Barclays Fined $450 Million for Manipulating Libor

Devan Biswas
27 Jun, 2012
New York City

UK based Barclays agreed to pay fines of more than $450 million to the U.S. and UK regulatory authorities after the bank admitted to manipulating the Libor, the London interbank offered rate and Euribor.

UK based Barclays agreed to pay fines of more than $450 million to the U.S. and UK regulatory authorities after the bank admitted to manipulating the Libor, the London interbank offered rate.

The interbank rate is used by several trillions of dollars of international contracts to set terms of loans and has been a benchmark or a reference rate for many international loans.

Barclays agreed to pay $200 million to Commodity Futures Trading Commission and $160 million to the U.S. Department of Justice and 59.5 million pounds to the UK’s Financial Service Authority. The European Commission is expected to levy its fine separately for the bank’s misconduct in brazenly attempting to manipulate euribor.

More banks are expected to be fined as at least ten regulatory agencies from around the world are looking at the conduct of 20 global banks at the height of financial crisis in 2007 and 2008.

Chief executive Bob Diamond and three other executives agreed to forego any potential bonus this year. Diamond said, “When we identified issues, we took prompt action to fix them and cooperated extensively and proactively with the authorities.”

Reckless lending and the lack of supervision among large banks was the root cause of the financial crisis that eventually brought the economies of the U.S. and UK into the deepest recession in seventy years that put twenty million additional people on the unemployment rolls in two countries. In to the fourth year of economic weakness, banks continue to fight regulatory oversight and dole out billions in dollars when most small businesses and consumers face hurdles in accessing bank loans.