What is Libor scandal?
The '''Libor scandal''' was a series of [[fraud]]ulent actions connected to the Libor ([[London Interbank Offered Rate]]). It affected the Interbank [[foreign exchange market]], the trading of different [[bank]]s with each other. The Libor is an average [[interest rate]]. It is calculated when major banks in [[London]] submit their interest rates. It was discovered that banks falsely changed the interest rates before submitting them, so that they could profit from the trades. Sometimes, this also made them look more [[Credit worthy|creditworthy]] than they really were. There is a market of about 350 trillion dollars in [[Derivative (finance)|derivatives]], which is connected to Libor. [[British Bankers' Association|The British Bankers' Association]] manages the Libor. The banks are supposed to submit the actual interest rates they are paying, or would expect to pay, for borrowing from other banks. The Libor is supposed to be the total assessment of the health of the [[financial system]] because if the banks being polled feel confident about the state of things, they report a low number and if the member banks feel a low degree of confidence in the financial system, they report a higher interest rate number. In June 2012, multiple [[criminal settlements]] by [[Barclays|Barclays Bank]] revealed significant [[fraud]] and [[collusion]] by member banks connected to the rate submissions, leading to the scandal. An attempt to manipulate Libor is an attempt to manipulate United States derivatives markets, and thus a violation of [[American law]]. Since [[mortgage]]s, [[student loans]], financial derivatives, and other financial products often rely on Libor as a reference rate, the manipulation of submissions used to calculate those rates can have significant negative effects worldwide. On 27 July 2012, the ''[[Financial Times]]'' published an article by a former trader. The article said that Libor manipulation had been common since at least 1991. Further reports on this have since come from the [[BBC]] and [[Reuter