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Some $800 trillion flowed yearly through the LIBOR (London Interbank Offered Rate) system operated by the British Banking Association.
Though it generated revenue of £2 million per year, the entire apparatus has been sold to NYSE Euronext, the company that operates the NYSE, for £1.
The system is “broken,” according to industry leaders.
Essentially, a bank lobbying organization had been operating the system that sets the benchmark of what thousands of debt-based securities are worth. It became easy for an inside group of traders to manipulate the numbers, rather like a giant points-shaving scheme run by bookies who take, then lay off rigged action on basketball and football games.
That led to a Racketeer Influenced Corrupt Organization conviction in a U.S. District Court in Manhattan.
Though three banks have settled rate-manipulation charges, agreeing to pay a totalof roughly $2.5 billion in penalties to U.S. and British regulators, a U.S. judge handed down a ruling last Friday that will severly limit the penalties other investment bankers will pay.(click here)
Click here for a more comprehensive read:http://blogs.wsj.com/moneybeat/2013/07/09/libor-sold-to-nyse-euronext-how-did-we-get-here/