Libor Gives Prosecutors Chance to Change Banking Culture

A defining feature of the 2008 financial crisis has been the dearth of criminal prosecutions. Rightly or wrongly, people have gotten the impression that the sheriff is asleep. The global Libor scandal has the potential to change that.

The investigation into the London interbank offered rate has already uncovered a wealth of evidence. From the facts provided by Barclays Plc in its settlements with U.S. and U.K. authorities, we know that its employees, and probably those of many other banks, submitted estimates of borrowing costs that they knew to be false. Those estimates were used to calculate a suite of benchmark interest rates that influence the value of hundreds of trillions of dollars in financial contracts worldwide.