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Brit watchdog says Libor rigging hard to spot

Barclays was one of three banks fined in

Barclays was one of three banks fined in the Libor interest rate rigging scandals. British banking officials were told Wednesday, Feb. 27, that regulators could not have spotted the "lowballing" even if they had looked. This is Barclay's headquarters in London. The others were Royal Bank of Scotland and UBS. (Feb. 11, 2013) Photo Credit: Bloomberg News

LONDON -- Regulators could not have spotted the "lowballing" of Libor interest rates during the financial crisis even if they had looked, Britain's Financial Services Authority said Wednesday in presentation to a government commission on banking standards.

Watchdog chairman Adair Turner told the commission it was much easier to see abuses in share trading by using computers. Manipulation of the London interbank offered rate, known as Libor, during the 2008 banking crisis was far harder to see, he said.

"There was no information on the trader manipulation," Turner told the commission. Libor is used to price trillions of dollars of financial products from derivatives to mortgages.

So far three banks -- Barclays, Royal Bank of Scotland and UBS -- have been fined in the scandal.

As markets went into meltdown following the collapse of Lehman Brothers in September 2008 some banks put in low submissions for rates at which they could borrow from other banks to give an impression they were sound.

The FSA's report into when and what it knew about Libor rigging will be published on March 5.

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