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Lloyds bank settles with US, UK over market fixing

By WTOP Staff

DANICA KIRKA
Associated Press

LONDON (AP) — Lloyds Banking Group is paying $369 million to U.S. and British authorities to settle allegations it manipulated a key global interest rate.

Lloyds, one of the world’s largest banks, on Monday became the sixth financial firm sanctioned in the international rate-rigging scandal. The U.S. and British regulators said Lloyds attempted to manipulate, and in some cases succeeded, in manipulating the London interbank offered rate, known as LIBOR.

The LIBOR, the rate used by banks to borrow from each other, affects trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

Under an agreement with the U.S. Justice Department, Lloyds will be allowed to avoid criminal prosecution in exchange for admitting responsibility for misconduct and continuing to cooperate in the investigation of major banks’ actions regarding LIBOR.

The $369 million that Lloyds is paying includes about $178 million levied by the U.K. Financial Conduct Authority, an $86 million criminal penalty to the Justice Department and a $105 million civil penalty to the U.S. Commodity Futures Trading Commission.

The misconduct by Lloyds occurred between May 2006 and 2009, according to the British and U.S. regulators. They said traders at Lloyds rigged the estimates of borrowing costs submitted by the bank to help set the LIBOR rate, to benefit their own trading positions and those of their friends.

British banks Barclays and Royal Bank of Scotland, Switzerland’s biggest bank, UBS, and Rabobank of the Netherlands have also been fined for LIBOR rigging. Nine individuals have been criminally charged by the Justice Department. The settlements with Lloyds bring the banks’ total payments to date to nearly $4 billion.

“Because investors and consumers rely on LIBOR’s integrity, rate-rigging fundamentally undermines confidence in financial markets,” Assistant U.S. Attorney General Leslie Caldwell said in a statement.

Exchanges among traders and bank employees who submitted reports for setting LIBOR show, quoted by the regulators, show a lively stream of apparent efforts to artificially lower or raise the rates. Among the quotes cited in phone conversations, emails and instant-message chats were: “Obviously we got the Libors down for you,” ”Will be setting an obscenely high (rate) again today …” and “Do you want us to keep the Libor higher?”

In its agreement with the CFTC, Lloyds agreed to establish controls and employee training “to ensure the integrity and reliability” of the reports submitted by the bank in the LIBOR-setting process.

Lloyds said in a statement it has “fundamentally overhauled systems and controls across the bank” over the past three years. The actions cited by the regulators “were restricted to a specific area of the business and were not known about or condoned by the senior management” of the bank at the time, Lloyds said.

The bank said it regards the actions of the individuals responsible “as totally unacceptable and unrepresentative of the cultural changes” it has made.

The process of setting the LIBOR came under scrutiny after Barclays admitted in June 2012 that it had submitted false information to keep the rate low. Barclays agreed to pay a $453 million fine, and its chief executive and chairman both resigned.

A number of U.S. cities and municipal agencies have filed lawsuits against banks that set the LIBOR rate. They are seeking damages for losses suffered as a result of an artificially low rate. Local governments hold bonds and other investments whose value is pegged to LIBOR.

Under a change taking effect this year, the Atlanta-based company that owns the New York Stock Exchange, IntercontinentalExchange, took over supervising the setting of LIBOR from the British Bankers’ Association.

In addition to Lloyds, Barclays, Royal Bank of Scotland, UBS and Rabobank, the banks that set LIBOR are Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., HSBC, Lloyds Bank, Societe Generale, BNP Paribas, Credit Agricole, Credit Suisse, Deutsche Bank, Royal Bank of Canada, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Bank and Norinchukin Bank.

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Gordon reported from Washington.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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