If a regulatory probe into the setting of Libor and other short-term interest rates finds other instances of market manipulation, claw backs and top executive departures may just be beginning. Regulators around the world, including the DoJ, FSA and Japanese and European agencies are investigating manipulation of the setting of the benchmark rates, which are a key part of opaque credit and interest rate derivative markets that have roughly $350 trillion in outstanding market value. A manipulation of the rates may have unfairly impacted the borrowing costs of homeowners, governments and corporations around the world, as the bank allegedly tried to profit or curb losses tied to floating interest rates at the height of the financial crisis. Other large banks that set short-term rates may be brought into the fray of an ongoing manipulation probe by the DoJ. Reports indicate that large cap banks like Citigroup ( C), Bank of America ( BAC), RBS ( RBS), Lloyds Banking Group ( LBG), Credit Suisse ( CS) and UBS ( UBS) that are part of the Libor and short-term interest rate setting process all may be subject to an ongoing regulatory and criminal probes. For more on bank earnings, see 10 banks you need to watch during second quarter earnings season. See why Warren Buffet shuns investment banks. For more on Barclays' Libor scandal, see why Diamond's departure was born out of a derivatives bet. -- Written by Antoine Gara in New York
Steve Ricchiuto, MZUHO Securities chief economist, and Bob Michele asset management global CIO with JP Morgan (JPM), joined BloomberTV's 'Bloomberg GO' to discuss the economy and the Fed raising rates.