Current Weather
The Spy FM

Episode 384: The Little Lie That Rocked The Banks

Filed by KOSU News in Business.
July 3, 2012

There’s a certain amount of trust underpinning the financial markets. But recent news out of the United Kingdom has shaken the world’s faith in a key element of the system.

That element is the number banks use to determine how much to charge their customers — think of it as the measuring stick that determines nearly every other other interest rate around: mortgages, credit cards, corporate loans, complex derivatives transactions. It’s called LIBOR, or the London Interbank Offered Rate, and it pretty much underpins everything.

For years, the British Bankers’ Association has calculated the rate by asking big banks what they are paying to borrow from other banks. The answers were largely taken on faith. Now it turns out that at least one big bank — Barclays — was skewing the numbers, during the financial crisis and before. Emails cited in a regulatory complaint against the bank show the casual way the efforts were discussed. Other banks are under investigation as well.

The result: Criminal and parliamentary inquiries on two continents, lawsuits, and a lot of mistrust and uncertainty about interest rates across the financial markets.

On today’s show, we look at how Barclays bankers sought to manipulate Libor, and why the repercussions will be felt throughout the global financial system for years to come.

Music: OK Go’s “White Knuckles” and Ivan & Alyosha’s “Beautiful Lie.” Find us:Twitter/Facebook/ Spotify/ Tumblr. [Copyright 2012 National Public Radio]

Leave a Reply

6PM to 6:30PM Marketplace

Marketplace

Hosted by Kai Ryssdal, award-winning Marketplace is public radio's daily magazine of business and economics.

Listen Live Now!

6:30PM to 7PM All Things Considered

All Things Considered

For two hours every weekday, All Things Considered hosts Robert Siegel, Michele Norris and Melissa Block present the program's trademark mix of news, interviews, commentaries, reviews, and offbeat features.

View the program guide!

7PM to 9PM The Oklahoma Rock Show

The Oklahoma Rock Show

The Oklahoma Rock Show filters through dozens of submissions a week to find the best in new local music. Ryan LaCroix is the host and mastermind behind the show and teaches at the Academy of Contemporary Music at the University of Central Oklahoma (ACM@UCO).

View the program guide!

Upcoming Events in your area (Submit your event today!)

Streaming audio and podcasts

Stream KOSU on your smartphone

Phone Streaming

SmartPhone listening options on this page are intended for many iPhones, Blackberries, etc. with low-cost software applications available to listen to our full-time web streams, both News on KOSU-1 and Classical on KOSU-2.

Learn more about our complete range of streaming services

We're perfecting the patient experience - Stillwater Medical Center