"The bank could not be seen to be borrowing at high rates" during 2008, according to an anonymous Barclays trader, describing the Libor manipulation. "Everyone knew ... there was no implication of illegality." The result: Libor might get reported at 2% when the bank was actually paying 5-6%, meaning lending had to take place at Libor plus 3-4% just to break even. [View news story]
I doubt the manipulation was anywhere near 3-4%, that would be easy to see. LIBOR is used internationally by thousands of institutions to set lending rates. A rate differential of .01% is significant in the over trillion dollar daily market rate. Either a lender wins/loses or the borrower wins/loses. When the dust settles will both lender or borrowers or investors be happy with Barclay? I doubt it. The government penalty is the first effect, now comes the legal actions from the private sector.
"The bank could not be seen to be borrowing at high rates" during 2008, according to an anonymous Barclays trader, describing the Libor manipulation. "Everyone knew ... there was no implication of illegality." The result: Libor might get reported at 2% when the bank was actually paying 5-6%, meaning lending had to take place at Libor plus 3-4% just to break even. [View news story]