States pursuing banks on LIBOR rate rigging
Pedestrians walk by the Citigroup Center on July 16, 2012 in San Francisco, Calif.
Jeremy Hobson: The attorneys general of New York and Connecticut have sent subpoenas to several banks, including JPMorgan Chase and Citigroup. This time, the issue is the alleged rigging of a key global interest rate called LIBOR. But the news comes just a day or so after the New York attorney general settled with Standard Chartered Bank over allegations that it hid thousands of financial transactions with Iran.
As our New York bureau chief Heidi Moore reports, when it comes to banking scandals, it's state regulators who are out in front.
Heidi Moore: Last month, a group of U.S. banks let it leak that they were ready to start talking about an industrywide settlement over LIBOR. It was an interest rate that they had allegedly rigged. Translation: “Come and get us!”
But who were they talking to?
James Angel: We have literally hundreds of regulators at the state and federal level, and they don’t always play nicely together.
James Angel is a visiting professor at the Wharton School.
The attorneys general of New York and Connecticut are licking their chops. It echoes the trend over the past few financial scandals: the states are running ahead of the Feds, whether it’s money laundering, or mortgage settlements.
Jonathan Armstrong is a partner at Duane Morris.
Jonathan Armstrong: It’s almost like the LIBOR scandal is the last train out of town and everybody’s running to get on it. There’s a lineup of regulators who are sprinting to announce their investigations.
They’re sprinting -- but to catch up with the banks. A lot of these abuses go back over eight years.
David Greene is a partner with Edwards Coe.
David Greene: The purpose of a cartel is to keep things secret, and the result is that regulators may find it out well after the event.
Despite the legal flurry, it will likely take years to reach a settlement.
In New York, I’m Heidi Moore for Marketplace.