“Honesty is a very expensive gift. Do not expect it from cheap people” Warren Buffet
Table of Contents
Introduction 2
History 2
Origen of the crisis 3
Probable Reasons for the LIBOR manipulation 5
Main players involved in the LIBOR scheme 6
Recommendations on what to do to avoid this problem 6
Reference List 8
What when wrong with LIBOR rates? Metz, and Seow, 2012. p. 137). The scheme consisted in artificially inflate or deflate the quotes to profit and to instill a deceitful impression of solvency (Choy, Ping Shung, and Chng, 2012. p. 3).
Two facts contributed to facilitate the crisis. First, since the financial crisis began in 2007 the interbank market had decreased remarkably, and therefore, several banks were anxious for funds; however, they tried to hide this reality and hence submitted lower quotes than the real ones (Abrantes-Merz, Kraten, D. Metz, and Seow, 2012 p. 138). Second that there was total dependence on specialist’s decision on the part of submitter when setting their LIBOR proposals (Garcia, 2012, p. 1). The BOE trusted totally in the quotes submitted for the respective specialists of the panel member contributor banks.
One surreptitious element, mostly overlooked, by the media is the ethical code of conduct of the authorities of the financial institutions involved in this scheme. Is the lack of social and moral concern a weakness of the Management and Finance schools and universities? Has the education system underestimated the importance of instilling a pervasive code of conduct morale on the higher education programs? A survey showed that 26% of
Related Documents: What Went Wrong with Libor Rate Essay
February 2013 Subject Implication of The Recent Libor-Fixing Scandal for Barclays Bank 1. Executive Summary * The London Interbank Offered Rate (Libor) is the average interest rate charged to banks for lending funds in the interbank market (Investopedia n.d.). * The UK Treasury reported that Libor is responsible for an estimated $300 trillion worth of financial transaction (BBC 2012). * Barclays’ traders submitted inappropriate rates upon derivative traders request (FSA 2012).…
goods/everyday (consumption) items is not counted, it is the investment (a promise of future money) that drives economic growth and stability. Financial institutions facilitate the flow of funds through the economy, and set bench marks with interest rates. Return or Yield – Is expressed in percentage form, and is the return on your investment. It can be actual return, or expected (probability weighted average) return. Risk - The chance of your return being high or low Liquidity – The ability to…
FIN 6406 A Financial Ratio Quarterly Trend Analysis of: The Walt Disney Company (DIS) Listed on New York Stock Exchange Prepared for: Dr. Deanne Butchey Department of Finance and Real Estate Florida International University In partial fulfillment of the requirements of Course: FIN 6406 By: Group #8 Samuel Mateo Rashida Walters Johnny de la Espriella Carlos Ramos Javier M. Alfonso Conclusions and Decisions Pages 16-18 and New References By: Javier M. Alfonso…