An interest rate that is set each business day morning in London by
approximately 18 major banks. LIBOR serves as a worldwide benchmark rate that
is responsible for determining the interest rates applicable to roughly $300
trillion of consumer and business financial products, including credit cards,
car loans, adjustable rate mortgages, municipal interest rate swaps, and
corporate loans.
In April 2008, regulators in Europe, the United States, and Japan began
investigating reports that a number of major banks colluded to manipulate the
LIBOR rate, an action that would add illegally to their profits. Several of the
banks later agreed to pay fines and penalties based on information revealed
during these investigations. As of November 2013, authorities are continuing to
examine the roles of other banks and their directors and officers in
conjunction with the manipulation of LIBOR rates.