London Calling: Why the Libor Affair Matters to YouBy
Stories about the London Interbank Offered Rate (Libor) typically don’t set one’s heart aflutter. This one should: Investigators in the U.S. Canada, Japan, the U.K., and the European Union are trying to figure out if a handful of brokers and traders manipulated a key benchmark rate that affects the price of $350 trillion worth of securities and loans around the world. That may include your car loan or even your home mortgage. No banks or individuals have been charged with any wrongdoing. Yet even if the case fizzles out, there is something weird about an internationally recognized benchmark interest rate set by a small group of financial professionals with little transparency or regulatory oversight.
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