Barclays Bank has agreed to pay out more than $450 million in settlements with the U.S. Department of Justice, the U.S. Commodities Futures Trading Commission and the British Financial Services Authority. Those entities said the bank had tried to manipulate key interest rates, which in turn affect mortgages, student loans and more.
Investigators said the bank manipulated the London InterBank Offered Rate, known as LIBOR, and the Euro Interbank Offered Rate, or EURIBOR. Those interest rates are a vital part of the world’s financial markets, notes the Los Angeles Times.
“LIBOR and EURIBOR are critically important benchmark interest rates,” Assistant Atty. Gen. Lanny Breuer said in a statement. “Because mortgages, student loans, financial derivatives and other financial products rely on LIBOR and EURIBOR as reference rates, the manipulation of submissions used to calculate those rates can have significant negative effects on consumers and financial markets worldwide.”
Here’s how the money will be split up under the settlement, which will allow Barclays to avoid prsoecution: The DOJ gets $160 million and cooperate with its ongoing investigation, $200 million goes to the U.S. Commodities Futures Trading Commission and the rest will go to the British Financial Services Authority.
In addition, Barclay’s Chief Exeuctive Bob Diamond says he and other head honchos will go without bonuses this year.
“The events which gave rise to today’s resolutions relate to past actions which fell well short of the standards to which Barclays aspires in the conduct of its business,” Diamond said. “When we identified those issues, we took prompt action to fix them and cooperated extensively and proactively with the authorities. Nothing is more important to me than having a strong culture at Barclays; I am sorry that some people acted in a manner not consistent with our culture and values.”
Barclays to pay more than $450 million in interest-rate settlement [Los Angeles Times]