Last week, Barclays was fined £290m for its manipulation of Libor rates. While Barclays was the first bank fined, many have been implicated in the scandal. In an ongoing debate surrounding the trustworthiness of Banks and financial institutions, the recent rate manipulation by several banks provides evidence of a ‘culture of market manipulation’, which many argue exists in big banks. Indeed, this most recent scandal has pushed many over the edge, causing outrage and questions as to whether the financial system has become a ‘sewer of systematically amoral dishonesty.’

Libor is the London Interbank Offered Rate, or in more comprehensible terms, the rate banks charge one another for loans. In essence, it reflects the price a bank pays for money. The rate is calculated daily, based on reports from member banks. Barclays, as well as other institutions, manipulated this by submitting rates lower than the numbers they were actually using. Libor has the capacity to impact over $350tn worth of financial products globally, as it is commonly used as a benchmark rate for several products including home mortgages, corporate loans and interest rates on credit cards.

The manipulation made the banks appear more solvent during a time of crisis, making it look like they were paying less to borrow more and covering up the true level of the bank’s financial distress. Actual costs of the manipulation are yet unknown, but the FSA stated the bank’s actions ‘could have caused serious harm’ to other institutions and individuals.

The £290m fine given to Barclays by regulators in the UK and US is a record amount. RBS is expected to receive a £150m fine. HSBC, Deutsche Bank and Credit Suisse have disclosed they are ‘co-operating with regulators’ requests’, and over 20 banks (of the 40 banks that submit rates) have received subpoenas from regulators. RBS has already let go 10 traders involved in the scandal, and at least a dozen other institutions have fired or suspended employees.

Given a lack of information as to the actual costs, if any, of the scandal, the uproar surrounding the manipulation seems to be more a comment on a lack of confidence in, and a mistrust of, the financial services industry. The manipulation shows the bankers’ callous attitude. E-mails were exchanged promising champagne for the misreporting. That traders did not think they would be caught shows disregard for regulatory bodies and the internal systems of the banks. That they were willing to do it in the first place suggests a disregard for the Libor system.

Politicians and regulators alike have responded strongly. Labour leader Ed Miliband has called for a public inquiry into banking culture and practices and has pushed for a new code of conduct criminalising bankers’ abuse of the system. George Osborne has highlighted the inability of the FSA to prosecute the bankers for manipulating rates.

Yet, most responses seem to ignore the fact that information regarding Libor manipulation was known several years ago. Between 2007 and 2008, Barclays failed to act on three separate internal warnings surrounding false submissions. In 2008, the Wall Street Journal published an article alleging banks were submitting lowered rates influencing Libor downwards. Where was the uproar then? Who knew, and when? This Wednesday, Paul Tucker, deputy governor of the Bank of England, will appear in front of the Treasury Select Committee to answer questions along these lines, specifically regarding a telephone conversation ‘during which the external perceptions of Barclays' Libor submissions were discussed.’

So far, senior executives are not being forced to resign, although they will need to face questioning. Should they be forced to resign? Should they face criminal charges? And looking to the long-term, how can Libor, and indeed the financial system, be reformed so something like this does not happen again?