The methodology of how the LIBOR rate is collected makes it difficult for a single institution or even group of institutions to move the needle on the LIBOR value by much (if at all), either up or down. The final value of LIBOR used for ARMs is constructed by taking submissions from the contributor panel of banks, where the rates are ranked into four groups. The lowest and highest groups are discarded, and the remainder is averaged together to produce a value.For example, if the contributor panel was 20 banks, the five lowest and five highest quotes would be excluded and the rest of the values would be averaged together.
LIBOR Homeowner Lawsuit: Much Ado Over $1.22?
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