By Pratap Chatterjee, CorpWatch Blog
August 16th, 2012
Seven international banks have been served with subpoenas over the global interest setting scandal. Barclays, Citigroup, Deutsche Bank, HSBC, JPMorgan Chase, Royal Bank of Scotland and UBS – have been asked to provide relevant “documents and communications” to Eric Schneiderman, the New York attorney-general in collaboration with George Jepsen, Connecticut’s top law enforcement officer.
The scandal involves LIBOR – or the London Inter Bank Offer Rate – a global system of interest rates for $360 trillion in international deposits. While many of these loans are overnight transfers between banks, they affect the price of consumer loans like mortgages, car loans and credit card loans. The rates are set by the British Bankers Association which makes a considered average of rates reported to them verbally by participating bankers.
For several years, speculation has been rife that the numbers were being fixed. A 2008 study by the Bank for International Settlements noted that the rates could “be manipulated if contributor banks collude or if a sufficient number change their behaviour.” So did a paper published on the Social Science Research Network which found evidence of “questionable patterns.”
Last year news emerged that the European Commission, the U.K. Financial Services Authority, U.S. Commodity Futures Trading Commission, the U.S. Department of Justice and the U.S. Securities and Exchange Commission were investigating the matter.
- Seven Banks Under Investigation for Global Interest Rate Scandal (blacklistednews.com)
- Seven Banks Under Investigation for Global Interest Rate Scandal (commondreams.org)
- Seven Banks Under Investigation for Global Interest Rate Scandal (corpwatch.org)
- Seven banks summoned in Libor probe (bigpondnews.com)
- TIMELINE-Libor: The road to scandal (uk.reuters.com)
- RBS to face US rate-fixing probe (scotsman.com)