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The thousands of community banks have often said their much larger counterparts have trampled on them. Now some hope the latest Wall Street scandal could give them ammunition to strike back.
Libor is “structurally flawed” and an international effort would be needed to restore the rate’s credibility as the leading benchmark for mortgages, derivatives and corporate lending around the world, Ben Bernanke, US Federal Reserve chairman, told Congress on Tuesday, the Financial Times reports.
In this excerpt from a live interview at the "Delivering Alpha" conference presented by CNBC and Institutional Investor, Treasury Secretary Timothy Geithner defends his actions in 2008 after the New York Federal Reserve learned that Barclays and other banks were not reporting accurate data on a key London-based interest rate. He also promises more enforcement is coming.
"There is a real confluence of events here, the British banks are getting repeatedly nailed by the US authorities this month, there is a risk here that the US authorities, whether it is lawmakers or regulators start to perceive the British banking industry as a lawless cesspit," David Enrich, European banking editor at the Wall Street Journal, told CNBC.
"The Bank of England at that time were desperate to try and get interest rates down because they were so worried about the state of the economy and the state of the financial system and every bank has an incentive to show that it has a low cost of funds to show that it is financially stable," Jan Toporowski, professor of Economics, SOAS, told CNBC.
Bank of England governor Mervyn King and his deputy Paul Tucker are going to be in front of the Treasury Select Committee the Libor scandal isn't officially on the agenda but clearly that is going to come up and may have implications for central bank succession planning. Catherine Boyle has more.
A drought-fueled rally in soybeans, corn and wheat is raising fears of another round of food price inflation, posing an unwelcome complication for policymakers, particularly in emerging Asia, where higher consumer prices may hinder their ability to ease monetary policy.
Trying to ride a risk rally in currencies? Better hold on tight.
Trader Stephanie Link is keeping a close eye on a sell-off. "If it gets down to the low $80's I'd pull the trigger," she says.
In light of the recent scandals at Barclays, JPMorgan Chase, and others, the obvious question that must be asked is: Where was the board?
As regulators ramp up their global investigation into the manipulation of interest rates, the Justice Department has identified potential criminal wrongdoing by big banks and individuals at the center of the scandal. The New York Times reports.
Mary Jo Jacobi, fmr assistant US Secretary of Commerce, told CNBC, "I don't see how we can avoid the Libor scandal blowing up, it is a big scandal you have disclosures from the New York Fed going back to 2008, you have Deutsche Bank turning states evidence in a plea for leniency, who knows where else it is going to go."
Tim Bush, head of governance and Financial Analysis at PIRC (Pensions Investment Research Consultants Limited) and Simon Nixon, European editor at the WSJ, joined CNBC to discuss whether the the Libor scandal will shift focus from Barclays.
The Libor rate-rigging scandal has had an adverse effect on London’s reputation as a leading financial center, Mark Boleat, policy chairman at the City of London Corporation, told CNBC.
Italy gets a downgrade; videogame sales continue to plummet; Ackmans sets sights on P&G; Lexmark revises outlook and Google’s Larry Page is back in the office.
CNBC's Brian Shactman and Eamon Javers report the New York Fed is expected to release its report on the LIBOR case tomorrow, and HSBC is preparing to pay big fines for not having necessary controls in place to prevent terror financing.
MIT Professor Simon Johnson points out that it is a mistake to treat the Libor scandal as confined to Barclays.
The softening global economy is leading central banks to cut rates, and that could change your carry trade strategy.
"This is a very big blow for Barclays, it's a blow for banks, it's a blow for London, the question is how much? Because the first big bank to be fined is in London it is certainly having an adverse effect on reputation," Mark Boleat, policy chairman at the City of London Corporation, told CNBC.
The decision by U.S. regulators to overhaul supervision of the country's largest banks following the financial crisis left front-line suprevisors without a deep knowledge of JPMorgan's trading operations during a brief yet critical moment, the New York Times reports.