Barclay's Bank is in hot water over attempts to manipulate the "London Interbank Offered Rate" (LIBOR) to their advantage. US and Brit regulators got the goods on Barclay's strong enough to make them cough up nearly $500 million in fines, and have their three top officers resign. Apparently the published LIBOR is put together by averaging reports from all the big banks on how much interest they had to pay to borrow money from other banks. LIBOR is used to set interest rates on all sort of loans.
L:IBOR is a new comer. Back in the day we used the "prime rate", which was alleged to be the interest rate big banks charged their best customers. Back then General Motors was considered a best customer, so we are talking about a long time ago. Somehow the financial world stopped using (and reporting on the news) the prime rate in favor of LIBOR. I have no idea how that transition happened.
Of course you have to wonder about LIBOR. It's an interest rate one bank charges another bank on a loan between two banks.
Banks are supposed to raise money and make loans to finance business and construction. That makes economies grow. Making loans to other banks just swaps the money around but doesn't do a thing for economic development. At least the "prime rate" was a measure of how well banks were doing at their primary job.
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