Barclays Bank has today been fined a combined £290M by regulators in the USA, UK and EU for manipulating the LIBOR; an acronym which stands for “London Interbank Offered Rate”. If you think this doesn’t sound sexy, you’re right. But if you think it isn’t critically important and one of the worst scandals to be exposed from the GFC so far, you’re wrong. The LIBOR is meant to be an objectively-set interest rate. It is used as the reference rate for an estimate $350 trillion in derivatives, not to mention an unknowable number of mortgages, international loans and financing arrangements. Many GFC scandals have involved institutions and hedge funds swindling each other out of paper wealth which never really existed. This one has involved one or more banks ripping off any number of governments, businesses, pensions funds and homeowners, and the fines so far are only the precursor to civil lawsuits and further criminal investigations. Continue reading