Whose LIBOR?

Two weeks ago, the Wall Street Journal published an article entitled “LIBOR Hits U.S. Borrowers” by Carrick Mollenkamp and Mark Whitehouse. In the article the authors identified the problem that “…payments on trillions of dollars in U.S. corporate and mortgage loans are set according to dollar LIBOR, but only 3 of the 16 banks that contribute their borrowing costs to calculate the rate are based in the U.S. That means the financial difficulties of European banks are having an outsized effect on U.S. borrowing costs, and could complicate the Federal Reserve’s efforts to bring those borrowing costs down.”

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