When Anthony Browne accepted the job of Chief Executive Officer of the British Bankers’ Association in June, it had responsibility for the world’s most important benchmark interest rate. Following the Libor-rigging scandal, it is likely to be little more than just another lobby group.
Regulators and lawmakers are weighing whether to strip the lobby group of its role overseeing the setting of Libor, the reference for more than $500 trillion of securities, after a worldwide probe into at least a dozen banks showed some had tried to rig the rate. U.S. Treasury Secretary Timothy Geithner and the Bank of England have both faulted the BBA for failing to fix Libor in 2008 when the Bank for International Settlements first raised concern that the benchmark was being manipulated.
In the meantime the group is still searching for a replacement chairman after Marcus Agius, who held the same role at Barclays, stepped down from both jobs after regulators fined his bank a record 290 million pounds for rigging the rate.
“Banks’ quotes are determined by strategic behavior as well as credit quality and funding needs,” the BIS said in its quarterly review.
The BBA said in an e-mailed statement this week that it would forward the findings of its own review to the FSA’s Wheatley.