Jargon Can Kill a Hot Business Story
There's nothing more frustrating for an editor than having a hot news story that involves a deadly headline word.
Boy, do we have that now.
We have a situation where bankers and traders were manipulating an interest rate upon which a good chunk of the world's mortgages and commercial loans are based. Holy cow! That's an important story.
Unfortunately that key rate is known as Libor, shorthand for London InterBank Offered Rate. If you say "Libor" to most folks, they'll look at you quizzically. Go ahead and say "London InterBank Offered Rate" and their eyes will cross completely. (Here's our explainer if your eyes crossed, too.)
No one reacts well to jargon. We see that daily on our Internet monitoring doodads. Put a piece of jargon in a headline and you can practically see readers running away from it.
But it's actually pretty simple. Banks lend each other money on a short-term basis. They report the rates they are typically paying on these loans to regulators. The regulators take an average of sorts and voila, you get the Libor. (Read the fine print in a lot of adjustable loans and you'll find rates typically a few points above this Libor rate).
Now, if several of these banks fib about what they are charging each other for short-term loans, they can essentially manipulate where Libor ends up. That's the fuss. Barclays, and some as yet unnamed others, maneuvered Libor to a lower point than it should have been. (Of course, some are arguing that central banks actually wanted Libor lower to help battle the financial crisis and that no one is hurt by low rates).
Victimless crime or not, the point is some banks broke the honor system. And this honor system governs a lot of other interest rates, like ... the Tibor (Tokyo InterBank Offered Rate) and the Mibor (Mumbai InterBank Offered Rate) and the Bibor (Bangkok) and the ... well, you get the picture. There's an assortment of CD and swap rates with honor system reporting, too.
Good gosh. Could all these reporting systems be at risk? Well, you can expect some journalistic poking around as the current scandal unfolds.
The big problem for us editors? All that jargon.