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Iit was big news when the Barclays chairman, Marcus Agius, resigned Monday over his bank’s role in the Libor rate-fixing scandal. Less noticed was his other resignation that same day.
Mr. Agius also quit as chairman of the British Bankers’ Association, or B.B.A., the powerful trade group that, among other things, oversees Libor.
Libor, short for the London interbank offered rate, is the interest rate that affects trillions of dollars’ worth of corporate and consumer loans each year. It is supposed to be a neutral figure that reflects how much it costs a bank to borrow money. But as Barclays has admitted, and other big banks may soon be forced to acknowledge, Libor has been manipulated — either to create a false impression of a bank’s health or to help bank traders game the financial markets.
However shocking the behavior by Barclays and possibly other banks might have been, the public, which has to pay interest based on rates set by Libor, is likely to be just as startled to learn that a vital financial benchmark is supervised not by government officials but by the bankers’ own trade association.
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