Everyone should be paying attention to the Libor scandal, at least according to Warren Buffett.
“It’s a big deal,” Buffett told CNBC “Squawk Box” host Becky Quick Thursday. “You get Libor, and you’re talking about the whole world.”
Big banks have come under fire recently following allegations that many profited off the manipulation of Libor, a key interbank lending rate that acts as a benchmark for interest rates around the world. The first bank to admit wrongdoing, Barclays, agreed to pay more than $450 million last month to settle claims it manipulated the rate. The 16 banks under investigation by governments in Europe, the U.S., and Japan for allegedly rigging Libor include Bank of America, JPMorgan Chase, and Citigroup.
Libor is used to price the rates on various home loans, particularly adjustable-rate mortgages (ARMs), the National Association of Realtors reports. If Libor is pusshed upward, homeowners pay more. If Libor is pushed downward, investors pay more.
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