Libor: the bankers who fixed the world’s most important number
Eh.<p>Libor was &quot;fixed&quot; by design.  Literally, the concept behind Libor was to ask some guys to make up a rate they thought they could borrow money at (note:  Not the rate they WERE borrowing money at).  Totally subjective.  For the purposes it was originally intended for, that was fine.  Later it began to be used for other purposes, but it seems like a lot of people forgot that it was, at base, asking some bankers to make up a number.  Which...they did.  And then people got upset, because they didn&#x27;t want a made up number, they wanted some objective benchmark.  Well, maybe you shouldn&#x27;t have been using Libor?<p>Okay, sure, the number was being made up for selfish reasons and did not represent a good faith effort to try and make up a number that accurately reflected the rate that the people being asked believed they could borrow hypothetical money, if they tried.  If you squint a bit, that&#x27;s...I dunno, I guess it&#x27;s bad?  It wasn&#x27;t <i>obviously</i> against the law, and I&#x27;m hard pressed to articulate a clear moral argument about how bankers should make up hypothetical numbers, but okay, let&#x27;s just say it was bad and wrong.<p>But...  At any given point some banks were trying to drive the numbers up; others down.  Net movement was often nil but <i>generally</i> downwards.  Since mortgages are often linked to Libor (in some countries) that means all this probably means a bunch of people saved a few pennies (literally) on their mortgage payments a few years back, mostly at the expense of large investors.  Yeah, I know, that doesn&#x27;t mean it&#x27;s either moral or legal but...stealing an almost immeasurably small amount of money from a hedge fund and giving it to a home owner is not exactly &quot;robbing widows and orphans&quot; territory.<p>In short, I&#x27;m decidedly underwhelmed by the entire &quot;scandal&quot;.  And I think the sentence was wildly disproportionate; there&#x27;s no way you can say the magnitude of the crime justified it, especially given the small scale and vague legal situation.