What do you know so far about the LIBOR scandal?
LIBOR is the rate set daily by banks themselves to lend money to each other. This rate affects the entire lending market from enormous changes of money between banks and for small consumer loans and mortgages.
This article in the Economist does an excellent job of outlining the fraud that took place and the levels it reached.
A good quote from the article reads:
“This is the banking industry’s tobacco moment,” says the chief executive of a multinational bank, referring to the lawsuits and settlements that cost America’s tobacco industry more than $200 billion in 1998. “It’s that big,” he says.
Are you keeping abreast of the LIBOR scandal news?
How may it have affected your life personally?
For me, it has more than likely affected my credit card interest rates, but since lending affects the prices of all goods and services, it has probably even reached into my wallet at the grocery store and gas station.
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7 Answers
I knew very little, but I think you’re right. It probably affects just about everyone not living a subsistence lifestyle.
The main reason people here in the USA hear about LIBOR is due to its use in currency exchange markets, though my understanding is the US mortgage market uses LIBOR at least as a reference point.
It has had a negative affect on my ability to obtain credit. @Hawaii_Jake, when is the last time you noticed an increase in something you buy at the grocery store? Prices here on the east coast just keep creeping up. I just had to pay over $20 for 16 rolls of Charmin at Sam’s Club. I’ve noticed my homeowner’s policies increasing. I would imagine it is because of the decline in the housing market. But, oh, well. I have my health. I have my family. I have the best friends in the world. Life is good. It could be worse.
And, it is messing with the price of silver I betcha.’ Bastards.
I know of at least one type of home loan with a variable interest rate that’s tied to the LIBOR. I almost went for it, but decided to go with the ol’ 30-year fixed.
The LIBOR rate seemed a bit iffy even when it wasn’t being fiddled. This is just another part of the ongoing financial services industry scandal.
Personally I’d say it’s about time, but that it’s just the tip of the iceberg.
The extent to which huge international institutions manipulate and suck wealth out of the commodities markets is understated.
The money that flows into their pockets to buy ‘investments’ in derivatives, that are rated by the colluding ratings companies, is HUGE and rarely discussed (besides the little subset called subprime mortgages).
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