The more information that comes to light on the extent and gravity of the Libor scandal, the more urgent it is for the EP's ECON committee to call in the banks to answer for their manipulation and regulators to account for their failures, comments McCarthy in her article for Nucleus.
The Parliament has moved swiftly to take action by amending the current market abuse rules and widening the scope to cover key interest rates such as Libor and Euribor and other systemically important benchmarks and indices. But the culture of the banking industry has not changed and this culture was aided and abetted by regulatory failures.
But why should we be so concerned about an inter-bank lending rate? Libor (the London inter-bank lending rate) is one of the most crucial interest rates in finance. $350 trillion in derivatives and around $10 trillion in loans are set according to Libor.
The concern for individuals is that this is also the benchmark for pricing some UK residential mortgages, more commonly for commercial mortgages, and increasingly for pricing commercial loans by banks to UK businesses. Barclays has already been fined £290 million in the UK and US, and regulators have now extended their investigations to at least four of Europe's biggest banks: Crédit Agricole, HSBC, Deutsche Bank and Société Générale.
We need to call the banks and regulators to come before our committee. It is important that we learn the lessons from this crisis and ensure we have a robust legal and regulatory framework to prevent future manipulation or abuse and its potentially devastating consequences for the European and global economy as well as deepening the crisis of confidence in banks and financial markets.
Full article
© Nucleus (now CBIE)
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article