Oppenheim Law

How Will the Libor Scandal Impact Main Street? -- Yahoo! Homes

News   •   Jul 30, 2012 12:08 EDT

Roy Oppenheim’s commentary was originally published on Yahoo! Homes and is being republished on South Florida Law Blog with their permission.

The residential real estate market is beginning to show real signs of life.

Home values have posted their first annual increase in nearly five years,acccording to the latest Zillow index,which is a well-respected year-over-year analysis of the sale of similar homes in the same area.

So we may be getting closer to a healthier housing market for the first time since the bubble burst in 2008.

But then the Libor scandal came along and threw a gigantic wrench in the works.

On the surface, Libor might appear to solely be a Wall Street problem.

There is no easy target for the populace to vilify, as there is with the HSBC money laundering investigation. And the damage done by the banks’ apparent attempts to subjugate Libor to their own benefit, at first glance, might appear to be limited to the banks themselves.

Perhaps that is why outrage over Libor hasn’t yet reached critical mass. But make no mistake; the impact of the scandal could be larger than any of the banking scandals that have come before it.

This is very much a Main Street issue. As the investigation continues, we may learn how homeowners were burdened with distorted mortgage rates.

What is Libor?

Libor stands for London Interbank Offered Rate. Simply put, Libor is the rate banks use to charge each other money.

The banks help set it, and it’s basically the starting point for lending rates, including a large percentage of mortgage interest rates here in the United States.

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