Bloomberg View: Getting to the Bottom of Libor | The Galactic Free Press

Bloomberg Business Week
August 30, 2012

Photograph by Simon Dawson/Bloomberg

The headquarters of Barclays, right, in the Canary Wharf business district of London

The global investigation into the manipulation of the London interbank offered rate has so far done a good job of exposing how bankers corrupted one of the world’s most important financial indicators. Now authorities need to take a giant step further: make banks release the data needed to determine how much damage was done and who should bear the most responsibility.

Investigators are focusing on two kinds of manipulation. In one, bankers submitted false data to push Libor in a direction that would benefit their own traders. In the other, bankers intentionally lowered the reported rates, which are published daily, to make their institutions’ financial positions look better than they really were. In June, for example, Barclays (BCS) paid about $450 million in fines after confessing that, during the 2008 financial crisis, it lowered its quotes below its true borrowing rates to keep them in line with those of other banks, which Barclays thought were fudging even more.

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