIBOR on this blog before. LIBOR is the "trimmed average" of interbank lending rates submitted by banks to price short-term credit risk in the banking system (overnight, 1-week, 1-month, 3-month, 6-month etc). Read more details at the British Bankers Association's website. LIBOR was the most important rate to watch during the 2008 financial crisis to see if the Fed could save the financial system (unfreeze liquidity) when all of the banks were headed to zero (see posts: 1, 2, 3). And LIBOR also moved higher when the sovereign debt crisis in the euro zone started to flare up (1, 2). So these rates are no joke. And I think we now know why the Eurodollar COT predicts the S&P 500 one year in advance! Ha. So, after knowing all of this, how did the banks not profit from their own credit crisis in 2008?
Here are related articles and Max Keiser's interesting views on the scandal.
The LIBOR affair: Banksters: How Britain’s rate-fixing scandal might spread—and what to do about it (The Economist)
Barclays Corrupts Libor and Maybe a Lot More (Bloomberg)
Barclays’ Diamond Blames Libor Fixing on Other Banks, Regulators (AdvisorOne)
Wall Street Bank Investors in Dark on Libor Liability: “The automatic reaction from investors is: ‘Who’s next?’” said Todd Hagerman, a New York-based analyst at Sterne Agee & Leach Inc. (BusinessWeek)
Rate Scandal Set to Spread: Former Barclays CEO Lambasted in Parliament as Other Banks Brace for Fallout (WSJ)
Who Should Be Sharpening Their Pitchforks For Barclays? (DealBreaker)
Analysis: Future unclear for Barclays investment bank arm (Reuters)
Barclays’ US deal rewrites Libor process (Financial Times)
LIBOR Banking Scandal Deepens; Barclays Releases Damning Email, Implicates British Government (Rolling Stone)