Did Major Banks Manipulate The LIBOR And Mortgage Rates?

That's the question that investigators with the US Department of Justice and the Securities and Exchange Commission are seeking to answer. The LIBOR, short for London Interbank Offered Rate, is the rate at which banks in the London wholesale money market will lend money to one another.

There are several LIBOR indexes based on the length of the loan term, such as 1 month, 3 months, or 1 year. These LIBOR indexes are important to the US mortgage market as they are standard benchmarks for adjustable rate mortgages. When it comes time for an ARM to adjust how much the rate will go up or down depends on the current LIBOR rate.

The Wall Street Journal has reported the investigation into whether several large banks manipulated the LIBOR between 2006 and 2008 to keep it artificially low. Read the full article here: http://www.efinancialnews.com/story/2011-04-14/us-asks-if-banks-colluded-on-libor