Don’t Let Libor Bankers Police Themselves

Sooner or later, the global inquiry into the rigging of Libor will have to deal with a sticky issue: what to do with the British Bankers’ Association, the trade group that was supposed to guarantee the integrity of one of the world’s most important financial benchmarks.

Founded in 1919, the BBA exists primarily to lobby for the interests of its member banks. In the 1980s, it took on the added responsibility of overseeing the London interbank offered rate, which is supposed to provide an objective measure of banks’ borrowing costs. Calculated every workday morning, Libor is used to determine payments on at least $300 trillion in mortgages, corporate loans and derivative contracts worldwide.