The Libor Scandal: Three Things to Know

July 10, 2012

The Libor Scandal: Three Things to Know
Explainer Video
from Video

Following investigations into Barclays’ manipulation of London Interbank Offered Rates (Libor), CFR’s Sebastian Mallaby highlights three implications from the unfolding scandal:

More From Our Experts

More on:

Financial Markets

Conflicts of Interest Within Banks: Barclays’ distorted reports on borrowing rates demonstrate the system’s failure to prevent damage from conflicts of interest between banks and their traders. "Chinese walls don’t work," Mallaby says. "It’s a lesson we’ve learned over and over again in finance."

More on:

Financial Markets

The Role of Regulators: The alleged collusion between the Bank of England and Barclays indicates a critical challenge in the governance of financial markets: Regulators are forced to bend rules to protect banks, "not because they are bribed," says Mallaby, "but because they are blackmailed, in the sense that the banks, by threatening to go under and do untold damage to the economy, can force regulators to bend the rules on their behalf."

More From Our Experts

More on:

Financial Markets

Responding to the Scandal: Calls for cultural change and for executives to give up remuneration simply scratch the surface, Mallaby argues. "The real lesson to be learned here is that banks which are too big to fail are also too big to exist," he says.

More on:

Financial Markets

Up
Close

Explore More on CFR

Germany

President Trump has targeted Germany over its supposed dependence on Russian natural gas, and the proposed Nord Stream 2 is dividing the EU. What’s in store for Europe’s pipeline politics?

Disasters

The U.S. government responds to scores of disasters each year, coordinating closely with state, local, and foreign partners. However, more frequent and severe storms, fires, and floods are straining resources.

Saudi Arabia

If Tesla goes private with significant funding from Saudi Arabia or other foreign investors, it would raise national security and ethical questions.