By Patrick Brogan
Tonight, the BBC‘s Panorama will air and it will cause the UK Government and banking industry some red faces. Panorama has uncovered evidence that the Government and Bank of England wanted the Libor rates pushed down back in 2008.
The Libor (London Interbank Offered Rate) is the rate at which other UK banks lend to each other and this then sets “a benchmark for mortgages and loans for ordinary customers” as reported by the BBC. An artificially set Libor rate is called lowballing.
This is important for a few different reasons. The Libor rate is an indicator of trust the banks have in each other. This works off an estimate and many banks agreed with each to either submit higher or lower rates than what was estimated. The rate was not regulated at the time, so the banks felt they were doing no wrong. However, manipulating Libor is a form of fraud. Indeed, people have been arrested for as much. This can have a huge impact on consumer confidence and affects the wider economy.
There are other implications. There was a Treasury select committee back in 2012 that investigated banking. These tapes would call into question the evidence of some members of the banking industry given. Maybe the most important factor is the Government’s role in this. Did they play a part in what is essentially fraud? That’s what these records suggest. It’s almost like politicians are under control of the banks or something.
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