Britain tightens screw on banks over Libor scandal
LONDON (AFP) - Britain tightened the screws on troubled banks on Friday, vowing to overhaul a "broken" Libor interest rate system that tainted the financial sector's reputation, and threatening to jail those who abuse it.
The Financial Services Authority (FSA) watchdog made the proposals in an independent report that was commissioned by British finance minister George Osborne in the wake of this year's notorious Libor rate-rigging affair.
Britain's banks, already being forced to ringfence retail and investment operations and boost their capital reserves, were facing even more pressure to reform as authorities seek to prevent a new global financial crisis.
"The reason we are here is that we have been misled," FSA managing director Martin Wheatley said on Friday as he published his review of Libor. "The system is broken and needs a complete overhaul. The disturbing events we have uncovered in the manipulation of Libor have severely damaged our confidence and our trust - it has torn the very fabric that our financial system is built on."