Tag Archives: libor

Libor interest rate to be axed following a series of scandals

Libor interbank borrowing index to be phased out by 2021Libor to be phased out

In the wake of news that a US court has overturned two former Rabobank traders’ convictions over a conspiracy to fix yen and dollar Libor rates, comes an announcement from the head of the Financial Conduct Authority, Andrew Bailey, that it has become ‘not only unsustainable, but also undesirable’ for Libor to continue in its current form.

The decision was taken because banks no longer want to participate in setting the rate, which, at its peak, was used to price more than $350tn of financial products around the world. Plans are currently being made to move to alternative benchmarks by the end of 2021.

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First conviction secured in Libor rate-rigging scandal

A former derivatives trader has been convicted of fraud following rate rigging scandal

 The first to fall

The seven-year investigation of the rate-rigging scandal that caused global outrage has resulted in its inaugural conviction. A jail sentence of 14 years has been handed down to former City trader Tom Hayes after becoming the first to be found guilty by a jury of rigging the Libor interest rate.

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ARMs to Benefit from Loose Monetary Policy

Headlines are telling us the economic impact of single family housing is subdued because first time home buyers are scarce. Perhaps the pool of single professionals, newlyweds and young families is too focused on fixed rate mortgages. Adjustable rate mortgage products knows as ARMs may be discounted by their baby boomer parents as too risky. But today’s move by the European Central Bank (ECB) to cut rates by -0.10 may indicate that stateside interest rates may not increase for the foreseeable future. The deflation risk affecting central bank policy around the developed world should make an ARM a good choice for first time buyers with plans to move up in coming years.
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