Interest Rate Fixing Scandal Claims First Victim

Jul 2, 2012 8:09am

Morning Business Report:

The scandal over price fixing of key global interbank lending rates has claimed its first victim with the resignation of the chairman of Barclays, one of the world’s biggest banks. Marcus Agius accepted responsibility for the scandal, calling it “a devastating blow” to the bank. Last week Barclays was hit with $453 million in fines from US and British regulators. CEO Bob Diamond is still under pressure to step down. Barclays shares have plunged since the fines were announced. About 20 financial firms are still being investigated by regulators in several nations for possible rate fixing. More damaging revelations could be coming.

It’s been a pretty good year so far the average 401(k) plan. The broad-based S&P 500 index rose 8.3 percent since January 1. Stocks kick off the third quarter this morning after last Friday saw the second-biggest rally of the year. The market recovered after European leaders finally produced a plan to address the debt crisis. The Dow gained 278 points or 2.5 percent and the mostly high-tech Nasdaq rose 3 percent on Friday. This week’s main market driver could be US jobs reports to be released Thursday and Friday.

Eurozone unemployment hit another record high in May – over 11 percent. May’s rate was the highest since the euro was launched in 1999, and adds further urgency to the eurozone countries’ plan to create economic growth and cut excessive government debt.

For the first time, Europe’s Airbus is planning to assemble some of its planes in the US in a direct challenge to Boeing, its chief rival. The Wall Street Journal reports Airbus plans to unveil an investment of roughly $600 million to build and equip a new assembly line in Alabama. “The new factory will ramp-up to delivering four planes monthly in 2017,” a source tells the Journal. The new plant may create thousands of jobs.

California is set to become the first state to put new homeowner protections into law. Banks don’t like it and state Republicans are largely opposed. The legislation would require mortgage lenders to provide a single point of contact for homeowners who want to discuss loan modifications. It would prohibit lenders from foreclosing while they consider alternatives to foreclosures.

Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com

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