The so-called libor scandal is ridiculous. Only people who do not understand what libor is and how it is calculated see this as a scandal. Barclays did nothing wrong or egregious. Now, of course, public pension funds -- probably the most corrupt and poorly managed institutions on the planet -- are huddling with their lawyers to sue the major banks over "managing" libor.
Libor is not a market interest rate. It never has been. It is an administered rate by definition, like the prime rate of old. It is what any bank wants it to be and it always has been. There is nothing in law or in practice that requires a bank to submit any particular libor rate. It is whatever each bank thinks it is, by definition. Those concerned about 'manipulation of libor' are simply showing their ignorance. There has always been a conflict of interest in libor rate setting as their has always been a conflict of interest in prime rate setting. Anyone unaware of this has not been paying attention. The timing of this so-called scandal is to give the politicians another opportunity to paint the commercial banks as bad guys.
This is one more witchhunt by politicians who are driving their respective countries over the cliff. Bankrupting their countries with foolish policies, they turn their eyes toward imaginary villains and victims. Meanwhile, commercial lending grinds to a halt while commercial banks pull in their horns and huddle with their lawyers. And these self same politicians wonder why capitalism can't deliver the goods. The truth is that capitalism could deliver the goods if it did not have to be bogged down in nonsensical legal and regulatory battles. The loser, once more, is the average person who will pay higher interest rates and have less access to credit, thanks to our political 'reformers.'
Meanwhile, the CFTC can't seem to provide the most basic regulatory enforcement as more then $200 million in customer money can be added to the $1.6 billion that disappeared in the MF Global disaster. Where is the CFTC? Where is the outrage? Why does the Obama Administration have no interest in enforcing laws that have been on the books for more than four decades? The CFTC is a disgrace.
So, attention by the media heads focuses on the so-called 'libor scandal' and ignores the looting of nearly $ 2 billion in customer accounts supposedly overseen by the CFTC. No wonder the economy is in shambles and people are losing confidence in American institutions.