Libor

FIRST, THE GOOD news about the scandal surrounding alleged manipulation of the London Interbank Offered Rate , the benchmark interest rate known as Libor. Though many trillions of dollars in financial obligations — from adjustable-rate mortgages to complex derivative contracts — hinge on Libor, the potential impact of the banks' alleged misbehavior on economic growth, both in the United States and globally, was probably negligible. The essence of the scandal is the misappropriation and misallocation of wealth, not its destruction.

HOUSING Freddie Mac sues banks over Libor fix Freddie Mac has sued 15 big banks, including JPMorgan Chase, Bank of America and Citigroup, accusing them of rigging a key interest rate and causing huge losses for the government-controlled mortgage giant. Freddie filed the lawsuit Thursday in federal court in Alexandria. It names the banks that set the London interbank offered rate, known as Libor, which provides the basis for trillions of dollars in contracts around the world, including...

Federal regulators had evidence that major banks could be manipulating one of the world's most important interest rates a year before the practice came to an end, according to documents released by the Federal Reserve Bank of New York on Friday. As early as 2007, the officials at the New York Fed suspected that this key rate, which serves as the basis for the interest rates that consumers pay on many loans, did not accurately reflect market forces, the documents show. Then, in April 2008, the New York Fed was explicitly warned by an...

Traders at the venerable Royal Bank of Scotland were so blatant about rigging benchmark interest rates for nearly five years that they bragged about it in e-mails and Internet chat rooms. In one instance, a senior trader at RBS told another, "it's just amazing how [rate] fixing can make you that much money; it's a cartel now in London. " Even a manager, at one point, admitted that "pure manipulation" was at work. Damning exchanges like these between dozens of employees at the nearly 300-year-old bank...

The revelation that Barclays and other big banks schemed to rig Libor, a critical global interest rate, sent shock waves across the world of finance . Top bank executives resigned. Central bankers launched probes into how rates are set in Britain, Sweden, Japan and elsewhere. Some commentators called the scandal one of the worst in history. But is it possible that the ma­nipu­la­tion actually had an upside? As analysts assess the fallout, there has been a lot of fog and little clarity about the precise impact on the global...

The U.S. Justice Department is preparing to file charges this fall against traders from several banks in the global probe of interest-rate rigging, but prosecutors in Britain haven't even decided whether they have a case. The United Kingdom's Serious Fraud Office (SFO) opened a criminal investigation this month after Barclays was fined a record $450 million by British and U.S. authorities. Politicians including Chancellor of the Exchequer George Osborne and Ed Miliband, leader of the...

U.S. prosecutors and European regulators are close to arresting individual traders and charging them with colluding to manipulate global benchmark interest rates, according to people familiar with a sweeping investigation into the rate-rigging scandal. Federal prosecutors in Washington have recently contacted lawyers representing some of the individuals under suspicion to notify them that criminal charges and arrests could be imminent, said two of those sources, who asked not to be...

LONDON — The British banking lobby responsible for setting Libor said it was happy to hand over the task to regulators, days ahead of an expected U.K. proposal to take tighter control of the scandal-tainted benchmark borrowing rate. Martin Wheatley, a top U.K. regulator, is expected to propose stripping the British Bankers' Association of its supervisory role in setting the hugely influential London interbank offered rate, in plans to be presented Friday. "If Mr. Wheatley's recommendations include...

Every workday morning in London, at about 10 o'clock, representatives from 19 banks make a series of decisions that affect financial transactions around the world, from what homeowners pay on their mortgages to the underlying value of credit default swaps and corporate bonds. The bankers' power is unsettling, says Tim Price, who helps oversee more than $1.5 billion as director of investment at PFP, an asset management firm. "It's a kind of Wizard of Oz surrealist nightmare," he says.

Treasury Secretary Timothy F. Geithner has said that he sounded the alarm four years ago to regulators about problems with the benchmark interest rate known as Libor. But Geithner, who was then head of the Federal Reserve Bank of New York, did not communicate in key meetings with top regulators that British bank Barclays had admitted to Fed staffers that it was rigging Libor, according to people familiar with the matter. Instead, regulators at the Commodity...

Mortgage finance giants Fannie Mae and Freddie Mac may have lost up to $3 billion from the ma­nipu­la­tion by several big banks of the global interest rate known as Libor, according to an internal government memo. That was just one more sign Wednesday of the growing rate-fixing scandal, as federal prosecutors and regulators also announced that Swiss banking giant UBS had agreed to pay $1.5 billion in fines for manipulating the rate. U.S. authorities also filed criminal charges against two UBS...

In a year rife with banking scandals, none quite rivaled the intrigue or magnitude of the alleged ma­nipu­la­tion of the global interest rate known as Libor. London-based Barclays set off a firestorm in June when it admitted to scheming to rig the benchmark that affects everything from mortgage rates to municipal bonds to credit cards around the world. Nearly half of the bank's C-suite resigned . Municipalities, pension systems and hedge funds filed a flurry of...

The U.S. Treasury Department and the Federal Reserve need to stop using the benchmark interest rate known as Libor in financial rescue programs because it might not be reliable and could put taxpayer dollars at risk, a federal watchdog said Thursday. The special inspector general for the Troubled Asset Relief Program, the bailout vehicle launched during the financial crisis, recommended that the Treasury and the Fed change some initiatives to ensure participating U.S. firms use alternatives...

LONDON — The British banking lobby responsible for setting Libor said it was happy to hand over the task to regulators, days ahead of an expected U.K. proposal to take tighter control of the scandal-tainted benchmark borrowing rate. Martin Wheatley, a top U.K. regulator, is expected to propose stripping the British Bankers' Association of its supervisory role in setting the hugely influential London interbank offered rate, in plans to be presented Friday. "If Mr. Wheatley's recommendations include...

Lawsuits are mounting against some of the world's biggest banks over the ma­nipu­la­tion of the global interest rate known as Libor as smaller lenders, municipalities and investors take stock of losses tied to the widening scandal. The cases are believed to be a trickle before an oncoming deluge of civil litigation that will beset the world's largest banks for years. Yet the ultimate problem for the accused may not be the millions they pay in damages but rather the cloud of uncertainty...

The U.S. Justice Department is preparing to file charges this fall against traders from several banks in the global probe of interest-rate rigging, but prosecutors in Britain haven't even decided whether they have a case. The United Kingdom's Serious Fraud Office (SFO) opened a criminal investigation this month after Barclays was fined a record $450 million by British and U.S. authorities. Politicians including Chancellor of the Exchequer George Osborne and Ed Miliband, leader of the opposition Labor Party,...

While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way a critical global benchmark called the London interbank offered rate, or Libor, is calculated, according to a June 1, 2008, e-mail obtained by The Washington Post. Writing to the head of the Bank of England, among others, Geithner made six recommendations, which included eliminating incentives that could encourage banks to manipulate the rate and establishing a "credible reporting procedure.

The U.S. Treasury Department and the Federal Reserve need to stop using the benchmark interest rate known as Libor in financial rescue programs because it might not be reliable and could put taxpayer dollars at risk, a federal watchdog said Thursday. The special inspector general for the Troubled Asset Relief Program, the bailout vehicle launched during the financial crisis, recommended that the Treasury and the Fed change some initiatives to ensure participating U.S. firms use alternatives to...

Treasury Secretary Timothy F. Geithner was back in the hot seat Wednesday. One of President Obama's most polarizing Cabinet officials, Geithner returned to Capitol Hill for the 66th time since taking office, this time defending himself against charges from House Republicans that he had failed to stop big banks from rigging a critical global interest rate four years ago. Geithner's role in the unfolding scandal around the London interbank...

Calls for the criminal prosecution of bankers involved in rigging the global interest rate known as Libor are growing louder as government officials learn more about the scheme. The European Commission on Wednesday proposed making the ma­nipu­la­tion of key financial benchmarks a criminal offense, responding to e-mails that show bankers on both sides of the Atlantic colluded in fiddling with Libor. Short of instituting new legislation, U.S....