U.S. state officials have issued a subpoena to the Royal Bank of Canada (among others) for participation in the LIBOR scandal. In addition, various Canadian regulatory bodies (including the Competition Bureau, an oxymoron if there ever was one) have launched their own probes into the matter.
The LIBOR (London InterBank Offered Rate) scandal arose when it was discovered that banks were artificially manipulating their interest rates as to profit from trades, or to give the impression that they were more creditworthy than they were. It was revealed that from 2005 to 2007, Barclay's manipulated the rates they officially reported as to improve their margins on internal trades with other banks. For example, if they anticipated that the LIBOR rate would increase, they would have placed their bets and then falsely reported higher rates, which in turn would have increased their averages of a payoff. In late 2008 Barclay's, as well as other banks - it is alleged - low-balled the rates they reported to LIBOR as to make their finances look more stable than they actually were. By doing so, they prevented calls for more government regulation (and even nationalization) in the wake of the financial crisis. The idea behind the LIBOR scandal is that by manipulating interest rates, these banks were changing the data that government regulators use to make decisions. Ergo, banks aren't properly regulated because bankers aren't honest and thus justification for further government control.
RBC Capital Markets spokesperson Gillian McArdle had this to say about the subpoena: “We have determined that our LIBOR submissions reflected our cost of
Whether this is true or not, remains to be seen.
The LIBOR scandal, in my opinion, is an inevitable outgrowth of a fiat-money system where central banks centrally plan monetary policy. The real interest rate manipulators, the central banks, never get the scrutiny they deserve. The Bank of Canada's ability to print money distorts interest rates far more than anything the RBC (allegedly) could do with LIBOR. The Bank of Canada's manipulation of interest rates distorts the economy, creates the business cycle and causes price inflation. The fact that the mainstream media ignores this is far more of a scandal than, to quote economist/blogger Robert Wenzel, "16 banksters in a room not doing a very effective job of trying to screw each other."