In an interview with Law360, Professor of Economics Richard Grossman discussed recent reforms suggested for the London Interbank Offered Rate (Libor) following a rigging scandal by banks. Grossman argued that the benchmark interest rate should be scrapped because “self-reported data is always susceptible to corruption, and as long as the market relies heavily on its own participants to set interest rates, it risks losing the confidence of lenders and borrowers.”
“This is what financial regulators are there to do — protect the integrity of the market,” he said. “This is a moment for them to be aggressive, and I worry they’re stopping short because to go further would be too hard.”
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