Yes, this move may be full of loopholes, but, it’s a real step forward, and, like a Tobin tax, something that neither Mitt Romney nor Barack Obama would ever propose in the US.
In short, Britain’s Financial Services Authority is tightening the rules on the London Interbank Offered Rate, or Libor, which is a tool used by large banks to calculate interbank lending.
As part of the financial chicanery that led to the Great Recession, banks on both sides of the Anglo-American Atlantic allegedly manipulated Libor rates, and allegedly, current US Treasury Secretary Tim Geithner knew about it while head of the New York Federal Reserve Bank and did nothing. (See poll at right and search old articles.)
So, the British stripped Libor oversight from the British Bankers’ Authority and instead moved it to the government regulatory agency, the equivalent of the new financial services agency here in the US taking some power away from the American Bankers’ Association.
Britain’s FSA plans to increase auditing of Libor-related trading to make sure that chicanery isn’t still happening. It also wants to make it a criminal offense to do so! That’s the part Mitt and Barry will never, ever do.
“There’s always a possibility for collusion,” (FSA Managing Director Martin) Wheatley told an audience at Mansion House, the 260-year-old home to the lord mayor of London that is adorned with gilded statues and chandeliers. “But under the new regulatory structure, people would be taking a high risk.”
Indeed, Wheatley is being honest about how much this may or may not help. But, he’s also determined to try.