British Rate-Fixing Scandal Takes 'Mind-Blowing' Turn

Matt Taibbi: Libor scandal goes 'down the rabbit hole' of banking
By Mark Russell,  Newser Staff
Posted Jul 5, 2012 4:52 AM CDT
Updated Jul 5, 2012 7:53 AM CDT
Former Barclays Chief Executive Bob Diamond after appearing before the Treasury Select Committee yesterday in London, England.   (Getty Images)

(Newser) – The scandal over rigged Libor rates, the benchmark rate used for interest rates on trillions of dollars worth of loans, is quickly growing past Barclays and threatens to engulf the Bank of England and a dozen other banks, including several in the US, reports the Wall Street Journal. Barclays officials had hoped the early deal it reached with US and British regulators, admitting guilt and taking a $453 million fine, would spare it from the worst of the scandal's fallout. But even with the resignation of top Barclays execs including CEO Bob Diamond in recent days, outrage is growing. Diamond was grilled by a parliamentary inquiry yesterday. "Either you were complicit, grossly negligent, or incompetent," a Labour lawmaker told him.

Ahead of the hearing, Barclays apparently ratcheted up the scandal several levels, releasing a 2008 email that suggested it was encouraged by a senior Bank of England official to manipulate the rate. "We have officially disappeared down the rabbit hole of the international financial oligarchy," writes Matt Taibbi in Rolling Stone, calling the revelation "mind-blowing" because it implies that all the other banks were doing the same thing and indicates that the official was passing on the message on behalf of the British government. Diamond, however, denied that he had considered the email an order, or, as the probe chairman said, "a nod and a wink, even though it reads that way to almost anyone who looks at it." Analysts believe the other banks involved will have to cough up billions to settle the allegations—and predict that Diamond won't be the only bank chief to be sacked. Click to read Taibbi's entire piece.

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