…[L]iterally hundreds of trillions of dollars around the world, all these deals, are based on [LIBOR]. Now we find out this number might be a lie. At least one bank was tampering with that number for their own profit.
We know this because federal regulators have released emails from Barclays bank that talk very casually about this manipulation. And the emails are incredible. There is a supposed to be a separation between the bankers who help set LIBOR and the traders who bet money in the market. But the emails show they routinely talked to each other.
In one, a trader says: Who’s going to put my low fixings in hehehe. He wrote the evil laugh right in the email.
Barclays says it was just a few traders behaving badly. But the scandal is about to break much wider than that. Because no bank can manipulate LIBOR alone. It’s an average of data from a bunch of banks. …This scandal is still unfolding. No one is sure how much money was made or lost on this scam yet.