Libor investigations spread to what regulators knew

Regulators now quizzed over role in the Libor rate-fixing scandal

Scottish newsLibor investigations spread to what regulators knew

by Amy Lenathen

Two key figures in the Libor Scandal are to appear before MPs today in the House of Commons as investigations now turn from bankers to what regulators knew or did not.

The recently-quit chief operating officer of Barclays, Jerry del Missier, and chairman of the Financial Services Authority, Lord Turner, will be questioned today (Monday) from the Treasury Select Committee regarding the latest developments on the Libor scandal.

Mr del Missier claimed he misinterpreted an email from former CEO Bob Diamond in 2008, which he thought had instructed him to submit falsely low figures to the British Bankers' Association.

The email was a summary of a phone call that Diamond had with deputy governor of Bank of England Paul Tucker, earlier that day.

MPs are likely to question Mr del Missier on how this mistake could have been made.

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Libor is ‘biggest financial fraud in history’

The Libor scandal continues to spread overseas, with US analyst Robert J. Shapiro among a growing number of commentators who are now referring to the scandal as “the biggest financial fraud in history.”

Libor, (London Interbank Offered Rate) which is the benchmark for hundreds of trillions of pounds worth of loans and mortgages, is now being investigated by the UK Government, the Serious Fraud Office, the European Commission and regulators around the world. 

It is expected that up to $42 billion (£27bn) will have to be paid in overall damages in relation to the derivatives and money markets with lawsuits across all currencies, according to former City minister Lord Myners. This figure does not include potential costs in relation to anti-trust investigations where if proof that banks formed cartels is found the fines may be as much as 10 percent of the company’s annual turnover.

The scandal, which exploded into the public domain, when Barclays was fined after admitting that its traders had been fixing the Libor rate, is now engulfing financial institutions in the US, including Bank of America, Citigroup and Jamie Dimon’s JPMorgan Chase.

Now, the New York Attorney General Eric Schneiderman, along with Connecticut Attorney General George, launched a probe into the extent of Libor rigging and its impact on  individuals, businesses,and local governments around the world.

Last month, Barclays Plc. were forced to pay £290 million in fines for attempting to manipulate Libor between 2005 and 2009.



Scottish News News Scotland

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published this page in News 2012-07-16 17:59:00 +0100