Interest Rate, Libor Scandal | featured news

Barclays has moved quickly to fill the void at the top. The bank Thursday named Antony Jenkins, the head of its retail and business banking unit, to succeed Robert Diamond, who was forced to resign July 3 after the Libor rate-rigging scandal.

The attorneys general of New York and Connecticut have issued subpoenas to seven banks over the possible manipulation of a global interest rate, a person with knowledge of the matter told The Associated Press on Wednesday....

Libor benchmark interest rates are no longer "fit for purpose" and must be changed or replaced, Britain's regulator said on Friday as he set out proposals to restore their credibility.

The investigation into the manipulation of the Libor benchmark interest rate has led banks to seek to implicate their rivals, according to government and bank officials.

Barclays Plc revealed a new regulatory probe and more U.S. lawsuits on Friday, making it harder for the British lender to rebuild its reputation damaged by the central role it played in the interest rate-rigging scandal shaking banks.

It is an open secret in the banking world: the interest rates for many mortgages and loans are based on a benchmark that is largely guesswork. The flaws in the rate-setting process, which is used to determine the pricing for trillions of dollars of financial products, have been exposed by the latest banking scandal. Regulators around the world are investigating whether big banks gamed the rates for their own benefit before and after the financial crisis.

Central bankers and regulators will hold talks in September on whether the troubled global Libor interest rate can be reformed or whether it is so damaged that the benchmark of borrowing costs should be scrapped.

The prospect of criminal cases related to the Libor scandal is expected to rattle the banking world and provide a new impetus for financial institutions to settle with the authorities.

Barclays alerted U.S. regulators as far back as 2007 to concerns that banks were rigging benchmark interest rates, according to documents released on Friday, but policymakers on both sides of the Atlantic did not appear to take decisive action, underscoring the chaos of the financial crisis.