“The Libor Scandal Sets Off a Wave of Probes. Imagine a “benchmark” as a notch on a carpenter’s bench used to measure. Simple enough. But what if the carpenter cheated, moving his marks to be able to charge a little more for a piece of lumber? In their role in modern financial markets, benchmarks set by traders help establish costs for mortgages, gasoline and money itself. They’re hard to understand and easy to manipulate. At the heart of the problem lies an inherent conflict: The figures are determined by the very firms that have the most to gain from where they’re set. Regulators agree that the main financial benchmarks are broken.”
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