London, this year's host of the Olympics, is also home to a bank scandal that threatens to rock the financial world as much as the Games influence the world of sports. Here's why: Libor (London Interbank Offered Rate) is a global benchmark for interest rates that reaches deep into the international financial system. Allegations that banks rigged those rates means that everyone from mortgage-holders and indebted students to cities and mutual funds may have had their interest rates unnaturally altered. Already tainted by other scandals, banks are under investigation because of charges that they profited illegally from their rate-rigging scheme. The mess further taints big banks and puts more strain on the credibility of the global financial system. Here are five ways the Libor scandal could affect you:
Morgan Stanley lawsuit over mortgage securities with the Federal Housing Finance Agency was settled for $1.25 billion, the company said Tuesday. The Morgan Stanley lawsuit was part of a larger one in which the government sued 18 financial firms for selling mortgage securities that turned toxic when the housing market collapsed.
JPMorgan Chase developed schemes to sell electricity at falsely attractive prices in Michigan and California, according to The New York Times. The market manipulation could result in JPMorgan Chase receiving penalties from the Federal Energy Regulatory Commission.
Honduras is broke, writes a guest blogger, and despite a recent credit downgrade it is now trying to privately place over $750 million in bonds.
Stocks rose on Wall Street Friday as the Standard & Poor's 500 index closed above 1,500 for the first time since the start of the Great Recession in 2007. Apple stock continued to decline, allowing Exxon Mobil to once again surpass the electronics giant as the world's most valuable publicly traded company