Libor Rises 431 basis points, Most on Record After Congress Rejects Bank Bailout

September 30, 2008 by · Leave a Comment
Filed under: Industry News 

Well this shows how acute this situation is now it is time to let the market cleanse itself to get these excesses out of the way. The LIBOR or Interbank lending rate have gone up 431 basis points to bring the rate for banks to lend to each other to 6.88% which is so high that no one would want a loan at that rate.

News Piece:

The cost of borrowing in dollars overnight in London rose the most on record after the U.S. Congress rejected a $700 billion bank-rescue plan, putting an unprecedented squeeze on the global financial system.

The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers’ Association said. The euro interbank offered rate, or Euribor, for one-month loans jumped to a record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, also increased to an all-time high.

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