Quote:
Originally Posted by scottbombedout
Are you in the banking industry?
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Yes - but not Barclays and nothing to do with LIBOR or any type of trading, so no skin in this game.
Mortgages may be tied to LIBOR or a bank lending rate or some other benchmark. It all depends. Banks fund at LIBOR + margin so it make sense to lend at LIBOR + or some similar benchmark to minimise the basis risk.
You can see how rates spiked 06-08 until govt backed liquidity schemes came into play.
If there is a secret agenda in all this its probably that Barclays don't want anyone to know just how close they came to a full blown liquidity crisis - and they were not alone. Lehman crisis would have seemed insignificant in comparison with the fall of a much larger bank. Desparate men do desparate things - maybe manipulating LIBOR was one of those those things. BTW 20-odd banks are under investigation for the same thing.
Maybe, the stupid thing is that the LIBOR setting system (and other benchmarks) is ripe for manipulation because it relies on all the contributing banks to submit what they would borrow and land to each other at. Nothing objective or verifiable. Its uniquely vulnerable, but regulators thought it was ok. Rumours of manipulation have been well known for at least 5 years.
Edit - In case it looks like I am being cagey, I have largely been selling aircraft for the last 18 months and now I am looking at infrastructure lending. I am truly, not close to this scandal in any way. I just liked the way you read the OP's quoted article and assume that banks were hiking rates to rip off consumers and make money (at least I thought that was implied), when actually it was the opposite as they fought tooth and nail to survive.