The $1.2 Billion LIBOR Scandal: How Bankers Rigged the World's Most Important Number

One number set the interest rate on roughly $350 trillion of mortgages, student loans, credit cards, and derivatives. Every morning, a small panel of global banks was asked one question: at what rate could you borrow from other banks? Their answers, averaged, became LIBOR, the London Interbank Offered Rate. In 2012 regulators discovered that traders had been nudging those answers up or down for years, using instant messages, to protect their own derivatives books. This video breaks down how the benchmark was built, why a single basis point mattered to millions of borrowers, how the conflict between derivatives desks and rate submitters was left unmonitored, and how a paper trail of chat logs ("I'll buy you a bottle of Bollinger") turned a subjective estimate into a criminal case. We trace the two separate motives for manipulation, the CFTC and FSA investigations, the Wheatley Review, the record penalties against Barclays and UBS, Tom Hayes's conviction and its 2025 reversal, and why LIBOR was finally replaced by SOFR and SONIA and switched off for good in 2023. ⏱️ Timeline: 00:00 – The number behind $350 trillion in loans 00:19 – What LIBOR was and how it was calculated 01:14 – Why one basis point mattered to your mortgage 02:02 – Derivatives and the real scale of the market 02:58 – 1986: the British Bankers' Association builds the benchmark 03:32 – Inside the daily submission process 05:20 – Traders vs. submitters: an unmonitored conflict of interest 06:14 – A network of "casual requests" across banks 07:27 – The chat logs: "I'll buy you a bottle of Bollinger" 08:41 – How small tweaks beat the trimmed-mean formula 10:40 – Two motives: lowballing for reputation, rigging for profit 11:16 – How the fraud was uncovered 12:35 – December 2012: enforcement actions against Barclays and UBS 12:59 – The Wheatley Review and the collapse of trust 14:12 – Anatomy of the $1.2 billion penalty 16:00 – Fines, disgorgement, and who actually got paid 16:33 – Tom Hayes: 14 years, reduced, then overturned in 2025 17:27 – Citigroup, JPMorgan, and the other settlements 18:04 – The victims nobody could identify 18:14 – A benchmark for a market that no longer existed 18:44 – SOFR, SONIA, and the end of LIBOR in 2023 19:40 – The trillion-dollar contract cleanup Could a benchmark this important be rigged again? Let us know in the comments. #LIBOR #LiborScandal #BankingScandal #WallStreet #FinancialCrime