Barclays, led by CEO Bob Diamond, is being charged with manipulating reports that help set the Libor, or London interbank offered rate. UPI/Daniel Acker/Pool | License Photo
WASHINGTON, June 27 (UPI) -- British bank Barclays has agreed to pay $450 million to settle charges that it manipulated interest rates used in $350 trillion in loans.
The Commodity Futures Trading Commission, the U.S. Justice Department and bank regulators in Britain charged Barclays with manipulating reports that help set the London interbank offered rate, or Libor, The New York Times reported Wednesday.
The Libor is used to set other lending rates, such as student loans, credit cards, mortgages and other lending.
It is in the interests of big banks, however, to report that their borrowing costs are low, as that makes them appear healthier.
The Libor is an average rate big banks charge each other for loans. But if Barclays, for example, has high rates to pay other banks, its financial position appears weaker, the Times reported.
Regulators are investigating other banks, including JPMorgan Chase, Citigroup and HSBC on similar complaints. Essentially, the investigation follows in the footsteps of brokerage firm Charles Schwab, which sued 11 big banks in 2011 on charges of conspiring to manipulate Libor.
Regulators said the scheming at Barclays included top tier management. In a statement, the bank's Chief Executive Officer Bob Diamond said, "The events which gave rise to today's resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business."
He also said the bank was cooperating with authorities and that four top executives at the bank, himself included, had forfeited their bonuses for the year.
The bank is setting its case with the CFTC for $200 million, while the Financial Services Authority in London accepted a $92.8 million settlement.
Regulators are also looking into the possibility of banks manipulating the Euro interbank offered rate, or Euribor, and the Tokyo interbank rate or Tibor, the Times said.