Seriously?

Big banks at center of interest rate probe

NEW YORK (CNNMoney) -- It affects everything from mortgages to credit cards to student loans, and now some of the world's biggest banks are at the center of a criminal investigation into whether they manipulated it for their own benefit.

The London Interbank Offered Rate, or Libor, is a measure of the cost of borrowing between banks that serves as a benchmark for over $350 trillion worth of financial products worldwide.

Higher Libor rates translate into higher borrowing costs for businesses and consumers, while lower rates could make lenders reluctant to lend since they can't charge as much in interest. In addition to consumer loans, certain bonds and interest rate swaps also use it as a benchmark.

With all the different loans and investments tied to Libor, there are serious consequences if the process is tampered with.

"If you move it even a little bit, it can cause massive redistribution of resources because it's so extensively used," said Rosa Abrantes-Metz, a professor at New York University's Stern School of Business and a former economist with the Federal Trade Commission.

Last week, the Justice Department said in a letter to a federal judge that it was conducting a criminal investigation of alleged Libor manipulation. Officials in Switzerland, Canada and the United Kingdom are also looking into the issue, according to disclosures in several banks' public filings.

I only have one question: did the manipulation pre-date or  post-date the bailout? I can't tell from the article.

The only observation I have is on this paragraph:

"If you move it even a little bit, it can cause massive redistribution of resources because it's so extensively used," said Rosa Abrantes-Metz, a professor at New York University's Stern School of Business and a former economist with the Federal Trade Commission.

I think Ms. Abrantes-Metz should have said "redistribution of wealth" rather than "....or resources..."

I take it no one reading here is surprised.