People tend to view white collar crime with a leniency uncommon to other crimes. Compared to more heinous actions such as rape or murder, these crimes are often brushed away with a wag of the finger and a “shame on you.” But four years after the major financial collapse and amidst a new series of banking scandals, it may be time to take white collar crimes a bit more seriously.  It has recently been uncovered that the major British bank Barclays regularly manipulated the London interbank offered rate (Libor), resulting in the departure of many senior officials, including its CEO Bob Diamond, and a fine of $450 million. This is where things get a little technical. Libor is one of myriad benchmarks used to determine the average interest rate that major international banks are charged to borrow from each other. Along with the Euribor, it is the primary benchmark for determining short term interest rates in the global financial market, setting the rates of mortgages, credit cards and various loans. The Libor is reported to be tied up with at least $10 trillion in loans and anywhere from $350 trillion to $750 trillion in total financial contracts. Frankly, those are difficult numbers to comprehend. The major problem, however, is with how the Libor is calculated. The interest rate is determined daily by a panel of at least 16 major banks, which each submit its own estimations of what rates will be charged to borrow from competitors. The rate has been set in this way since the 1960s. Barclays admitted to manipulating the rate for various reasons, whether to improve the bank’s derivatives trading position or keep the bank from appearing weak enough to warrant nationalization. However, due to the collective nature of the Libor’s calculation, it is unlikely that Barclays was alone in manipulating the interest rate. Already, other banks are being investigated for misconduct, including UBS, JPMorgan Chase and Citigroup. In fact, when speaking to Parliament, Diamond’s defense of his company’s action basically amounted to “they started it.” This isn’t the only banking scandal that has come out in recent weeks. The Senate reported this week that the British bank HSBC, aided by lax regulations and oversight, laundered billions of dollars for Mexican drug cartels and Middle Eastern terrorists. The report states that HSBC was used as a “gateway for terrorists to gain access to U.S. dollars and the U.S. financial system.” Whether because of corruption or incompetence, the financial sector is in need of some serious cleaning. One would think that after the major meltdown that occurred in 2008, we would have made the financial sector our No. 1 priority, yet we’ve become distracted by sideshow politics. Cultural dilemmas over contraception, gay rights and other issues have routinely dominated the political headlines on most Broadcast news stations, while the problems with Wall Street have been delegated to the sidelines, deemed fit only for documentaries and books. Economics is what really determines how free we are. It’s about time we got serious about truly reforming the banking industry. However, even the calls for more regulations may not truly address our woes. In the Barclays case, it is still under investigation whether Bank of England Deputy Governor Paul Tucker told Diamond to lower his bank’s interest rates, acting as a middleman for the English government in an attempt to preserve an image of financial stability. The Senate’s report on HSBC also criticized the Office of the Comptroller of Currency, one of the top U.S. bank regulators, for failing to properly oversee the bank. And when a “revolving door” is the name of the game at these institutions and regulating agencies, it becomes difficult to enact true changes. There needs to be more accountability, not just fines. Otherwise, these actions will continue because the harshest punishment is either just paying some money or being forced to step down from a prominent position. The revolving door needs to be locked shut as well, otherwise regulations will amount to nothing. It’s time we did something about the real problems that caused our economic crisis in the first place.
David Scheuermann is a 20-year-old mass communication and computer science junior from Kenner. Follow him on Twitter at @TDR_dscheu.
 
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