Question

The LIBOR scandal. When did it happen and for how long?

PC. This if for 3-unit BA-343 International Banking special study, I need deeper explanation. Thanks

Answer 1

A LIBOR stands for london inter bank offered rate. It is a rate on which the rate of variable interest loans depend. A LIBOR Scandal is a group or series of various fradulent transactions which are related to the LIBOR and also with the results of the investigation. A LIBOR is simply a average of the interest rates which are charged by the various banks in various countries on loans or deposits. Thi scandal is derived or found or arised when the banks were wrongly or with wrong intention inflating or we say deflating their rates so as to show high or more profitable their financial statements. By doing this they may presents their creditworthiness more than they have.

As we all know that LIBOR is mostly used or useful for the US market Derivatives so the manipulation in the US derivatives LIBOR may manipulate the US market Rates which may leads to voilation of the US Laws,Since various loans such as of mortgages , student education loans , Business loans are based on LIBOR rate. So now the manipulation of LIBOR may leads to bad effect or negative effects on the consumers or we say lenders or market.

Mainly the problem of LIBOR scandal is arised in October 2008 as there are many reports comes after the study of LIBOR Scandal such as WSJ LIBOR study , Regulatory Investigations , Unites States Investigation , Parliamentary Investigation and many others . It can go near about 4 to 6 years upto 2012 when the Rate get fixed.