The LIBOR-rigging scandal that has engulfed London in the past week is now lapping at America's shores.
On Monday, an oversight panel of the House Financial Services Committee sent a letter to the New York Fed asking for transcripts of phone calls between Fed officials and Barclays (BARC.L) executives from 2007 and 2008, The New York Times reports.
At issue is whether the NY Fed ignored reports of irregularities in the LIBOR market during the financial crisis, as U.K. regulators are alleged to have done. (According to Reuters, the Fed knew of irregularities in the LIBOR market as early as August 2007.)
The bigger issue here is that LIBOR is at the very heart of the financial market and if you can't trust LIBOR, what can you trust?
"LIBOR is probably the single-most supposedly market-based price of credit in the world," explains David Kotok, CIO of Cumberland Advisors. "And now we see it may have been rigged and rigged for a long period of time.Read More »from Why the LIBOR Scandal Matters: ‘Destruction of Confidence to the Nth Degree’