News Release

LIBOR Scandal: The Conundrum of Bank Regulators

Stephany Griffith Jones is Financial Markets Program Director at the Initiative for Policy Dialogue at Columbia University. With José Antonio Ocampo and Joseph E. Stiglitz she co-edited Time for a Visible Hand: Lessons from the 2008 World Financial Crisis. She was recently featured on the IPA news release “Barclays Scandal Highlights Need to ‘Clean the Cesspit.’” She said today: “An important reason why this potential rigging of LIBOR is so significant is because over $500 trillion of transactions worldwide — of interest rate derivatives, but also of mortgages, credit card debt and student loans of millions of people — are influenced by LIBOR. It is not morally acceptable that such a crucial variable for so many could be lied about so as to benefit a few traders and bankers.”

RICHARD WOLFF, rdwolff at
Wolff is author of the book Occupy the Economy: Challenging Capitalism. He said today on the LIBOR scandal: “The long-standing, mutual assistance relationship between global bankers and regulators has been exposed for serving their interests at the expense of the world economy. Such exposures happen when extreme economic crises such as today’s provoke searches for scapegoats. Punishing big banks and regulators leaves intact the basic economic system that created the incentives and provided the rewards for what they did. The real issue is the need for system change.

On the European economic crisis, Wolff said: “Global capitalism is a system in deep crisis. Beginning in the U.S., it was worse there in 2008 and 2009 than it was in Europe. Then, partly because U.S. policies failed to end the crisis, global markets spread it to Europe and beyond in 2010 and 2011. ‘Austerity’ policies in Europe worsened its crisis that now, via global markets, returns to further depress the weakened U.S. economy. Global capitalism, a broken, dysfunctional system, persists because ideological blinders refuse to question let alone change it.”

He is a Professor of Economics Emeritus, University of Massachusetts, Amherst, and currently a visiting professor in the Graduate Program for International Affairs at the New School University in New York City. Video of his talk “Capitalism Hits the Fan” is available here.