Sources said Wednesday that U.S. officials are investigating whether some of the world’s biggest banks worked together to understate their own borrowing costs before and during the financial crisis—affecting trillions of dollars in loans and derivatives. The borrowing costs are used to calculate the London interbank offered rate, or Libor, and for the past year, law-enforcement officials have been investigating if banks effectively formed a global cartel and coordinated how to report borrowing costs between 2006 and 2008. The investigation is being led by the U.S. Justice Department and the Securities & Exchange Commission. Roughly $10 trillion in loans and $350 trillion in derivatives are tied to Libor, which affects costs of everything from corporate bonds to car loans, and if the rate was kept artificially low, then borrowers were not likely to be harmed—meaning struggling banks would not have to answer questions about their practices.
TOP 10 RIGHT NOW