http://www.newamerica.net/blog/topics/libor The taxonomy view with a depth of 0. en http://www.newamerica.net/blog/american-strategy/2008/doubts-raised-over-libor-3334 <p><img src="/blog/files/GESlogoEXsm2.jpg" height="47" width="300" /></p> <p>The Libor (London inter bank offered rate), or the interest rate that banks lend to other banks, has been called under question as a reliable indicator of banks' access to credit. Because of the tightening of credit conditions worldwide and hesitance to reveal the sting of the credit crunch, banks may not be reporting the actual rates at which they are able to borrow from other banks. The repercussions for the unreliability of Libor are catastrophic. Interest rates on home loans, auto loans, and student loans worldwide depend on the Libor rate. Citigroup's Scott Peng believes that Libor could be underestimated by as much as .3 percent, causing all banks to lend money cheaper than they should.</p> <p>Snapshot asks, if Libor is underestimated, how much more pressure will it put on banks?</p> <p>Wall Street Journal - <a href="http://online.wsj.com/article/SB120831164167818299.html">Bankers Cast Doubt on Key Rate Amid Crisis</a><br />Wall Street Journal - <a href="http://online.wsj.com/article/SB120838284713820833.html">Bank Group Expedites Libor Probe</a><br />Financial Times - <a href="http://www.ft.com/cms/s/0/08d38b0c-0bd9-11dd-9840-0000779fd2ac.html">Lenders examine Libor alternatives</a><br />Bank of International Settlements - <a href="http://www.bis.org/publ/qtrpdf/r_qt0803g.htm">Interbank rate fixings during the recent turmoil</a></p> http://www.newamerica.net/blog/american-strategy/2008/doubts-raised-over-libor-3334#comments American Strategy Credit Crisis Global Economic Snapshot Libor Thu, 17 Apr 2008 15:34:00 -0400 Sam Sherraden 3334 at http://www.newamerica.net/blog