account
search
search

Britain reacts harshly to Libor scandal

  |   June 28, 2012 at 7:56 PM
LONDON, June 28 (UPI) -- British Prime Minister David Cameron and the head of the treasury, George Osborne, took verbal pot shots at Barclays bank Thursday.

"People have to take responsibility for the actions and show how they're going to be accountable for those actions. It's very important that goes all the way to the top of the organization," Cameron said as he arrived in Brussels for an EU summit.

The Daily Telegraph said pressure was mounting for Barclays' top executive, Bob Diamond, to resign after the bank agreed to pay $450 million to settle charges that it routinely manipulated the London interbank offer rate or Libor over four years.

The Libor is the average rate banks use to lend each other money. It is used to set various other lending rates including student loans and credit card interest rates.

A bank reporting a fictitiously low borrowing rate looks healthier on paper than it really is. In turn, if bank traders know where the Libor is headed, they can profit from derivatives trades that are based on financial benchmarks.

A series of bank e-mails shows staff members at Barclays frequently requesting other personnel to manipulate the figures. Return e-mails include messages such as, "Done, for you big boy."

Chancellor of the Exchequer Osborne called the manipulations a "flagrant breach" of trust.

Regulators in Britain and the United States have said they are investigating other global banks, which also report their borrowing rates that are figured into the Libor. Regulators are looking for similar false reporting and also for collusion between banks.

How low can you go? Osborne said the bank e-mails "read like an epitaph to an age of irresponsibility."

Member of Parliament John Thurso called Barclays "a sewer of systemically amoral dishonesty."

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
x
Feedback