You may not have heard much about LIBOR (London Interbank Offered Rate), but that is not because it is a small, insignificant topic; on the contrary, the LIBOR scandal is one of the largest banking scandals of our time, but ABC’s World News and NBC’s Nightly News have ignored the scandal for over one month now. The LIBOR, a critical interest rate calculated by averaging inter-bank lending rates of the largest London-based banks, is used as a benchmark for nearly all other short-term interest rates globally. Its manipulation affects payments for more than $800 trillion of financial instruments,[i] affecting 99 percent of all commercial products including mortgages, credit cards and pensions.[ii]
Because of the breadth of the LIBOR’s effects, this scandal will touch people across all income levels – and will likely affect your daily life. While the exact extent is not yet known, it is clear that the rigged LIBOR will affect private student loans, adjustable-rate mortgages, money-market funds and bank-loan funds.[iii] Banks are accused of suppressing LIBOR during the U.S. financial crisis of 2008, but the issue could easily have spread further than that.
Barclays’s involvement is clear, with a $450 million fine paid and executives and traders recently coming under heightened scrutiny.[iv] However, they are not alone; at least six other major banks—HSBC, Royal Bank of Scotland, Citigroup, Deutsche Bank, JPMorgan and UBS—have also been issued subpoenas from the attorney generals of New York and Connecticut for investigation of potential involvement in the scandal.[v]
During a time that so many are already having trouble making ends meet and just getting by, big banks have put our investments and our futures in jeopardy by manipulating the interest rates that affect so many of our finances. For an issue that touches so many, it is alarming that major news networks have chosen not to cover it.
Jubilee USA, along with our partners at The Interfaith Center on Corporate Responsibility and The Missionary Oblates of Mary Immaculate, sent letters to the producers of ABC’s World News and NBC’s Nightly News urging them to cover the LIBOR scandal, which affects people across the income spectrum with especially severe repercussions for the poor and most vulnerable. One month later, we still have not received a response and the issue is still not being reported on. Viewers of these news programs deserve reporting on this banking scandal and its impact on average Americans and poor people around the world.
[ii] Nick Thompson, “Why the interest rate scandal could bring real change,” CNN, July 3, 2012. http://edition.cnn.com/2012/07/03/business/barclays-diamond-resignation-explainer/index.html
[iii] Kirsten Grind, “What Libor Means for You,” The Wall Street Journal, August 3, 2012. http://online.wsj.com/article/SB10000872396390443545504577565120728037852.html
[iv] Jennifer Ablan and Matthew Goldstein, “LIBOR Scandal Claims New York-Based Barclays Executive And Trader,” Business Insider, September 4, 2012. http://www.businessinsider.com/libor-barclays-executive-trader-new-york-2012-9