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News Summary: UK arrests 3 in LIBOR rate probe

The Associated Press

LIBOR AND THE LAW: British police arrested three people as part of their investigation into the manipulation of a key benchmark interest rate — the first British arrests in a scandal that's had global ramifications.

BROADENING INVESTIGATION: The arrests follow an investigation from Britain's Serious Fraud Office. It opened its probe in July after Barclays was fined $435 million by American and British agencies for creating false reports on its borrowing costs between 2005 and 2009, specifically related to the London interbank offered rate, or LIBOR. Numerous other banks are reportedly under investigation for similar violations.

LIBOR: LIBOR is the rate banks use to borrow from each other — and it is critical. The rate indirectly affects the cost of loans that people pay when they take out loans — such as when consumers buy a home or car.