Libor
Individual Assignment #2
Barclay and the LIBOR Scandal
Introduction Issues pertaining to fraud, insider trading, discrimination, bribery, and compensation are just some of the ethical problems that disrupt the global financial system. Barclays, one of the largest banks and financial services institution in London, whose operations spans retail, wholesale, investment banking, wealth management, mortgage lending and credit cards, has recently been placed under the spotlight as allegations were made against Barclays over their manipulation of rates causing the Libor Scandal. This questions us to examine the relationship between ethical principles and the pursuit of profit. This paper will explore an overview of the case, the key ethical issues that are involved in the case, such as price fixing, and an analysis on the Libor scandal.
Key ethical issues
Price –fixing p 219
Through understanding the key issues within the case we will now examine the ethical issue that is most applicable. The most well know issue that Barclay was prosecuted was the price fixing. Not to do with dollar but the interests rate that company/people borrowed from them. They did this by manipulation the London interbank lending rate, known as LIBOR. The rate is used by banks to borrow from each other and indirectly affects the cost of loans in the wider economy. During the first years of the crisis, Barclays frequently paid higher interest rates than other banks due to concerns about its financial position. Regulators found that in order to protect Barclays’ reputation, the bank’s senior management ‘routinely’ instructed staff to make artificially low LIBOR submissions. Andrew Tyrie, the chairman of the Commons Treasury select committee, said Barclays had put at risk the integrity of the financial markets, with potentially serious consequences for British consumers:“This is tantamount to lying. This could have affected hundreds of thousands of homeowners by forcing them to pay
Barclay and the LIBOR Scandal
Introduction Issues pertaining to fraud, insider trading, discrimination, bribery, and compensation are just some of the ethical problems that disrupt the global financial system. Barclays, one of the largest banks and financial services institution in London, whose operations spans retail, wholesale, investment banking, wealth management, mortgage lending and credit cards, has recently been placed under the spotlight as allegations were made against Barclays over their manipulation of rates causing the Libor Scandal. This questions us to examine the relationship between ethical principles and the pursuit of profit. This paper will explore an overview of the case, the key ethical issues that are involved in the case, such as price fixing, and an analysis on the Libor scandal.
Key ethical issues
Price –fixing p 219
Through understanding the key issues within the case we will now examine the ethical issue that is most applicable. The most well know issue that Barclay was prosecuted was the price fixing. Not to do with dollar but the interests rate that company/people borrowed from them. They did this by manipulation the London interbank lending rate, known as LIBOR. The rate is used by banks to borrow from each other and indirectly affects the cost of loans in the wider economy. During the first years of the crisis, Barclays frequently paid higher interest rates than other banks due to concerns about its financial position. Regulators found that in order to protect Barclays’ reputation, the bank’s senior management ‘routinely’ instructed staff to make artificially low LIBOR submissions. Andrew Tyrie, the chairman of the Commons Treasury select committee, said Barclays had put at risk the integrity of the financial markets, with potentially serious consequences for British consumers:“This is tantamount to lying. This could have affected hundreds of thousands of homeowners by forcing them to pay