The British bank, Barclays, will pay out $100 million to end an investigation into their manipulation of interest rates as a part of the now-infamous Libor (London inter-bank lending rate) scandal.
Barclays marks the first bank to come to a settlement with states — 44 to be precise — that artificially inflated borrowing costs, reports Bloomberg. Coming four years after the British bank had laid to rest similar charges, this ignites a new controversy surrounding the London based financial firm.
Barclays attempted to hide the dwindling health of their bank from 2005-2009 by manipulating interest rates at “the expense of government entities and not-for-profits whose contracts were linked to the rates,” according to Bloomberg. These agencies report they were jilted out of “millions of dollars when they entered into swaps or other financial contracts based on Libor, without knowing that Barclays and other banks were working to manipulating the benchmark,” reports the Wall Street Journal.
New York Attorney General Eric Schneiderman said recently that “there has to be one set of rules for everyone, no matter how rich or how powerful,” in a statement released by the attorney general’s office.
Even more states are speaking up about this controversy, with Virginia’s Attorney General Mark R. Herring announcing that his state too is part of the $100 million dollar payout. Herring told the press Monday, “investors have a right to rely on accurate, sound information when making financial and investment decisions that could have a real impact on retirement accounts and the bottom line of a Virginia government entity or nonprofit,” in a press release by the attorney general’s office.
Attorney General Brian Frosh of Maryland told the press Monday that Barclays agreement is “the first, but certainly not the last, with major international financial institutions that manipulated interest rate benchmarks for their own gain,” underscoring the shady practices currently ongoing in the financial marketplace, reports Bloomberg.
Barclays has admitted to manipulating benchmark interest rates in a way that would help their trading positions, and also admitted to making false financial statements to disguise their financial position in the market during the crisis of ’08.
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