Did the manipulation affect the rate on ARM loans?
It's unlikely Barclays' attempt to manipulate the Libor affected U.S. mortgage borrowers, McBride says.
That's because of the way the Libor is calculated.
Each day, the 16 banks surveyed provide the rate they would need to pay to borrow money on that particular day. Of the rates provided, the top and bottom four are discarded. The final numbers are based on the average of the eight remaining figures.
So what if the investigation finds that several banks were providing artificial rates?
McBride says that unless several banks were part of the manipulation scheme and agreed to bid on the same side, it is unlikely that the Libor indexed to ARM mortgages would be affected.
Say the Libor was affected. It's difficult to say whether borrowers were helped or hurt by the mess.
Depending on when a loan reset, a borrower could have been overcharged or undercharged for the interest. That's because during the financial crisis of 2008, when media started to question Barclays' financial stability, Barclays suppressed its rates and reported artificially lower rates to make it look like the bank was doing well.
In theory, if the Libor was affected by the manipulation, borrowers who had loans resetting during that period probably got cheaper rates than they should have.
Read more: The Libor scandal and you | Bankrate.com http://www.bankrate.com/financing/mo...#ixzz20HTd6vkf