British banks have been blasted by the chief regulator over the way they've manipulated the LIBOR rate. One bank has been fined over fixing the rate meaning it was able to put profit above the welfare of its customers. Martin Wheatley, the head of the Financial Services Authority issued a report on the situation today and said bankers involved in fixing the rate should face jail. He told the BBC that "Society has lost confidence in banks, in finance, in the whole system."
Barclays got fined £290m for their part in rate rigging. Bob Diamond the CEO and other key execs resigned as a result of the scandal. Other banks are being investigated over the practice, but Barclays in particular is expected to be singled out for special criticism in a speech Wheatley will make later. The LIBOR is used as a benchmark for $300 trillion of financial contracts around the world, including the mortgages of millions of British home-owners. The report delivered by the FSA today is a damning indictment of the state of the way our banks have been running their operations in the last few years. It goes on to say the system is broken and suggests its complete overhaul, including criminal prosecutions for those who try to manipulate it. Martin Wheatley also wants the British Bankers' Association which supervises Libor, to be stripped of the role, saying it "clearly failed".