Arab Today, arab today big banks at center of interest rate probe
Last Updated : GMT 06:17:23
Arab Today, arab today
Arab Today, arab today

Big banks at center of interest rate probe

Arab Today, arab today

Arab Today, arab today Big banks at center of interest rate probe

New York - Arabstoday

It affects everything from mortgages to credit cards to student loans, and now some of the world\'s biggest banks are at the center of a criminal investigation into whether they manipulated it for their own benefit. The London Interbank Offered Rate, or Libor, is a measure of the cost of borrowing between banks that serves as a benchmark for over $350 trillion worth of financial products worldwide. Higher Libor rates translate into higher borrowing costs for businesses and consumers, while lower rates could make lenders reluctant to lend since they can\'t charge as much in interest. In addition to consumer loans, certain bonds and interest rate swaps also use it as a benchmark. With all the different loans and investments tied to Libor, there are serious consequences if the process is tampered with. \"If you move it even a little bit, it can cause massive redistribution of resources because it\'s so extensively used,\" said Rosa Abrantes-Metz, a professor at New York University\'s Stern School of Business and a former economist with the Federal Trade Commission. Last week, the Justice Department said in a letter to a federal judge that it was conducting a criminal investigation of alleged Libor manipulation. Officials in Switzerland, Canada and the United Kingdom are also looking into the issue, according to disclosures in several banks\' public filings. In addition, a number of banks, including Bank of America, Citigroup, HSBC, JPMorgan and Credit Suisse, are defendants in a U.S. civil case brought by investors -- ranging from mutual funds to individual traders to the city of Baltimore -- who say they lost profits due to Libor distortion as far back as 2006. Law enforcement officials and the banks targeted in the suit either declined to comment or did not respond to requests for comment. How Libor works: Libor rates are set each business day through a process overseen by the British Bankers\' Association. Between seven and 18 large banks are asked what interest rate they would have to pay to borrow money for a certain period of time and in a certain currency. In all, the process generates rates for 10 currencies across 15 different time periods, ranging from one day to one year. The responses are collected by Thomson Reuters, which removes a certain percentage of the highest and lowest figures before calculating the averages and creating the Libor quotes. Banks trying to appear stronger and more creditworthy may have been tempted to submit lower numbers, particularly during the financial crisis. In addition, if the banks coordinated their submissions, they could adjust trading positions tied to Libor in order to profit from their advanced knowledge of its movements. \"The banks involved in this were largely trusted by the public to be setting these rates in a fair way -- it was supposed to be a transparent measure of the cost of borrowing,\" said Arun Subramanian, a lawyer representing plaintiffs involved in the civil litigation. \"To the extent that the banks were colluding to manipulate these rates, everyone was harmed and the public trust was violated.\" No banks have been formally accused of wrongdoing in the United States. However, Japanese regulators temporarily suspended some transactions by UBS and Citi in December after it was revealed that traders at both banks attempted to influence yen Libor rates and the related Tokyo Interbank Offered Rate, or Tibor. UBS also recently revealed in public documents that it was providing information to U.S. and Swiss officials investigating possible Libor manipulation in exchange for leniency and conditional immunity, depending on the jurisdiction. There\'s no telling how long all the various probes will take to resolve, but if the allegations are proven, liabilities could be in the billions, said Jonathan Macey, a professor at Yale Law School. There\'s also the possibility of criminal charges should conspiracy among traders be established, as well as the potential for more lawsuits from private plaintiffs. \"It\'s a very serious issue when you\'re talking about banks manipulating these rates across the globe,\" Subramanian said. \"I think the liability for the banks is going to be staggering.\"

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today big banks at center of interest rate probe Arab Today, arab today big banks at center of interest rate probe

 



Arab Today, arab today
Arab Today, arab today US, Britain ban laptops on flights

GMT 07:36 2017 Wednesday ,22 March

US, Britain ban laptops on flights
Arab Today, arab today Sheds light on major steps in 12-year career

GMT 06:07 2017 Monday ,27 February

Sheds light on major steps in 12-year career
Arab Today, arab today Hezbollah commander killed by own men

GMT 07:43 2017 Wednesday ,22 March

Hezbollah commander killed by own men
Arab Today, arab today Tunisian media host praises her new experience

GMT 12:35 2017 Wednesday ,15 March

Tunisian media host praises her new experience
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Yemeni official warns education is under threat

GMT 12:03 2017 Tuesday ,14 March

Yemeni official warns education is under threat
Arab Today, arab today 2017 already marked

GMT 15:25 2017 Tuesday ,21 March

2017 already marked
Arab Today, arab today Prepares to give stargazers an eyeful

GMT 13:38 2017 Monday ,06 March

Prepares to give stargazers an eyeful
Arab Today, arab today Renault Trezor wins design award

GMT 11:56 2017 Tuesday ,21 March

Renault Trezor wins design award
Arab Today, arab today Palestinian police wage war

GMT 07:53 2017 Friday ,17 March

Palestinian police wage war
Arab Today, arab today Donia Abdel Aziz participates in "Game of Silence"

GMT 07:12 2017 Tuesday ,21 March

Donia Abdel Aziz participates in "Game of Silence"
Arab Today, arab today Mexico threatens to ditch US corn imports

GMT 10:34 2017 Tuesday ,21 March

Mexico threatens to ditch US corn imports

GMT 07:39 2017 Monday ,20 March

Dalia Mustafa believes in the presence of ghosts

GMT 19:27 2017 Saturday ,11 March

Boualsof launches "Priestess Kahina" collection

GMT 16:41 2017 Monday ,20 March

Preserving the memory of glaciers

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"

GMT 14:17 2017 Monday ,20 March

Cholesterol-slashing drug not impair brain

GMT 17:08 2017 Saturday ,18 March

Reveals secrets of tourism flights to space

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 22:39 2017 Thursday ,09 March

Zuhair Murad presents his new collection "Resorts"
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday