We noted this morning LIBOR's reliability has come under scrutiny as some traders fear banks are being less than truthful in reporting their borrowing costs. Now the Wall Street Journal is reporting the British Bankers' Association is accelerating its inquiry into the accuracy of data provided about bank-to-bank lending rates.
On Briefing.com, a report indicated "those in the know" claim fears about the integrity of LIBOR are groundless.Yet, the basis for which trillions of dollars in fixed income securities jumped today by the biggest amount since last August.
With a twist of irony, the gauge that monitors fear levels within the banking community is now reacting to fears about the reliability of its own data. This serves as a stark reminder of the systemic risks the credit crisis still poses to the financial system.
Earnings may beat sandbagged estimates, but risk, as Minyanville's Mr. Practical is apt to say, is high.
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