FSA & Bank of of England drawn into mess

It has not taken long for the LIBOR scandal to become a little more complex. Many banks were involved and even were speaking to their customers. LIBOR ceased to have much meaning in 2008/9. This was blamed on the Financial Crisis - turns out that was an inaccurate generalisation.

It seems so unlikely that so many banks could be implicated without the FSA and other authorities knowing that something was amiss - already it seems as if maybe 100 people will be directly involved. Not a small number.

So now the focus will switch quite rightly to the regulators and their role in condoning or ignoring what was going on in the LIBOR market. I doubt this is going to go well for the regulators 2008 after all was a busy year for the FSA and BOE and an quite inglorious one. Mistake compounded upon mistake from 2007 onwards.

As I wrote on Friday, it won't surprise me to find the regulators as much at fault as the Banks for this. With the markets dying in the liquidity crunch anything, even deception, that could hold together the global capital markets would be a good thing. The UK did not need Barclays joining the SOE (State Owned Enterprise) club - nor will the US have wanted more Lehmans collapses.

So the interesting piece will be the blame game and who gets caught up in the end. Mervyn King is retiring soon anyway and it won't be all that amazing if he does a Marcus Agius to try to carry some of the can.