From outside the elite preserves of the financial industry, Britain’s LIBOR scandal follows a wearily familiar narrative arc: Yes, a leading investment bank has confessed to gaming a central borrowing index—the so-called London Interbank Offered Rate, which establishes how much banks charge each other to borrow money. And yes, that bank—Barclays of London—has coughed up 290 million pounds in fines to stave off the prospect of a criminal prosecution. But jaded consumers of financial news can be forgiven for thinking that this all amounts to the perennial status quo for the investment class, in the city and on Wall Street alike. Haven’t these characters always sought to live by their own self-seeking code—and haven’t fund managers long been little more than glorified corruptionists? If we systemically prosecute this sort of behavior, are we just futilely attempting to issue a restraining order against human nature?
In reality, the LIBOR dustup is a very big deal—and largely because of its very routine profile. Read More